Fairfax Financial, through certain subsidiaries, has signed a definitive agreement to invest an additional $500m of equity in Seaspan by exercising two tranches of warrants issued to the company in February.
The proposed investment will increase Fairfax’s total investment in Seaspan to $1bn.
It will also allow Fairfax to purchase around 38.46m Class A common shares at an exercise price of $6.50 per share.
Seaspan chairman David Sokol said: “Our Board of Directors and management team are excited by this transformative investment, which will further bolster Seaspan’s strategy to lead consolidation in the fragmented containership sector and capitalise on the most compelling opportunities in the shipping sector and beyond it.
“Building on our acquisition of Greater China Intermodal Investments and existing partnership with PremWatsa and Fairfax, the cumulative investment of $1bn from Fairfax will also significantly strengthen Seaspan’s balance sheet, significantly improve access to capital, and accelerate our progress toward achieving an investment grade credit rating.”
The investment will be fulfilled in January next year when Fairfax will exercise all of the warrants issued to the company in relation with the closing of its second debenture investment of $250m in Seaspan.
Once completed, the $1bn investment will include $500m of Class A common shares and $500m in debentures.
The newly signed definitive agreement is subject to customary closing conditions.
Seaspan primarily serves the world’s major container shipping liners with alternatives to vessel ownership by providing long-term leases on large, modern containerships, as well as ship management services.
The company currently operates a fleet of 112 containerships with a total capacity of over 900,000 twenty-foot equivalent units (TEU).