Seaspan Swings to Profit

Containership owner Seaspan defied the global downturn by earning a first quarter profit of $24.2 million, compared with a loss of $7.7 million in the same quarter last year as revenue from chartering out its fleet increased by 16.4 percent.

Revenue increased to $63.1 million for the quarter ended March 31, from $54.2 million for the comparable quarter last year.

The increase was primarily due to the delivery of six additional container ships between May and November 2008.

The profit includes a non-cash unrealized gain of $21.4 million and loss of $53.8 million from interest rate swaps for the current and comparable quarters respectively.

“While we cannot predict the extent of the global recession and the ultimate impact it may have on the industry, our charterers continue to perform as expected,” said Gerry Wang, CEO of the Hong Kong-based company.

Despite the healthy increase in profit and revenue the Hong Kong-based company said it will temporarily reduce its dividend in order to build up the funds to order new vessels.

“This temporary reduction will enable Seaspan to retain an approximate additional amount of $100 million per year that can be redeployed to fund its newbuilding program, which currently requires approximately between $500 million to $600 million in non-debt capital over the next 24 to 30 month period commencing in late 2010 to early 2011,” the company said in its statement

“Temporarily reducing our dividend allows Seaspan to defer its equity capital needs, reduce its overall equity needs by approximately $320 million to $360 million and maintain a quarterly payout to its shareholders,” Wang said.

Seaspan said it has gotten agreement from its shipyards to allow it to defer delivery of up to 15 of the ships it has contracted to buy for up to 15 months form their original dates.

Seaspan said it has accepted delivery of a 4,250-TEU vessel for the troubled Chilean carrier CSAV and has agreed to charter three additional 4250-TEU vessels to CSAV in the future.

“We are aware from media reports of the recent downgrade of CSAV's counter-party credit rating by major credit rating agencies,” Seaspan said.

“We are also aware of the public disclosures by CSAV and one of its charter providers of a possible restructuring proposal. At this time, we have not received a formal proposal by CSAV to renegotiate our time charters and we expect them to honor their charter commitments in full,” it said.