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(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2021
OR
Date of event requiring this shell company report
For the transition period from to
Commission file number 001-39237
ATLAS CORP.
(Exact Name of Registrant as Specified in Its Charter)
Republic of the Marshall Islands
(Jurisdiction of Incorporation or Organization)
23 Berkeley Square
London, United Kingdom
W1J 6HE
(Address of Principal Executive Offices)
Graham Talbot
23 Berkeley Square
London, United Kingdom
W1J 6HE
Telephone: +44 20 7788 7819
Facsimile: + 44 843 320 5270
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on which Registered
Common Shares, par value of $0.01 per share
Series D Preferred Shares, par value of $0.01 per share
Series H Preferred Shares, par value of $0.01 per share
Series I Preferred Shares, par value of $0.01 per share
ATCO
ATCO-PD
ATCO-PH
ATCO-PI
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
247,024,699 Common Shares, par value of $0.01 per share
5,093,728 Series D Preferred Shares, par value of $0.01 per share
9,025,105 Series H Preferred Shares, par value of $0.01 per share
6,000,000Series I Preferred Shares, par value of $0.01 per share
12,000,000Series J Preferred Shares, par value of $0.01 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
Yes o No x
obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large
accelerated filer” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
Large accelerated filer x Accelerated filer o Non-accelerated filer o Emerging growth company o
Yes x No o
after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP x International Financial Reporting Standards as Issued by the International Accounting Standards Board o Other o
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Item 17 o Item 18 o
Yes o No x
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ATLAS CORP.
INDEX TO REPORT ON FORM 20-F
PART I
Item 1.
Item 2.
Item 3.
Item 4.
Identity of Directors, Senior Management and Advisors
Offer Statistics and Expected Timetable
Key Information
Information on the Company
Item 4A. Unresolved Staff Comments
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Item 10.
Additional Information
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
Item 12.
Description of Securities Other than Equity Securities
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15.
Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16F. Change in Registrants’ Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 17.
Financial Statements
Item 18.
Financial Statements
Item 19.
Exhibits
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PART I
Our disclosure and analysis in this Annual Report concerning our operations, cash flows, and financial position,
including, in particular, the likelihood of our success in developing and expanding our business, include forward-looking
statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act). Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words
such as “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “forecasts,” “will,”
“may,” “potential,” “should” and similar expressions are forward-looking statements. Although these statements are based
upon assumptions we believe to be reasonable based upon available information, including projections of revenues,
operating margins, earnings, cash flow, working capital and capital expenditures, they are subject to risks and uncertainties
that are described more fully in this Annual Report in the section titled “Risk Factors.”
These forward-looking statements represent our estimates and assumptions only as of the date of this Annual Report
and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-
looking statements. Forward-looking statements appear in a number of places in this Annual Report. These statements
include, among others:
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future operating or financial results;
future growth prospects;
our business strategy and capital allocation plans, and other plans and objectives for future operations;
potential acquisitions, financing arrangements and other investments, and our expected benefits from such
transactions;
our primary sources of funds for our short, medium and long-term liquidity needs;
the future valuation of our vessels, power generation assets and goodwill;
future time charters and vessel deliveries, including replacement charters and future long-term charters for
certain existing vessels;
estimated future capital expenditures needed to preserve the operating capacity of our containership fleet and
power generation assets and to comply with regulatory standards, our expectations regarding future operating
expenses, including dry-docking and other ship operating expenses and expenses related to performance under
our contracts for the supply of power generation capacity, and general and administrative expenses;
our ability to recruit and retain crew for our containerships, particularly in light of the current Russia-Ukraine
conflict and the COVID-19 pandemic;
number of off-hire days and dry-docking requirements;
global economic and market conditions and shipping and energy market trends, including charter rates and
factors affecting supply and demand for our containership and power generation solutions;
disruptions in global credit and financial markets as the result of the COVID-19 pandemic, the Russia-Ukraine
conflict or otherwise;
conditions in the public equity market and the price of our shares;
our financial condition and liquidity, including our ability to borrow funds under our credit facilities, our ability
to obtain waivers or secure acceptable replacement charters under certain of our credit facilities, our ability to
refinance our existing facilities and notes and to obtain additional financing in the future to fund capital
expenditures, acquisitions and other general corporate activities;
our continued ability to maintain, enter into or renew primarily long-term, fixed-rate time charters and leases of
our power generation assets with our existing customers or new customers;
the potential for early termination of long-term contracts and our potential inability to enter into, renew or
replace long-term contracts;
changes in governmental rules and regulations or actions taken by regulatory authorities, and the effect of
governmental regulations on our business;
our continued ability to meet specified restrictive covenants in our financing and lease arrangements, our notes
and our preferred shares;
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the length and severity of the ongoing COVID-19 pandemic, including as a result of the new variants of the
virus, and its impact on our business;
the financial condition of our customers, lenders and other counterparties and their ability to perform their
obligations under their agreements with us;
our ability to leverage to our advantage our relationships and reputation in the containership industry;
changes in technology, prices, industry standards, environmental regulation and other factors which could affect
our competitive position, revenues and asset values;
disruptions and security threats to our technology systems;
taxation of our company, including our exemption from tax on our U.S. source international transportation
income, and taxation of distributions to our shareholders;
the continued availability of services, equipment and software from subcontractors or third-party suppliers
required to provide our power generation solutions;
our ability to protect our intellectual property and defend against possible third-party infringement claims
relating to our power generation solutions;
our ability to achieve or realize expected benefits from ESG initiatives;
potential liability from future litigation; and
other factors detailed in this Report and from time to time in our periodic reports.
Forward-looking statements in this Annual Report are estimates and assumptions reflecting the judgment of senior
management and involve known and unknown risks and uncertainties. These forward-looking statements are based upon a
number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of
which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-
looking statements. Accordingly, these forward-looking statements should be considered in light of various important
factors, including, but not limited to, those set forth in “Item 3. Key Information—D. Risk Factors.”
We do not intend to revise any forward-looking statements in order to reflect any change in our expectations or
events or circumstances that may subsequently arise except as required by law or regulation. We expressly disclaim any
obligation to update or revise any of these forward-looking statements, whether because of future events, new information,
a change in our views or expectations, or otherwise. You should carefully review and consider the various disclosures
included in this Annual Report and in our other filings made with the Securities and Exchange Commission, or the SEC,
that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of
operations.
Corporate Reorganization & Acquisition of APR Energy Limited
On February 27, 2020, Seaspan Corporation (“Seaspan”) completed a holding company reorganization (the
“Reorganization”) whereby it became a direct, wholly owned subsidiary of Atlas Corp (“Atlas”). The business operations
of Seaspan did not change as a result of the Reorganization.
In the Reorganization, holders of Seaspan common shares and Seaspan preferred shares became holders of Atlas
common shares and Atlas preferred shares, as applicable, on a one-for-one basis with the same number of shares and same
ownership percentage of the same corresponding class of Seaspan shares as they held immediately prior to the
Reorganization. In addition, Atlas assumed Seaspan’s share purchase warrants, the Seaspan Corporation Stock Incentive
Plan, all unexercised and unexpired options to purchase Seaspan common shares and each right to acquire or vest in a share
of Seaspan common stock, including restricted stock unit awards and performance share awards that were outstanding
under the Seaspan Corporation Stock Incentive Plan.
On February 28, 2020, Atlas Corp. acquired Apple Bidco Limited and its wholly-owned subsidiaries, including APR
Energy Limited (“APR Energy”).
Glossary
Unless we otherwise specify or the context otherwise requires, when used in this Annual Report, (i) the terms
“Atlas,” the “Company,” “we,” “our” and “us” refer to Atlas Corp. and its subsidiaries, (ii) the term “Seaspan” refers to
Seaspan Corporation and its subsidiaries and (iii) the term “APR Energy” refers to Apple Bidco Limited, its subsidiary
APR Energy Limited, and APR Energy Limited’s subsidiaries.
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References to Seaspan’s customers are as follows:
Customer
CMA CGM S.A.
China COSCO Holdings Company Limited
Hapag-Lloyd AG
Maersk Line A/S(1)
MSC Mediterranean Shipping Company S.A.
Ocean Network Express Pte. Ltd.
Yang Ming Marine Transport Corp.
ZIM Integrated Shipping Services Ltd.
_______________________
(1)
A subsidiary of A.P. Moeller Maersk A/S.
Reference
CMA CGM
COSCO
Hapag-Lloyd
Maersk
MSC
ONE
Yang Ming Marine
ZIM
We use the term “twenty-foot equivalent unit,” or TEU, the international standard measure of containers, in
describing the capacity of our containerships, which are also referred to as “our vessels”. We identify the classes of our
vessels by the approximate average TEU capacity of the vessels in each class. However, the actual TEU capacity of a
vessel may differ from the approximate average TEU capacity of the vessels in such vessel’s class.
