The Hong Kong-based business said it planned to offer 3.5 million shares at $22 a share, a 6.1% discount on Tuesday's closing price. In its SEC filing, Seaspan said it plans to use the $77 million in net proceeds to fund general corporate activities which may include additional vessel purchases.
Citigroup, Bank of America, Credit Suisse, Deutsche Bank, JPMorgan and Jefferies will act as joint book-runners on the offering, while Clarkson Capital Markets will be co-manager.
TheStreet Ratings team rates Seaspan Corp as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate Seaspan Corp (SSW) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 4100% and other important driving factors, this stock has surged by 49.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although SSW had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- Seaspan Corp reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Seaspan Corp turned its bottom line around by earning 73 cents a share vs. -$2.07 a share in the prior year. This year, the market expects an improvement in earnings (91 cents vs. 73 cents).
- Net operating cash flow has slightly increased to $89.88 million or 9.58% when compared to the same quarter last year. Despite an increase in cash flow of 9.58%, Seaspan Corp is still growing at a significantly lower rate than the industry average of 61.32%.
- The debt-to-equity ratio is very high at 2.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SSW's quick ratio is somewhat strong at 1.13, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: SSW Ratings Report