NEW YORK (TheStreet) -- Shares of Seaspan (SSW - Get Report) are plunging by 9.44% to $14.67 on heavy trading volume late Tuesday afternoon, after the company priced its public offering of 5 million Class A common shares at $14.70 per share.
Seaspan has granted the underwriters a 30-day option to purchase as many as 750,000 additional common shares. The offering is expected to close on May 27.
The company will put about $85 million of the proceeds toward redeeming a portion of its outstanding 9.5% Series C Cumulative Redeemable Perpetual Preferred Shares. It will use the remainder for "general corporate purposes."
Seaspan also is commencing a partial redemption of its 9.50% Series C Preferred Shares at $25 per share and an amount equal to all accumulated and unpaid dividends.
Deutsche Bank (DB) wrote in a note this morning that the announcement could "raise more questions than answers."
"For example the company still expects to book asset impairments of $250-290M in 3Q, with a reduction in net assets potentially leading to 'a breach of certain financial covenants,'" the firm said.
About 5.68 million shares of Seaspan have been traded so far today, well above the company's average trading volume of roughly 279,536 shares per day.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Seaspan's strengths such as its revenue growth, good cash flow from operations and expanding profit margins are countered by weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: SSW
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.