We use the term “megawatts”, representing a unit of energy, to describe the power generation capacity of our power
assets. The actual megawatts that can be generated from our power assets, individually or in aggregate may differ from the
approximate amount disclosed.
We also use a variety of operational terms and concepts in this Annual Report. These include the following:
Annual Survey. The inspection of a vessel pursuant to international conventions, by a classification society surveyor,
on behalf of the flag state, that takes place every year.
Bareboat Charter. A charter of a vessel under which the shipowner is usually paid a fixed amount for a certain
period of time during which the charterer is responsible for the vessel operating expenses, including crewing, and voyage
expenses of the vessel and for the management of the vessel. A bareboat charter is also known as a “demise charter” or a
“time charter by demise.”
Bunkers. Heavy fuel and diesel oil used to power a vessel’s engines.
Charter. The hire of a vessel for a specified period of time or a particular voyage to carry a cargo from a loading
port to a discharging port. The contract for a charter is commonly called a charterparty.
Charterer. The party that charters a vessel.
Charter hire. A sum of money paid to the shipowner by a charterer for the use of a ship.
Classification society. An independent organization that certifies that a vessel has been built and maintained
according to the organization’s rules for that type of vessel and complies with the applicable rules and regulations of the
flag state and the international conventions of which that country is a member. A vessel that receives its certification is
referred to as being “in-class.”
Dry-docking. The removal of a vessel from the water for inspection and, if needed, repair of those parts of a vessel
that are below the water line. During dry-dockings, which are required to be carried out periodically, certain mandatory
classification society inspections are carried out and relevant certifications are issued. Dry-dockings for containerships are
generally required once every five years, which must be a “special survey.”
Flag State. The country of a vessel’s registry.
Hire rate. The payment to the shipowner from the charterer for the use of the vessel.
Hull. Shell or body of a vessel.
IMO. International Maritime Organization, a United Nations agency that issues international standards for shipping.
Intermediate survey. The inspection of a vessel by a classification society surveyor that takes place 24 to 36 months
after each “special survey.”
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Megawatts. A unit of energy generated by power assets.
Newbuilding. A new ship under construction or just completed.
Off-charter. The period in which a vessel is not in service under a time charter and, accordingly, we do not receive
hire.
Off-hire. The period in which a vessel is not available for service under a time charter and, accordingly, the charterer
generally is not required to pay the hire rate. Off-hire periods can include days spent on repairs, dry-docking and surveys,
whether or not scheduled. For all other assets, the period in which the asset is not available for service under a lease
agreement.
On-hire. The period in which an asset is available for service under a lease agreement.
Protection and indemnity insurance. Insurance obtained through a mutual association formed by shipowners to
provide liability indemnification protection from various liabilities to which they are exposed in the course of their
business, and which spreads the liability costs of each member by requiring contribution by all members in the event of a
loss.
Scrapping. The sale of a ship as scrap metal.
Ship operating expense. The costs of operating a vessel, primarily consisting of crew wages and associated costs,
insurance premiums, management fee, lubricants and spare parts, and repair and maintenance costs. Ship operating
expenses exclude fuel cost, port expenses, agents’ fees, canal dues and extra war risk insurance, as well as commissions,
which are included in “voyage expenses.”
Special survey. The inspection of a vessel by a classification society surveyor that takes place every five years, as
part of the recertification of the vessel by a classification society.
Spot market. The market for immediate chartering of a vessel, usually for single voyages.
TEU. Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.
Time charter. A charter under which the shipowner hires out a vessel for a specified period of time. The shipowner
is responsible for providing the crew and paying vessel operating expenses, while the charterer is responsible for paying the
voyage expenses and additional voyage insurance. The shipowner is paid the hire rate, which accrues on a daily basis.
Voyage expenses. Expenses incurred due to a ship’s traveling from a loading port to a discharging port, such as fuel
(bunkers) cost, port expenses, agents’ fees, canal dues, extra war risk insurance and commissions.
Vessel operating expenses. The costs of operating a vessel, primarily consisting of crew wages and associated costs,
insurance premiums, management fees, lubricants and spare parts, and repair and maintenance costs.
We use the term “Notes” to refer, collectively, to the 3.75% exchangeable senior notes due 2025 (the “Exchangeable
Notes”), the 6.5% senior unsecured sustainability-linked bonds due 2024 (the “2024 NOK Bonds”), the 6.5% senior
unsecured sustainability-linked bonds due 2026 (the “2026 NOK Bonds” and together with the 2024 NOK Bonds, the
"NOK Bonds"), the sustainability-linked, senior secured notes (the "Senior Secured Notes") and the 5.5% senior unsecured
notes due 2029 (the “2029 Notes”), in each case issued by Seaspan, as well as the 7.125% senior unsecured notes due 2027
of Atlas (the "Atlas 7.125% Notes").
Until May 2021, Seaspan also had outstanding, 7.125% senior unsecured notes due 2027 (the "Seaspan 7.125%
Notes"), which notes were exchanged for Atlas 7.125% Notes.
We use the term "Fairfax Notes" to refer, collectively, to our 5.50% senior notes due 2025 (the “2025 Fairfax
Notes”), 5.50% senior notes due 2026 (the “2026 Fairfax Notes”) and 5.50% senior notes due 2027 (the “2027 Fairfax
Notes”), which were held by certain affiliates of Fairfax Financial Holdings Limited ("Fairfax"). None of the Fairfax Notes
were outstanding as of December 31, 2021.
Item 1.
Identity of Directors, Senior Management and Advisors
Not applicable.
Item 2.
Offer Statistics and Expected Timetable
Not applicable.
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Item 3.
Key Information
A.
B.
[Reserved]
Capitalization and Indebtedness
Not applicable.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
Some of the following risks relate principally to our businesses and our business strategy. Other risks relate
principally to regulation, our indebtedness and to ownership of our securities. The occurrence of any of the events
described in this section could significantly and negatively affect our business, financial condition, operating results, ability
to pay dividends on our shares, ability to redeem our preferred shares or the trading price of our shares.
Summary of Risk Factors
The following is a summary of some of the principal risks we face. The list below is not exhaustive, and investors
should read this “Risk Factors” section in full.
Risk relating to our business as a whole
• We expect acquisitions of new assets and lines of business to be a significant part of our growth strategy. If we
are unable to identify suitable acquisition candidates or successfully integrate the businesses or assets we
acquire, our growth strategy may not succeed. Further, any acquisitions we undertake will involve numerous
risks, including risks related to integration, and we may not realize the anticipated benefits of our acquisitions
and may incur unanticipated costs and liabilities.
• We depend on our key personnel and changes in our management team may adversely affect our operations.
Risks related to our containership business
• We derive our charter revenue from a limited number of customers, and the loss of any one customer or the
long-term charters we have with them, further increases in the number of vessels on short-term charter or any
material decrease in payments under our customer contracts could materially harm our business, results of
operations and financial condition.
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A decrease in the export of goods from the regions served by our customers, including that caused by the
maintenance or escalation of trade protectionism, could materially harm our business.
The profitability and growth of our containership business is subject to world and regional demand for
containership chartering, which is impacted by factors outside our control, including developments in
international trade, regulatory developments, relocation of manufacturing, and economic and political
conditions, the impact of the COVID-19 pandemic and the current Russia-Ukraine conflict.
Containership values and charter rates may fluctuate substantially over time.
If a more active short-term or spot containership market develops, we may have more difficulty entering into
long-term, fixed-rate time charters and our existing customers may begin to pressure us to reduce charter rates.
The business and activity levels of our charterers, shipbuilders and third parties with which we do business and
their respective abilities to fulfill their obligations under agreements with us may be hindered by any
deterioration in the shipping industry, credit markets or other negative developments, including, recently, the
COVID-19 pandemic and the invasion of Ukraine by Russia.
• We will be required to make substantial capital expenditures to complete the acquisition of our newbuild
containerships and any additional vessels we acquire in the future, which may result in increased financial
leverage or dilution of our equity holders’ interests or decreased ability to redeem our preferred shares. Delays
in deliveries of our newbuild containerships could materially harm our business, results of operations and
financial condition.
• We may be unable to attract and retain qualified, skilled crew necessary to operate our vessels or may pay rising
crew and other vessel operating costs.
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• We must make substantial capital expenditures over the long-term to preserve the operating capacity of our
fleet, including to, among other things, meet future environmental regulatory standards. These costs are likely to
increase as our fleet ages.
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Risks inherent in the operation of ocean-going vessels could materially harm our reputation, business, results of
operation and financial condition.
Risks related to our power generation business
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Our competitive position, revenues and asset values could be adversely affected by changes in technology,
prices, industry standards, environmental regulation and other factors.
The delivery of our power generation solutions to our customers and our performance under our customer
contracts may be adversely affected by problems related to our reliance on third-party contractors and suppliers.
