February 14, 2006

Seaspan acquires 3,500 TEU newbuilds

Seaspan Corporation (NYSE:SSW), which is best known for ordering super large containerships, is purchasing two 3,500 TEU newbuildings.

Seaspan has agreed to purchase the pair from affiliates of Conti Holding GmbH & Co. KG ("Conti") of Germany. The acquisition is incremental to Seaspan's original contracted fleet, and will increase the company's total fleet to 25 vessels.

Seaspan will acquire the vessels on their delivery in February and July 2007 respectively from Zhejiang Shipbuilding Co. Ltd. in China. The total delivered cost is expected to be approximately $50 million per vessel.

Seaspan has arranged simultaneous twelve-year charter agreements for the vessels with Cosco Container Lines Co., Ltd. at $19,000 per day.

Seaspan Management Services Limited will supervise the construction of the new vessels and operate both ships for Seaspan at an initial fixed rate of $4,200 per day.

"The acquisition of these two new building contracts is consistent with Seaspan's strategy as it allows us to deliver incremental growth to our shareholders through the expansion of our fleet," said Gerry Wang, CEO of Seaspan. "Additionally, the long-term charters agreed with Coscon will contribute to Seaspan's strong and stable cash flows for distribution to our shareholders. Finally, we are very pleased that this acquisition will diversify our customer base by adding a major and rapidly growing player in China, with the potential to deliver further business in the future. It also allows us to establish a relationship with a growing Chinese shipbuilder."

The 3,500 TEU vessel size will complement Seaspan's existing fleet of 9,600 TEU, 8,500 TEU and 4,250 TEU vessels. The smaller sized 3,500 TEU vessel is in demand among major charterers, including Seaspan's existing customer base.

Construction of the ships has just begun, which will allow the Seaspan Management Services technical team to influence ship design and ensure greater uniformity with the existing fleet.

"Seaspan believes that acquisitions will be key drivers of our growth strategy, but has put in place specific acquisition criteria which require that all acquisitions be accretive to distributable cash flow; include agreements with a high quality charterer; and meet our careful assessment of credit and residual risk," noted Wang. "The acquisition of these two vessel contracts meets all of these criteria."

Seaspan paid Conti a $4 million deposit upon signing of the transaction, which was financed from cash on hand. The company is in the process of arranging long-term debt financing for this transaction, which is expected to be in place within six weeks. The board of directors of Seaspan Corporation has unanimously approved the terms of this transaction.

Zhejiang Shipbuilding, which is building the two new vessels, is located near Ningbo, China. The yard is one of the largest private shipyards in China and is owned by Sino-Pacific Heavy Industries, which also operates the Dayang shipyard in Yangzhou.