Seaspan Reports Financial Results for the Three and Nine Months Ended September 30, 2010

  


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27 Oct 2010

seaspan_logo_corporation.pngSeaspan Corporation announced yesterday the financial results for the three and nine months ended September 30, 2010. Below is a summary of our key financial results.


--  Achieved vessel utilization of 98.7% and 98.3%, respectively, for the

    three and nine months ended September 30, 2010;

--  Accepted delivery of one newbuild vessel during the third quarter, the

    COSCO Indonesia, bringing our fleet to a total of 53 vessels at

    September 30, 2010;

--  Paid a second quarter dividend of $0.125 per share on August 20, 2010,

    reflecting a 25% increase over the dividend paid for the first quarter

    of 2010;

--  Declared a third quarter dividend of $0.125 per common share to be paid

    on November 12, 2010, increasing cumulative dividends declared since our

    IPO to $6.84 per common share; and

--  Subsequent to the quarter end, we also completed a corporate guarantee

    reduction and, subject to customary closing conditions, a $150 million

    sale-leaseback, which we believe, together, satisfy our remaining equity

    needs for the acquisition of the remaining vessels that we have

    contracted to acquire.

Gerry Wang, Chief Executive Officer of Seaspan, stated, "During the
third quarter, Seaspan continued to grow earnings and cash flow,
highlighting the Company's ongoing success in expanding its modern
fleet and achieving strong utilization. Including the COSCO Indonesia,
which we received in the third quarter, and the two newbuildings
delivered in the current fourth quarter, Seaspan has taken delivery of
a total of 13 vessels year-to-date. Going forward we expect the
Company's annual cash available for distribution to grow approximately
65% over the next two years as we take delivery of 14 additional
newbuildings over the next 18 months, all of which are secured on
long-term charters with leading Asian-based liner companies."

Mr. Wang added, "During the quarter, Seaspan also maintained its focus
on strengthening the Company's financial flexibility. Based on our most
recent financing transactions, we believe we have fully secured funding
for our built-in fleet growth in a manner that benefits the long-term
interests of our shareholders. We are pleased to have successfully
executed our plan, initiated in 2008, to finance our significant
contracted fleet growth under favorable terms. Going forward, we remain
committed to preserving Seaspan's strong capital structure and
exploring growth opportunities that create enduring shareholder value."

Subsequent events:

Subsequent to the end of the third quarter, on October 15, 2010, we
accepted delivery of an 8500 TEU vessel named the COSCO Thailand, and
on October 25, 2010, we accepted delivery of a 4500 TEU vessel named
the Brotonne Bridge bringing our fleet to 55 vessels.

On October 21, 2010, the Company entered into a twelve-year sale and
leaseback financing for up to $150 million for one of its 13100 TEU
container vessels ordered from Hyundai Heavy Industries Co., Ltd. Under
the terms of the transaction, subject to certain closing conditions,
the vessel will be sold by the Company upon delivery to an affiliate of
Credit Agricole Corporate and Investment Bank and will charter the
vessel to a newly formed, wholly owned subsidiary of Seaspan
Corporation. The Company will charter the vessel from its subsidiary
and continue to time charter the vessel to COSCO Container Lines Co.,
Ltd. in accordance with the terms of the original twelve-year time
charter. The subsidiary's financial indebtedness under the charter is
non-recourse to Seaspan Corporation.

On October 21, 2010, a subsidiary of Seaspan Corporation amended its
$400 million UK Tax Lease Facility with an affiliate of Lloyds Banking
Group. Under the original terms of the lease, all of the obligations of
the Company's subsidiary under the lease were guaranteed by Seaspan
Corporation. Under the terms of the amended lease facility, Seaspan
Corporation's guarantee of scheduled rental and termination amounts,
based on current tax and other assumptions, are limited to a
significantly reduced fixed amount of the subsidiary's obligations. The
lease facility will continue to provide the financing for five 4500 TEU
vessels, each of which is to commence a twelve-year time charter with
Kawasaki Kisen Kaisha Ltd. upon delivery.

Vessel utilization was 98.7% and 98.3%, respectively, for the three and
nine months ended September 30, 2010 compared to 99.4% and 99.8%, for
the comparable periods in the prior year.