Power plants are inherently dangerous workplaces at which hazardous materials are handled. If we fail to
maintain safe work environments or cause any damage, we could be exposed to significant financial losses, as
well as civil and criminal liabilities.
Unauthorized use of our proprietary technology by third parties may reduce the value of our power generation
services and brand, and impair our ability to compete effectively.
Legal, regulatory and litigation risks
• We are subject to potential claims and litigation from customers, suppliers, and third parties. Alternatively, we
may find it necessary to bring litigation against others. Litigation and other avenues of resolving claims, can be
costly, time-consuming and result in adverse outcomes.
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Failure to comply with applicable anti-bribery and corruption or economic sanctions and trade embargo laws
and regulations could result in fines and criminal penalties, terminations of charters, financing arrangements and
other significant contracts, and a material adverse effect on our business.
Our business is subject to extensive governmental regulation, including environmental, in a number of different
jurisdictions, and our inability to comply with existing regulations or requirements or changes in applicable
regulations or requirements may have a negative impact on our business, results of operations or financial
condition. Climate change and greenhouse gas restrictions may adversely affect our operating results.
• We have operations in emerging markets which exposes us to risks that are more prevalent than in developed
markets, such as economic and governmental instability (which has been and during 2022 will likely continue to
be exacerbated by COVID-19), the possibility of significant amendments to, or changes in, the application of
governmental regulations, the nationalization and expropriation of private property, payment collection
difficulties, social problems, substantial fluctuations in interest and exchange rates, changes in the tax
framework or the unpredictability of enforcement of contractual provisions, currency control measures limits on
the repatriation of funds and other unfavorable interventions or restrictions imposed by public authorities.
•
The legal system in China has inherent uncertainties that could limit the legal protections available to us, and
the legal and geopolitical risks associated with chartering vessels to Chinese customers, constructing vessels in
China and obtaining financing and insurance from Chinese financial institutions and insurers could materially
harm our business, results of operations and financial condition.
Risks related to tax
• We intend that our business be conducted and operated in a manner that minimizes income taxes imposed upon
us; however, there is a risk that we will be subject to income tax in one or more jurisdictions if under the
existing or future tax laws of any such jurisdiction, we or one of our subsidiaries are considered to be carrying
on a trade or business there or earn income that is considered to be sourced there and we do not, or such
subsidiary does not, qualify for an exemption or reduced taxation under local taxation rules or applicable tax
treaties.
Risks related to financing and indebtedness
• We have substantial debt. We may not have sufficient cash flow from operations or otherwise to be able to
timely pay, or be able to refinance, amounts owed under our credit facilities, Notes and vessel lease and other
financing arrangements, or be able to repurchase our Notes when required. Moreover, our substantial debt
levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.
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Disruptions in global capital markets and economic conditions or changes in lending practices may harm our
ability to obtain financing on acceptable terms, which could hinder or prevent us from meeting our capital
needs. Exposure to interest rate fluctuations may result in fluctuations in our results of operations and financial
condition.
Charterparty-related defaults under certain of our secured credit facilities and vessel lease and other financing
arrangements could permit the counterparties thereto to accelerate our obligations and terminate such facilities
or leases, which could materially adversely affect our financial condition.
Risks related to an investment in our securities
•
Fairfax has significant influence over our policies and business.
• We may not have sufficient cash from our operations to enable us to pay dividends on our shares or redeem our
preferred shares following the payment of expenses. Further, the amount of cash we have available to pay
dividends on our shares or to redeem our preferred shares will not depend solely on our profitability, but is also
subject to the discretion of our directors and the requirements of Marshall Islands law, among other factors.
General risk factors
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Disruptions and security threats to our technology systems could negatively impact our business.
The global COVID-19 pandemic has created significant economic disruption and adversely affected our
business, and is likely to continue to do so in the future.
Risks related to our business as a whole
Acquisitions of new assets and lines of business have formed a significant part of our growth strategy in the past
and are expected to continue to do so. If we are unable to identify suitable acquisition candidates or successfully
integrate the businesses or assets we acquire, our growth strategy may not succeed.
We intend to seek acquisition opportunities both to expand into new lines of business and to enhance our position in
our existing lines of business. This may entail the acquisition of new businesses, assets to contribute to our existing lines of
business, including new or secondhand vessels and power generation assets, or both. However, our ability to do so will
depend on a number of factors, including our ability to:
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obtain debt or equity financing that we may need to complete proposed acquisitions;
identify suitable acquisition candidates;
negotiate appropriate acquisition terms; and
complete the proposed acquisitions.
If we fail to achieve any of these steps, our growth strategy may not be successful, which could materially harm our
business, results of operations and financial condition.
Acquisitions involve numerous risks, including risks related to integration, and we may not realize the anticipated
benefits of our acquisitions. Acquisitions may also result in significant integration costs and expose us to
significant unanticipated liabilities.
Acquisitions involve numerous risks, potential difficulties in the assimilation of the operations, systems, controls,
technologies, personnel, services and products of an acquired company, the potential loss of key employees, customers and
distributors of an acquired company and the diversion of our management’s attention from other business concerns. We
may not accurately anticipate all of the changing demands that any future acquisition may impose on our management, our
operational and management information systems and our financial systems. The failure to successfully integrate acquired
businesses or assets in a timely manner, or at all, could have an adverse effect on our business, financial condition and
results of operations. In addition, the anticipated benefits of an acquisition may not be realized fully or at all, or may take
longer to realize than we expect. For example, in connection with our acquisition of APR Energy, we have been required to
record non-cash impairment charges related to goodwill, as a result of strategic repositioning contemplated subsequent to
the acquisition. Integration efforts associated with our acquisitions may require significant capital and operating expense.
Such expenses may include information technology integration fees, legal compliance costs, facility closure costs and other
restructuring expenses. Significant unanticipated expenses associated with integration activities may materially harm our
business, financial condition and results of operations. If we are not able to realize the anticipated benefits and synergies
expected from our acquisitions within a reasonable time, our business, financial condition and results of operations may be
materially adversely affected.
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We may underestimate or fail to discover liabilities relating to acquisitions during our due diligence investigations,
and we, as the successor owner of an acquired company, might be responsible for those liabilities. Such liabilities could
include employment, retirement or severance-related obligations under applicable law or other benefits arrangements, legal
claims, tax liabilities, warranty or similar liabilities to customers, product liabilities and personal injury claims, claims
related to infringement of third party intellectual property rights, environmental liabilities and claims by or amounts owed
to vendors or other third parties. The indemnification and warranty provisions in our acquisition agreements may not fully
protect us from the impact of undiscovered liabilities. Indemnities or warranties are often limited in scope, amount or
duration, and may not fully cover the liabilities for which they were intended. The liabilities that are not covered by the
limited indemnities or warranties could have a material adverse effect on our business, financial condition and results of
operations.
We depend on our key personnel and changes in our management team may adversely affect our operations.
Over the last several years, we have experienced significant turnover and repeated changes in our senior
management, as well as in the senior management of our two wholly owned subsidiaries, Seaspan and APR Energy. While
we expect to engage in an orderly transition process as we integrate newly appointed personnel, we face a variety of risks
and uncertainties relating to this transition, including diversion of management attention from business concerns, loss of
institutional knowledge and failure to retain other key personnel. These risks and uncertainties could result in operational
and administrative inefficiencies and added costs, which could adversely impact our business and results of operations.
Our future success depends to a significant extent upon our ability to identify, hire, develop, motivate and retain key
personnel, including our senior management and skilled employees. Competition for highly qualified professionals is
intense. If key employees depart, it could prevent or delay the implementation and completion of our strategic objectives,
divert management’s attention or adversely affect our ability to manage our business effectively and, as a result, our
business, results of operations and financial condition may be adversely affected.
Risks related to our containership business
We derive our charter revenue from a limited number of customers. The loss of any one customer or our long-term
charters that we have with them, further increases in the number of vessels on short-term charter or any material
decrease in payments under our customer contracts could materially harm our business, results of operations and
financial condition.
As of December 31, 2021, we had eight customers. The following table shows the number of vessels in our
operating fleet that were chartered to such customers and the percentage of our consolidated revenue attributable to the
charters with such customers for the year ended December 31, 2021:
Customer
COSCO
Yang Ming Marine
ONE
Other
Number of Vessels in our
Operating Fleet Chartered
to Such Customer
Percentage of Total Revenue
for the Year Ended
December 31, 2021
28
15
23
67
133
29.9 %
15.2 %
15.5 %
39.4 %
100.0 %
Under some circumstances, we could lose a time charter or payments under the charter if:
•
•
•
the customer fails to make charter payments because of financial inability or distress, disagreements with us,
defaults on a payment or otherwise;
at the time of delivery, the vessel subject to the time charter differs in its specifications from those agreed upon
under the shipbuilding contract; or
the customer exercises certain limited rights to terminate the charter, including (1) if the ship fails to meet
certain guaranteed speed and fuel consumption requirements and we are unable to rectify the situation or
otherwise reach a mutually acceptable settlement and (2) under some charters if the vessel is off-hire or
unavailable for operation for certain reasons for a specified period of time or if delivery of a newbuilding vessel
is delayed for a prolonged period of time.
