Seaspan reports working capital deficit, eyes investment-grade rating

By Devika Patel

Knoxville, Tenn., Aug. 2 – Seaspan Corp. plans to take steps towards becoming investment-grade.

The company is focused on enhancing its credit profile and deleveraging, especially since Seaspan currently has a working capital deficiency.

“I want to highlight our focus on improving our credit profile and progressing on a long-term path to investment-grade,” president and chief executive officer Bing Chen said on the company’s second quarter ended June 30 earnings conference call on Thursday.

“We recently announced the redemption of our 10.5% coupon series F preferred shares on July 23, which is consistent with our capital allocation strategy and reflects our ongoing commitment to enhance the company’s capital structure.

“[The preferreds were] very high-cost in terms of capital.

“We are firmly committed to deleveraging and moving ourselves towards investment-grade,” Chen said.

The company’s top financial executive agreed that deleveraging was essential.

“Deleveraging is a key and core component of our strategy and we believe that that not only enhances our balance sheet but also creates customer value, shareholder value for a variety of reasons,” chief financial officer Ryan Courson said on the call.

The company has a working capital deficiency, which it may address through tapping the capital markets.

“Given the increase in current liabilities, we have a current working capital deficiency at June 30,” Courson said.

“This deficiency may increase in future periods due to the classification of the Fairfax debentures to current liabilities.

“We have planned to address this deficiency through cash generated from operations and additional sources of funds in the capital markets, as available,” Courson said.

Cash and cash equivalents were $269.07 million as of June 30, 2018, compared to $253,176,000 as of Dec. 31, 2017.

Seaspan is a Hong Kong-based shipping company.

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