This decrease in vessel utilization for the nine months ended September
30, 2010 was primarily due to the 90 days of unscheduled off-hire
resulting from the grounding of the CSCL Hamburg in the Gulf of Aqaba
on December 31, 2009. CSCL Hamburg's next dry-docking was originally
scheduled for 2013, however we combined the repairs of the CSCL Hamburg
with an earlier dry-docking which defers the next scheduled dry-docking
to 2015. This dry-docking resulted in 12 days of scheduled off-hire and
the CSCL Hamburg was back in service in April. We also completed the
dry-dockings for the CSCL Vancouver, CSCL Sydney, CSCL New York, CSCL
Melbourne, New Delhi Express, CSCL Brisbane and are in progress of
completing the dry-docking for Dubai Express. This has resulted in a
total of 114 days of scheduled off-hire. Our vessel utilization since
our initial public offering is 99.1%.

Interest expense is composed of interest at the variable rate plus
margin incurred on debt for operating vessels and a reclassification of
amounts from accumulated other comprehensive income related to
previously designated hedging relationships. The increase in interest
expense for the three and nine months ended September 30, 2010, was
primarily due to a higher average operating debt balance compared to
the comparable periods in the prior year. The average LIBOR for the
quarter ended September 30, 2010 was 0.3% which is consistent with the
comparable period in the prior year. The average LIBOR for the nine
months ended September 30, 2010 was 0.3%, compared to 0.5% for the
comparable period in the prior year. Although we have entered into
fixed interest rate swaps, the difference between the variable interest
rate and the swapped fixed rate on operating debt is recorded in our
change in fair value of financial instruments caption as required by
financial reporting standards. The interest incurred on our long-term
debt for our vessels under construction is capitalized to the
respective vessels under construction.

Change in Fair Value of Financial Instruments

The change in fair value of financial instruments resulted in a loss of
$113.4 million for the three months ended September 30, 2010 compared
to a loss of $92.6 million for the comparable quarter last year. The
change in fair value of financial instruments resulted in a loss of
$336.5 million for the nine months ended September 30, 2010 compared to
a loss of $0.1 million for the comparable period last year. The change
in fair value loss for the three and nine months ended September 30,
2010 was primarily due to decreases in the forward LIBOR curve.

Cash Available for Distribution to Common Shareholders(2)

These increases in cash available for distribution for the three and
nine months ended September 30, 2010 over the comparable periods in the
prior year are primarily due to an increased fleet size of 53 vessels
at September 30, 2010 compared to 41 vessels at September 30, 2009.

Dividend Declared:

For the quarter ended September 30, 2010, we declared a quarterly
dividend of $0.125 per common share, representing a total distribution
of $8.5 million. The dividend will be paid on November 12, 2010 to all
shareholders of record as of November 2, 2010. Because we adopted a
dividend reinvestment plan, or DRIP, the actual amount of cash
dividends paid may be less than the $8.5 million based on shareholder
participation in the DRIP.

Since our initial public offering in August 2005, we have declared
cumulative dividends of $6.84 per common share. Cumulatively, since we
adopted the DRIP in May 2008, an additional 1.8 million shares have
been issued through the participation in the DRIP. As of today's date
and based on a discount of 3%, participating shareholders have invested
$18.4 million in the DRIP since the plan's adoption.

About Seaspan

Seaspan owns containerships and charters them pursuant to primarily
long-term fixed-rate charters. Seaspan's contracted fleet of 69
containerships consists of 55 containerships in operation and 14
containerships to be delivered over approximately the next 18 months.
Seaspan's operating fleet of 55 vessels has an average age of
approximately four years and an average remaining charter period of
approximately seven years. All of the 14 vessels to be delivered to
Seaspan are already committed to primarily long-term time charters
averaging approximately 12 years in duration from delivery. Seaspan's
customer base consists of eight of the world's largest liner companies,
including to A.P. Moller-Maersk A/S, China Shipping Container Lines
(Asia) Co., Ltd., Compania Sud Americana de Vapores, COSCO Container
Lines Co., Ltd., Hapag-Lloyd USA, LLC, Kawasaki Kisen Kaisha Ltd.,
Mitsui O.S.K. Lines, Ltd., and United Arab Shipping Company (S.A.G).

Seaspan's common shares are listed on the New York Stock Exchange under the symbol "SSW".



Source: Seaspan Corporation

Sources:  www.Shipid.com

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