The majority of our vessels are chartered under long-term charters, and customer payments are the source of nearly
all of our operating cash flow. An over-supply of containership capacity and low freight rates have resulted in liner
companies (including some of our customers) incurring losses in past business cycles. A reduction in cash flow resulting
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from low freight rates, a reduction in borrowing bases under reserve-based credit facilities, a limited or lack of availability
of debt or equity financing, or a combination of such events, may reduce the ability of our customers to make charter
payments to us. For example, in 2016, Hanjin Shipping terminated the charters for seven of our vessels after it filed for
bankruptcy, resulting in lost revenues due to off-hire. If we lose one of our large liner customers due to financial distress,
bankruptcy or certain other events, such circumstance could likely lead to significant reductions in our revenues,
commercial disputes, receivable collection issues, and other negative consequences that could have a material adverse
impact on our results of operations, financial condition and cash flows.
Further, as liner companies (including our existing customers) consolidate through merger, joint ventures or
alliances, our risk relative to the concentration of our customers may increase and they may also seek to renegotiate the
rates payable for the remaining terms of their charters. The loss of any of these long-term charters, further increases in the
number of vessels on short-term charters or any material decrease in payments under our customer contracts could
materially harm our business, results of operations and financial condition.
A decrease in the export of goods from the regions served by our customers, including that caused by the
maintenance or escalation of trade protectionism, could materially harm our business.
Governments have used, and may continue to use, trade barriers in order to protect their domestic industries against
foreign imports, or for other purposes. Most of our containership customers’ business revenue is derived from the shipment
of goods from the Asia Pacific region, primarily China. In recent years, increased trade protectionism affecting China, as
well as other markets our customers serve, has caused increases in the cost of goods exported, the length of time required to
deliver goods and the risks associated with exporting goods as well as a decrease in the quantity of goods shipped.
China’s import and export of goods may continue to be negatively affected by trade protectionism, specifically the
ongoing U.S.-China trade dispute, which has been characterized by escalating tariffs between the U.S. and China, and has
also impacted trade relations among other countries. While a trade agreement was reached between China and the U.S. in
January 2020 aimed at easing the dispute, there can be no assurance that there will not be any further escalation.
In addition, the Chinese government has implemented economic policies aimed at increasing domestic consumption
of Chinese-made goods, which may have the effect of reducing the supply of goods available for export and may, in turn,
result in decreased demand for cargo shipping.
A general economic downturn, either globally or affecting the Asia Pacific region, Europe, or the United States
specifically, could also have the effect of reducing the supply of Chinese-made goods available for export or the demand
for such goods.
Any reduction in or hindrance to the output of China-based exporters, whether the result of tariffs, other government
policies, or other factors, could negatively our customers’ business, and in turn could materially harm our business, results
of operations and financial condition.
On January 31, 2020, following an affirmative vote by national referendum, the United Kingdom (the “U.K.”)
withdrew from the European Union (the “EU”), an event commonly referred to as “Brexit.” In December 2020, the EU
and the U.K. agreed a trade deal, which went into effect on January 1, 2021. While the trade agreement provides for tariff-
free trade in goods and limited mutual market access in services, some specifics of the deal related to financial services
have not been agreed upon. Additionally, the end of free movement could significantly disrupt the exchange of people and
services between the U.K. and the EU, resulting in the imposition of impediments to trade.
Any increased trade barriers or restrictions on global trade resulting from Brexit could harm our customers’ business
and in turn could materially harm our business, results of operations and financial condition.
The profitability and growth of our containership business is subject to world and regional demand for
containership chartering.
The container shipping industry is both dynamic and volatile in terms of charter hire rates and profitability.
Containership charter rates have fluctuated significantly in the past and are expected to continue to fluctuate in the future.
Fluctuations in containership charter rates result from changes in the supply and demand for vessel capacity, which are
driven by global fleet capacity and utilization and changes in the supply and demand for the major products internationally
transported by containerships. The factors affecting the supply and demand for containerships are outside of our control,
and the nature, timing and degree of changes in industry conditions are largely unpredictable.
Factors that influence demand for containership capacity include, among others:
•
•
supply and demand for products suitable for shipping in containers;
changes in global production of products transported by containerships;
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•
•
•
•
seaborne and other transportation patterns, including the distances over which container cargoes are transported;
global and regional economic and political conditions, including the COVID-19 pandemic and the current
conflict between Russia and Ukraine;
developments in international trade; and
environmental and other regulatory developments;
Factors that influence the supply of containership capacity include, among others:
•
•
•
•
•
•
•
•
•
the number of vessels that are out of service;
the number of newbuilding orders and deliveries;
the extent of newbuilding vessel deferrals;
the scrapping rate of containerships;
newbuilding prices and access to capital;
charter rates and the price of steel and other raw materials;
changes in environmental and other regulations that may limit the useful life of containerships;
the number of containerships that are slow-steaming or extra slow-steaming to conserve fuel; and
port and canal infrastructure and congestion.
Our ability to recharter our containerships upon the expiration or termination of their current time charters and the
charter rates under any renewal or replacement charters will depend upon, among other things, the then current state of the
containership market. If charter rates are low when our existing time charters expire, we may not be able to recharter our
vessels at profitable rates or at all, which could materially harm our business, results of operations and financial condition.
Should the COVID-19 pandemic continue for an extended period of time, with significant negative impact on global
growth and overall containerized volumes, there is a risk that vessels with expiring charter contracts will not be renewed or
renewed at lower rates.
Containership values and charter rates may fluctuate substantially over time.
Containership values can fluctuate substantially over time due to a number of different factors, including, but not
limited to:
•
•
•
•
prevailing economic conditions in the market in which the containership trades;
a substantial or extended decline in world trade;
increases or decreases in containership capacity; and
the cost of retrofitting or modifying existing ships, as a result of technological advances in vessel design or
equipment, changes in applicable environmental or other regulations or standards, or otherwise.
If a charter terminates, we may be unable to re-deploy the vessel at attractive rates, or at all, and rather than continue
to incur costs to maintain and finance the vessel, may seek to dispose of it. Our inability to dispose of the containership at a
reasonable price, or at all, could result in a loss on its sale. As of December 31, 2021, we have five vessels coming off
charter in 2022. For our vessels that are or will be off-charter, there is no assurance that replacement charters will be
secured and if secured, at what rates or for what duration. If replacement charters are not secured on satisfactory terms, it
could materially harm our business, results of operations, financial condition and ability to pay dividends on our equity
securities.
If a more active short-term or spot containership market develops, we may have more difficulty entering into long-
term, fixed-rate time charters and our existing customers may begin to pressure us to reduce charter rates.
One of the principal strategies of our containership business is to enter into long-term, fixed-rate time charters. As
more vessels become available for the short-term or spot market, we may have difficulty entering into additional long-term,
fixed-rate time charters for our vessels due to the increased supply of vessels. As a result, our cash flow may be subject to
instability in the long-term.
A more active short-term or spot containership market may require us to enter into charters based on changing
market prices, as opposed to contracts based on a long-term, fixed-rate, which could result in a decrease in our cash flow in
periods when the market price for containerships is depressed or insufficient funds are available to cover our financing
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costs for related vessels. In addition, the development of an active short-term or spot containership market could affect
rates under our existing time charters as our current customers may begin to pressure us to reduce our rates. Besides the
risk of charter rate fluctuations, there is also the inherent risks of lost revenue due to idling vessels and/or additional
mobilization costs in between short-term charters. This variability in our cash flow and earnings could materially harm our
business, results of operations and financial condition.
The business and activity levels of shipbuilders and other third parties with which we do business, and their
respective abilities to fulfill their obligations under agreements with us, may be hindered by any deterioration in the
shipping industry, credit markets or other negative developments.
Shipbuilders that we engage to construct newbuild vessels may be affected by future instability of the financial
markets and other market conditions or developments, including the fluctuating price of commodities and currency
exchange rates and global disruptions to markets, supply chains and shipbuilders' operations, such as those caused by
COVID-19 and the current Russia-Ukraine conflict. In addition, the refund guarantors under shipbuilding contracts (which
are banks, financial institutions and other credit agencies that guarantee, under certain circumstances, the repayment of
installment payments we make to the shipbuilders) may also be negatively affected by adverse market conditions and, as a
result, may be unable or unwilling to meet their obligations due to their own financial condition. If our shipbuilders or
refund guarantors are unable or unwilling to meet their obligations to us, this could materially harm our business, results of
operations and financial condition.
Damage to our reputation or industry relationships within the containership industry could harm our business.
Our operational success and our ability to grow within the containership industry depends significantly upon our
performance of technical services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance,
assistance with regulatory compliance and financial services). Our business will be harmed if we fail to perform these
services. For example, a vessel could go off hire, which could in turn impact our customers’ ability to perform their
contractual obligations to cargo interests or other third parties. Our ability to compete for and to enter into new charters and
expand our relationships with our customers depends upon our reputation and relationships in the shipping industry. If we
suffer material damage to our reputation or relationships, it may harm our ability to, among other things:
•
•
•
•
•
renew existing charters upon their expiration;
obtain new charters;
successfully interact with shipyards;
dispose of vessels on commercially acceptable terms;
obtain financing on commercially acceptable terms;
• maintain satisfactory relationships with our customers and suppliers; or
•
grow our business.
If our ability to do any of the things described above is impaired, it could materially harm our business, results of
operations and financial condition.
The containership industry is highly competitive, and we may not be able to expand relationships with existing
customers, establish relationships with new customers and obtain new time charters.
The process of obtaining new time charters is highly competitive and generally involves an intensive screening
process and competitive bids, and often extends for several months in regard to newbuilding containerships. Containership
charters are awarded based upon a variety of factors relating to the vessel operator, including, among others:
•
•
•
•
•
•
•
shipping industry relationships and reputation for customer service and safety;
container shipping experience and quality of ship operations, including cost effectiveness;
quality and experience of seafaring crew;
the ability to finance containerships at competitive rates and the shipowner’s financial stability generally;
relationships with shipyards and the ability to get suitable berths when needed;
construction management experience, including the ability to obtain on-time delivery of new ships according to
customer specifications;
willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for
force majeure events; and
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•
competitiveness of the bid in terms of overall price.
Competition for providing new containerships for chartering purposes comes from a number of experienced
shipping companies, including direct competition from other independent charter owners and indirect competition from
state-sponsored and other major entities with their own or leased fleets. Some of our peers have significantly greater
financial resources than we do and may be able to offer better charter rates. Some of our peers have entered into joint
ventures to charter their containerships, and may be able to better satisfy customer demands. An increasing number of
marine transportation companies have entered the containership sector, including many with strong brand recognition and
extensive resources and experience in the marine transportation industry. This increased competition may cause greater
price competition for time charters. As a result of these factors, we may be unable to expand our relationships with existing
customers or develop relationships with new customers in order to secure charters on a profitable basis, if at all, which
could materially harm our business, results of operations and financial condition. These risks will be heightened to the
extent that we enter into newbuilding or other vessel acquisition contracts prior to entering into charters for such vessels.
We will be required to make substantial capital expenditures to complete the acquisition of our newbuilding
containerships and any additional vessels we acquire in the future, which may result in increased financial leverage
or dilution of our equity holders’ interests or decreased ability to redeem our preferred shares.
As at December 31, 2021, we were contracted to purchase 67 newbuild containerships with scheduled delivery dates
through 2024. The total purchase price of the 67 containerships is estimated to be approximately $7.3 billion and while we
have secured financing for all such acquisitions, not all of these financings are available prior to delivery. Further, we may
add to our newbuild program. The acquisition of additional newbuild or existing containerships or businesses will require
significant additional capital expenditures.
To fund existing and future capital expenditures, we intend to use cash from operations, incur borrowings, enter into
sale-leaseback or other financing arrangements, or use a combination of these methods. Use of cash from operations may
reduce cash available to pay dividends to our shareholders, including holders of our preferred shares, or to redeem our
preferred shares. Incurring additional debt may significantly increase our interest expense and financial leverage, and under
certain of our debt facilities there are maximum loan to value ratios at time of advance that may restrict our ability to
borrow. Our ability to obtain or access bank financing for future debt may be limited by our financial condition at the time
of any such financing and covenants in our credit facilities, as well as by adverse market conditions. To the extent that we
enter into newbuilding or other vessel acquisition contracts prior to entering into charters for such vessels, our ability to
obtain new financing for such vessels may be limited and we may be required to fund all or a portion of the cost of such
acquisitions with our existing capital resources. Our failure to obtain funds for our capital expenditures at attractive rates,
if at all, could materially harm our business, results of operations and financial condition.
Delays in deliveries of our newbuilding containerships could materially harm our business, results of operations
and financial condition.
The delivery of the containerships we have ordered, or any other containerships we may order, could be delayed,
which would delay our receipt of revenue under the charters for the containerships and, if the delay is prolonged, could
permit our customers to terminate the newbuilding containership charter. The occurrence of any of such events could
materially harm our business, results of operations and financial condition.
The delivery of the containerships could be delayed because of:
•
•
•
•
•
•
•
•
•
•
work stoppages or other labor disturbances that disrupt any of the shipyards’ operations;
quality or engineering problems;
changes in governmental regulations or maritime self-regulatory organization standards;
bankruptcy or other financial crisis of any of the shipyards;
a backlog of orders at any of the shipyards;
hostilities, or political or economic disturbances in South Korea or China, where the containerships are being
built;
weather interference or catastrophic event, such as a major earthquake, fire or tsunami;
disruptions due to an outbreak of disease, including COVID-19;
our requests for changes to the original containership specifications;
shortages of or delays in the receipt of necessary construction materials, such as steel, or key parts that are
supplied by third parties to the shipyard, such as engines;
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•
•
•
•
our inability to obtain requisite permits or approvals;
a dispute with any of the shipyards;
our failure to obtain financing for the vessels, or any failure of our banks to provide debt financing; or
a disruption to the financial markets.
In addition, each of the shipbuilding contracts for our newbuilding containerships contains “force majeure”
provisions whereby the occurrence of certain events could delay delivery or possibly result in termination of the contract. If
delivery of a containership is materially delayed or if a shipbuilding contract is terminated, it could materially harm our
business, results of operations and financial condition.
Because each existing and newbuilding vessel in our contracted fleet is or will be built in accordance with standard
designs and uniform in all material respects to other vessels in its class, any material design defect likely will affect
all vessels in such class.
Each existing and newbuilding vessel in our fleet is built, or will be built, in accordance with standard designs and
uniform in all material respects to other vessels in its class. As a result, any latent design defect discovered in one of our
vessels will likely affect all of our other vessels in that class. For certain newbuild vessels, including the two 24,000 TEU
class containerships and the LNG dual fuel containerships, this is the first time we are commissioning vessels of this size or
specification, and therefore may be more susceptible to additional design and operational challenges. Any disruptions in the
operation of our vessels resulting from these defects, and particularly if such disruptions would constitute grounds for a
customer to cancel or terminate a charter, could materially harm our business, results of operations and financial condition.
Excess supply of global containership capacity may limit our ability to operate our vessels profitably.
While the size of the containership order book has declined from the historic highs reached in mid-2008, as of
March 1, 2022, newbuilding containerships representing approximately 25.3% of the existing global fleet capacity as of
that date were under construction. Notwithstanding that some orders may be cancelled or delayed, the size of the orderbook
may result in an increase in the size of the world containership fleet over the next few years. If it does, it may lead to a
reduction in charter rates or prolong the period during which low charter rates prevail, which in turn may mean that upon
the expiration or termination of our containerships’ current time charters, we may only be able to recharter our
containerships at unprofitable rates, if at all. Until such capacity is fully absorbed by the container shipping market, the
industry will continue to experience downward pressure on freight rates and such prolonged pressure could have a material
adverse effect on our financial condition, results of operations and liquidity.
We may be unable to attract and retain qualified, skilled crew necessary to operate our vessels or may pay rising
crew and other vessel operating costs.
Acquiring and renewing long-term time charters with leading liner companies depends on a number of factors,
including our ability to man our containerships with suitably experienced, high-quality masters, officers and crews. Our
success will depend in large part on our ability to attract, hire, train and retain highly skilled and qualified personnel. In
recent years, the limited supply of and the increased demand for well-qualified crew, due to the increase in the size of the
global shipping fleet, has created upward pressure on crewing costs, which we bear under our time charters. Changing
conditions in the home country of our seafarers, such as increases in the local general living standards, changes in taxation
or military conflict such as the current Russia-Ukraine conflict (Ukrainian seafarers representing approximately 17% of our
2,615 seafarers presently onboard our vessels), may make serving at sea less appealing or impossible and thus further
reduce the supply of crew and/or increase the cost of hiring competent crew. The challenges experienced by seafarers and
shipping companies during the COVID-19 pandemic has also led many seafarers to seek employment ashore. Unless we
are able to increase our hire rates to compensate for increases in crew costs and other vessel operating costs such as
insurance, repairs and maintenance, and lubricants, our business, results of operations, financial condition and our
profitability may be adversely affected. In addition, any inability we experience in the future to attract, hire, train and retain
a sufficient number of qualified employees could impair our ability to manage, maintain and grow our containership
business. We have contracted to purchase 67 newbuild containerships, for which we will need to recruit approximately
2000 crew. If we cannot attract and retain sufficient numbers of quality onboard seafaring personnel, our fleet utilization
will decrease, which could also have a material adverse effect on our business, results of operations and financial condition,
as well as our cash flows, including cash available for dividends to our stockholders.
Increased technological innovation in competing vessels could reduce our charter hire rates and the value of our
vessels.
The charter rates and the value and operational life of a vessel are determined by a number of factors, including the
vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to be
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loaded and unloaded quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass
through canals and straits. Physical life is related to the original design and construction, maintenance and the impact of the
stress of operations. If new ship designs currently promoted by shipyards as being more fuel efficient perform as promoted,
or if new containerships are built in the future that are more efficient or flexible or have longer physical lives than our
vessels, competition from these more technologically advanced containerships could adversely affect the amount of charter
hire payments we receive for our vessels once their initial charters end and the resale value of our vessels. As a result, our
business, results of operations and financial condition could be materially harmed.
Risks inherent in the operation of ocean-going vessels could materially harm our reputation, business, results of
operation and financial condition.
The operation of ocean-going vessels carries inherent risks, including dangers associated with potential marine
disasters, environmental accidents, collisions, cargo and property losses or damage, and business interruptions caused by
mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather
conditions. Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in
the delivery of cargo, loss of revenue from or termination of charter contracts, governmental fines, penalties or restrictions
on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. The
involvement of our vessels in an environmental disaster could harm our reputation as a safe and reliable vessel owner and
operator. Any of these circumstances or events could materially harm our business, results of operations and financial
condition.
Piracy is an inherent risk in the operation of ocean-going vessels and has historically affected vessels trading in
certain regions of the world. We may not be adequately insured to cover losses from these incidents, which could
materially harm our business, results of operations and financial condition. In addition, crew costs, including for employing
onboard security guards, could increase in such circumstances. Any of these events, or the loss of use of a vessel due to
piracy, may harm our customers, impairing their ability to make payments to us under our charters, which could materially
harm our business, results of operations and financial condition.
We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs
and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with
contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our
crew, we may face governmental or other regulatory claims, which could have an adverse effect on our business, results of
operations and financial condition.
We maintain insurance for our fleet against risks commonly insured against by vessel owners and operators,
including hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes
environmental damage and pollution insurance). Although we seek to obtain appropriate insurance coverage, we cannot
guarantee that such insurance coverage is, or will be, sufficient to cover all of the possible losses that would normally be
covered by such policies. If we were to incur a serious uninsured loss, the resulting costs could have a material adverse
effect on our business, financial condition and results of operations. Furthermore, we do not carry loss-of-hire insurance,
which covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled
dry-docking due to damage to the vessel from accidents. Accordingly, any loss of a vessel or extended vessel off-hire, due
to an accident or otherwise, could materially harm our business, results of operations and financial condition.
Over the long-term, we will be required to make substantial capital expenditures to preserve the operating capacity
of our fleet.
We must make substantial capital expenditures over the long-term to preserve the operating capacity of our fleet,
including to, among other things, meet future environmental regulatory standards. If we do not retain funds in our business
in amounts necessary to preserve the operating capacity of our fleet, over the long-term, our fleet and related charter
revenues may diminish, and we will not be able to continue to refinance our indebtedness. As our fleet ages, we will likely
need to retain additional funds, on an annual basis, to provide reasonable assurance of maintaining the operating capacity of
our fleet over the long-term. To the extent we use or retain available funds to make capital expenditures to preserve the
operating capacity of our fleet, there will be less funds available to pay interest and principal on our Notes, pay dividends
on our equity securities or redeem our preferred shares.
The aging of our fleet may result in increased operating costs in the future, which could adversely affect our
earnings.
In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. Our
current operating fleet of 132 containerships as of March 10, 2022, had an average age (weighted by TEU capacity) of
eight years. As our fleet ages, we may incur increased costs. Older vessels may require longer and more extensive dry-
dockings, resulting in more off-hire days and reduced revenue. Older vessels are typically less fuel efficient and more
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costly to maintain than more recently constructed vessels due to improvements in engine technology. In addition, older
vessels are often less desirable to charterers. Governmental regulations, including emissions reductions initiatives, and
safety or other equipment standards related to the age of a vessel may also require expenditures for alterations or the
addition of new equipment to our vessels and may restrict the type of activities in which our containerships may engage.
We cannot assure you that, as our vessels age and environmental regulations continue to tighten, market conditions
will justify such expenditures or will enable us to profitably operate our older vessels.
Our vessels’ mortgagees or other maritime claimants could arrest our vessels, which could interrupt our charterers’
or our cash flow.
If we default under our credit facilities that are secured by mortgages on our vessels, the lenders that hold those
mortgages could arrest some or all of the vessels encumbered by those mortgages and cause them to be sold. We would not
receive any proceeds of such sales unless all amounts outstanding under such indebtedness had been repaid in full. In
addition, crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a
maritime lien against the applicable vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime
lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. In addition, in some jurisdictions,
such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel that is subject to the
claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner.
Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our ships.
The arrest or attachment of one or more of our vessels could interrupt our charterers’ or our business and cash flow and
require the charterers or us or our insurance to pay significant amounts to have the arrest lifted, which could materially
harm our business, results of operations and financial condition.
Risks related to our power generation business
Our competitive position, revenues and asset values could be adversely affected by changes in technology, prices,
industry standards, environmental regulation and other factors.
The markets in which we operate change rapidly because of technological innovations and changes in prices,
industry standards, environmental regulations, customer requirements (including demand for more environmentally
friendly solutions), product introductions and the economic environment. New technology or changes in industry,
environmental regulation and customer requirements may render our existing power generation solutions obsolete,
excessively costly or otherwise unmarketable. As a result, we must continuously enhance the efficiency and reliability of
our existing technologies and seek to develop new technologies to remain at the forefront of industry standards and
customer requirements. If we are unable to introduce and integrate new technologies into our power generation solutions in
a timely and cost-effective manner, our competitive position will suffer and our prospects for growth will be impaired.
Further, if technological advances render our existing power generation assets obsolete or otherwise unmarketable,
competition from third parties offering more technologically advanced solutions could adversely affect our ability to extend
or secure new power purchase contracts and the resale value of our assets. As a result, our business, results of operations
and financial condition could be materially harmed.
The delivery of our power generation solutions to our customers and our performance under our customer
contracts may be adversely affected by problems related to our reliance on third-party contractors and suppliers.
Our customer contracts require services, equipment or software which we subcontract to or source from third parties.
The delivery of products or services which are not in compliance with the requirements of the subcontract, or the late
supply of products and services, can cause us to be in default under our customer contracts. To the extent we are not able to
transfer all of the risk or be fully indemnified by third-party contractors and suppliers, we may be subject to claims by our
customers as a result of problems caused by a third party that could have a material adverse effect on our reputation,
business, results of operations and financial condition.
Power plants are inherently dangerous workplaces at which hazardous materials are handled. If we fail to
maintain safe work environments or cause any damage, we could be exposed to significant financial losses, as well
as civil and criminal liabilities.
Our installation, construction, commissioning, operation, maintenance and dismantling activities in connection with
the delivery of our power generation solutions to customers often put our employees and others in close proximity with
large pieces of mechanized equipment, moving vehicles, manufacturing or industrial processes, and heat or liquids stored
under pressure. On most projects and at most facilities, we are responsible for safety and, accordingly, must implement safe
practices and safety procedures. If we fail to design and implement such practices and procedures or if the practices and
procedures we implement are ineffective, our employees and others may become injured and our and others’ property may
become damaged. Unsafe work sites also have the potential to increase employee turnover, increase the cost of a project to
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our customers or the operation of a facility, and raise our operating costs. Any of the foregoing could result in financial
losses, which could have a material adverse impact on our business, financial condition and results of operations.
In addition, our activities in connection with the delivery of our power generation solutions can involve the handling
of hazardous and other highly regulated materials, which, if improperly handled or disposed of, could subject us to cleanup
obligations as well as civil and criminal liabilities. We are also subject to regulations dealing with occupational health and
safety. We maintain functional groups whose primary purpose is to ensure we implement effective health, safety and
environmental work procedures throughout our organization, including construction sites and maintenance sites, the failure
to comply with such regulations could subject us to liability. In addition, we may incur liability based on allegations of
illness or disease resulting from exposure of employees or other persons to hazardous materials that we handle or are
present in our workplaces.
We believe that our safety record is critical to our reputation. Many of our customers require that we meet certain
safety criteria to be eligible to bid for contracts, and many contracts provide for automatic termination or forfeiture of
some, or all, of its contract fees or profit in the event it fails to meet certain measures. As a result, our failure to maintain
adequate safety standards could result in reduced profitability or the loss of projects or clients and could have a material
adverse impact on our business, financial condition and results of operations.
Unauthorized use of our proprietary technology by third parties may reduce the value of our power generation
services and brand, and impair our ability to compete effectively.
Our power generation business relies on a combination of trade secret and intellectual property laws, non-disclosure
and other contractual agreements and technical measures to protect our proprietary rights. These measures may not be
sufficient to protect our technology from third-party infringement and, notwithstanding any remedies available, could
subject us to increased competition or cause us to lose market share. In addition, these measures may not protect us from
the claims of employees and other third parties. We also face risks with respect to the protection of our proprietary
technology because the markets where our services are sold include jurisdictions that provide less protection for intellectual
property than is provided under the laws of the United States or the European Union. Unauthorized use of our intellectual
property could weaken our competitive position, reduce the value of our services and brand, and materially harm our
business, financial condition and results of operations.
Legal, regulatory and litigation risks
We are subject to potential claims and litigation from customers, suppliers, and third parties. Alternatively, we may
find it necessary to bring litigation against others. Litigation and other avenues of resolving claims, can be costly,
time-consuming and result in adverse outcomes.
The nature of our operations in both in the containership and energy generation businesses exposes us to potential
liability claims and contract disputes, and we may, from time to time, be involved in various litigation matters.
Our power generation projects generally involve complex engineering, procurement and construction management.
As such, claims involving customers, suppliers and subcontractors may be brought against us, and by us, in connection
with our project contracts. Claims that may be brought against us include back charges for alleged defective or incomplete
work, breaches of warranty and/or late completion of the project and claims for cancelled projects. The claims and back
charges can involve actual damages, as well as contractually agreed upon liquidated sums. Claims brought by us against
customers include claims for additional costs incurred in excess of current contract provisions arising out of project delays
and changes in the previously agreed scope of work. Claims between us and our suppliers, subcontractors and vendors
include any of those described above. These project claims, if not resolved through negotiation, are often subject to lengthy
and expensive litigation or arbitration proceedings.
Additionally, we engage in operations where failures in design, construction or systems can result in substantial
injury or damage to third parties. We have been, and may in the future, be named as a defendant in legal proceedings where
parties may make a claim for damages or other remedies with respect to our projects or other matters.
These claims generally arise in the normal course of our business. When or if it is determined that we have liability
for damages, we may not be covered by insurance or, if covered, the amount of these liabilities may exceed our policy
limits.
We are also subject to the risk of adverse claims and litigation alleging our infringement of the intellectual property
rights of others.
The resolution of claims, regardless of the merits or ultimate outcome, may entail significant costs and could divert
management's attention from the operation of our business, which could materially adversely impact our business, financial
condition and results of operations.
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Failure to comply with applicable anti-bribery and corruption laws and regulations could result in fines and
criminal penalties, terminations of charters, financing arrangements and other significant contracts, and a material
adverse effect on our business.
We operate in a number of countries throughout the world, including countries where there is an elevated risk of
corruption. We are committed to doing business in accordance with applicable anti-bribery and corruption laws and have
adopted a Standards of Business Conduct Policy which is consistent and in full compliance with the UK Bribery Act 2010
and the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”). We train our personnel concerning anti-bribery and
corruption laws and issues, and also inform our partners, subcontractors, suppliers, agents and others who work for us or on
our behalf that they must comply with anti-bribery and corruption law requirements. We are subject, however, to the risk
that we, our affiliated entities or our or their respective officers, directors, employees and agents, or the third parties with
which we do business, may take actions determined to be in violation of such anti-bribery and corruption laws, including
the UK Bribery Act and FCPA. Any violation of anti-bribery and corruption laws and regulations could result in substantial
fines, sanctions, civil and/or criminal penalties, as well as breaches of our material contracts, which would have a material
adverse effect on our business, financial condition and results of operations. In addition, actual or alleged violations could
damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged
violations is expensive and can consume significant time and attention of our senior management.
If we are found to be in violation of sanctions, there could be a material adverse effect on our reputation,
business, financial condition or results of operations, or the market for our common shares.
By virtue of our listing on the New York Stock Exchange and our debt covenants, we are subject to U.S. and EU
economic sanctions and trade embargo laws and regulations as well as equivalent economic sanctions laws of other
relevant jurisdictions in connection with our activities. The laws and regulations of these different jurisdictions vary in their
application and do not all apply to the same covered persons or proscribe the same activities. In addition, the sanctions and
embargo laws and regulations of each jurisdiction may be amended to increase or reduce the restrictions they impose over
time, and the lists of persons and entities designated under these laws and regulations are amended frequently. Moreover,
most sanctions regimes provide that entities owned or controlled by the persons or entities designated in such lists are also
subject to sanctions. The U.S. and EU have enacted new sanctions programs in recent years. Additional countries or
territories, as well as additional persons or entities within or affiliated with those countries or territories, have been, and in
the future, the target of sanctions. Further, the U.S. has increased its focus on sanctions enforcement with respect to the
shipping sector. Any violation of sanctions and embargo laws and regulations could result in substantial sanctions and
penalties and defaults under our financing and other material contracts, all of which would materially adversely effect our
reputation, business, financial condition and results of operations.
As a result of Russian actions in Ukraine, the U.S., EU and United Kingdom, together with numerous other
countries, have imposed significant sanctions on persons and entities associated with Russia and Belarus, as well as
comprehensive sanctions on certain areas within the Donbas region of Ukraine, and such sanctions apply to entities owned
or controlled by such designated persons or entities. These sanctions adversely affect our ability to trade to this region.
Moreover, a significant number of our crew are Ukrainian. The evolving situation in Ukraine and the sanctions being
imposed may adversely affect our ability to hire and/or pay our crew for our vessels.
We are subject to stringent environmental regulation that could require significant expenditures and affect our
operations.
Our business and operations are materially affected by environmental regulation in the form of international,
national, state and local laws, regulations, conventions, treaties and standards in force in jurisdictions in which we do
business, including those governing the management and disposal of hazardous substances and wastes, the cleanup of oil
spills and other contamination, air emissions, water discharges and, in respect of our vessels, ballast water management and
vessel recycling. These regulations require us to obtain regulatory licenses, permits and other approvals and to comply with
the requirements of such licenses, permits and other approvals, which can carry substantial costs. There can be no
assurance that:
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governmental authorities will approve the issuance of such licenses, permits and other approvals or that such
licenses, permits or approvals will be timely renewed or sufficient for our operations;
in respect of our power generation business, public opposition will not result in delays, modifications to or
cancellation of any proposed project or license; or
laws or regulations will not change or be interpreted in a manner that increases our costs of compliance or
materially or adversely affects our operations or plants.
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We can give no assurance that we will continue to be in compliance with such regulations or material liabilities and
expenses associated with compliance issues in the future. Violation of such regulations may give rise to significant liability,
including fines, damages, fees and expenses, as well as closures of our power plants, detention of our vessels or denial of
access to ports. Generally, relevant governmental authorities are empowered to clean up and remediate releases of
environmental damage and to charge the costs of such remediation and cleanup to the owners or occupiers of the property,
the persons responsible for the release and environmental damage, the producer of the contaminant and other parties, or to
direct the responsible parties to take such action. These governmental authorities may also impose a tax, financial
assurance requirements or other liens on the responsible parties to secure the parties' reimbursement obligations. We could
also become subject to personal injury or property damage claims relating to the release of hazardous materials associated
with our operations.
Environmental regulation has changed rapidly in recent years, and it is possible that we will be subject to even more
stringent environmental standards in the future. Such environmental standards may affect the resale value or useful lives of
our assets, require modifications to our vessels or power generation assets or operational changes or restrictions, or lead to
decreased availability of insurance coverage for environmental matters. We cannot predict the amounts of any increased
capital expenditures or any increases in operating costs or other expenses that we may incur to comply with applicable
environmental or other regulatory requirements. For additional information about the environmental regulations to which
we are subject, please read “Item 4. Information on the Company—B. Business Overview—Environmental and Other
Regulations”.
Climate change and greenhouse gas restrictions may adversely affect our operating results.
Many governmental bodies have adopted, or are considering the adoption of treaties or national, state and local laws,
regulations and frameworks to reduce greenhouse gas emissions due to concerns about climate change. The Paris
Agreement, in which almost 200 countries pledged to reduce their greenhouse gas emissions and set firm target reduction
goals, was signed in 2016. Recently, the push for both governments and businesses to adopt zero net carbon targets has
been reinvigorated, with the COP26 summit in November 2021 resulting in the Glasgow Climate Pact, pursuant to which
over 140 countries pledged to reach net-zero carbon emissions. Additionally, more than 450 private firms, managing $130
trillion, approximately 40% of the world’s financial assets, pledged to reach net-zero carbon emissions by 2050, and to set
interim goals for 2030. Compliance with laws, regulations and obligations relating to climate change, including those
promulgated as a result of such international pledges and negotiations, as well as the efforts by non-governmental
organizations and investors, could increase our costs related to operating and maintaining our assets, and require us to
install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions, or administer and
manage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be
adversely affected. For example, the IMO has introduced initiatives to reduce greenhouse emissions from the shipping
industry with specified targets using the Energy Efficiency Existing Vessel Index (“EEXI”) and a Carbon Intensity
Indicator (“CII”) . It could adversely affect us if we fail to adopt and implement EEXI and/or CII measures for our vessels.
The European Union has also adopted a set of measures to reduce greenhouse gas emissions from the shipping industry and
is planning to implement an Emission Trading Scheme (“ETS”) which may require us to purchase carbon emission credits
for voyages in and out of Europe. This may have a significant cost impact to us if our customers do not assume
responsibility for these increased administrative and compliance costs once the proposals are enacted.
Compliance with safety and other vessel requirements imposed by flag states may be costly and could harm our
business, results of operations and financial condition.
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its
country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable
rules and regulations of the country of registry of the vessel and the IMO, International Convention for the Safety of Life at
Sea (“SOLAS”). In addition, a vessel generally must undergo annual, intermediate and special surveys to maintain
classification society certification. If any vessel does not maintain its class or fails any annual, intermediate or special
survey, the vessel will be unable to trade between ports and will be unemployable and we could be in violation of certain
covenants in our credit facilities and our lease agreements. This could materially harm our business, results of operations
and financial condition.
Increased inspection procedures, tighter import and export controls and new security regulations could cause
disruption of our business.
International containership traffic is subject to security and customs inspection and related procedures in countries of
origin, destination and trans-shipment points. These inspections can result in cargo seizure, delays in the loading,
offloading, trans-shipment or delivery of containers and the levying of customs duties, fines or other penalties against
exporters or importers and, in some cases, customers.
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Since the events of September 11, 2001, U.S. and Canadian authorities have increased container inspection rates.
Government investment in non-intrusive container scanning technology has grown and there is interest in electronic
monitoring technology that would enable remote, centralized monitoring of containers during shipment to identify
tampering with or opening of the containers. Also, additional vessel security requirements have been imposed, including
the installation of security alert and automatic identification systems on board vessels. It is unclear what changes, if any, to
the existing inspection and security procedures will ultimately be proposed or implemented in future, or how any such
changes will affect the industry. Such changes may impose additional financial and legal obligation on carriers and may
render the shipment of certain types of goods by container uneconomical or impractical. Additional costs that may arise
from current or future inspection procedures may not be fully recoverable from customers through higher rates or security
surcharges. Any of these effects could materially harm our business, results of operation and financial condition.
The operation of our vessels is also affected by the requirements set forth in the International Ship and Port Facilities
Security Code (the “ISPS Code”). The ISPS Code requires vessels to develop and maintain a ship security plan that
provides security measures to address potential threats to the security of ships or port facilities. Although each of our
containerships is ISPS Code-certified, any failure to comply with the ISPS Code or maintain such certifications may
subject us to increased liability and may result in denial of access to, or detention in, certain ports. Furthermore,
compliance with the ISPS Code requires us to incur certain costs. Although such costs have not been material to date, if
new or more stringent regulations relating to the ISPS Code are adopted by the IMO and the flag states, these requirements
could require significant additional capital expenditures or otherwise increase the costs of our operations.
Governments could requisition our containerships during a period of war or emergency, resulting in loss of
earnings.
All of our vessels are registered and flagged in Hong Kong. The government could requisition for title or seize our
containerships. Requisition for title occurs when a government takes control of a ship and becomes the owner. Also, a
government could requisition our containerships for hire. Requisition for hire occurs when a government takes control of a
ship and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or
emergency. Government requisition of one or more of our containerships could materially harm our business, results of
operations and financial condition.
Our power generation business is subject to extensive governmental regulation in a number of different
jurisdictions, and its inability to comply with existing regulations or requirements or changes in applicable
regulations or requirements may have a negative impact on our business, results of operations or financial
condition.
We are subject to extensive regulation of our power generation business in the United States, Argentina,
Bangladesh, Brazil and Mexico and in each of the other countries in which we operate. Such laws and regulations require
licenses, permits and other approvals to be obtained in connection with our activities. This regulatory framework imposes
significant actual, day-to-day compliance burdens, costs and risks on us. In particular, the power plants that we install,
commission, operate, maintain and demobilize are subject to strict national, state and local regulations relating to their
development, construction and operation (including, among other things, land acquisition, leasing and use of land, and the
corresponding building permits, landscape conservation, noise regulation, environmental protection and environmental
permits and energy power transmission and distribution network congestion regulations). Non-compliance with such
regulations could result in the revocation of permits, sanctions, fines or even criminal penalties. Compliance with
regulatory requirements may result in substantial costs to our operations that may not be recovered. In addition, we cannot
predict the timing or form of any future regulatory or law enforcement initiatives. Changes in existing energy,
environmental and administrative laws and regulations may materially and adversely affect our business, margins and
investments.
We have operations in emerging markets that could be subject to increased legal and political uncertainties.
Our power generation business operates in a range of international locations, including Argentina, Bangladesh,
Brazil and Mexico, and we expect to expand our operations into new locations in the future, and our containership
operations are heavily concentrated in the Asia Pacific region, particularly China. Accordingly, we face a number of risks
associated with operating in emerging markets. These risks include, but are not limited to, adapting to the regulatory
requirements of such countries, compliance with changes in laws and regulations applicable to foreign corporations, the
uncertainty of judicial processes, and the absence, loss or non-renewal of favorable treaties, or similar agreements, with
local authorities or other government officials, all of which can place disproportionate demands on our management, as
well as significant demands on our operational and financial personnel and business.
A number of other risks are more prevalent than in developed markets, such as:
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social, economic and governmental instability (which has been, and during 2022 will likely continue to be,
exacerbated by COVID-19), civil unrest and, in some cases, regime change and armed conflict;
the possibility of significant amendments to, or changes in, the application of governmental regulations;
the nationalization and expropriation of private property;
payment collection difficulties and general counterparty credit risk;
substantial fluctuations in interest and exchange rates;
changes in the tax framework or the unpredictability of enforcement of contractual provisions; and
imposition of new or additional trade and economic sanctions laws imposed by the U.S. or foreign governments
and other unfavorable interventions or restrictions imposed by public authorities.
We are also exposed to currency control measures and limits on the repatriation of funds in the jurisdictions in
which we do business. For example, our contracts in Argentina are denominated in U.S. dollars and payable in local
currency at the exchange rate on or immediately prior to the payment date. Currency control measures imposed by the
Argentine central bank prohibit companies with intercompany and/or debt arrangements like those of our Argentinian
subsidiary to (a) convert Argentine pesos into U.S. dollars and/or (b) repatriate funds abroad at the official exchange rate.
Consequently, we have entered into Blue Chip swap transactions to mitigate the exchange rate exposure. However, there is
still the possibility that the Argentine central bank or federal government will broaden the scope of pesification measures,
effectively fixing the payment in Argentine pesos using a historical exchange rate, which could have an adverse impact on
our business.
Governments in Latin America and Asia frequently intervene in the economies of their respective countries and
occasionally make significant changes in policy and regulations. Governmental actions in certain Latin American countries
to control inflation and other policies and regulations have often involved, among other measures, price controls, currency
devaluations, capital controls and limits on imports. Although our activities in emerging markets are not concentrated in
any specific country (other than China for Seaspan, and Argentina and Bangladesh for APR Energy), the occurrence of one
or more of these risks in a country or region in which we operate could have a material adverse effect on our business,
financial condition and results of operations, and we can provide no assurance that our future international operations will
remain successful.
The legal system in China has inherent uncertainties that could limit the legal protections available to us, and the
legal and geopolitical risks associated with chartering vessels to Chinese customers, constructing vessels in China
and obtaining financing and insurance from Chinese financial institutions and insurers could materially harm our
business, results of operations and financial condition.
We conduct a substantial amount of business in China and with Chinese counterparties. As of March 10, 2022, a
total of 28 of the 132 vessels in our current fleet were chartered to Chinese customers and in 2021 our revenues from
Chinese customers represented 33.5% of our total revenue from our containership segment. Many of our vessels regularly
call to ports in China. In addition, we have entered into financing arrangements with certain Chinese financial institutions.
The Chinese legal system is based on written statutes and their legal interpretation by the standing Committee of the
National People’s Congress. Prior court decisions may be cited for reference but have limited precedential value. Since
1979, the Chinese government has been developing a comprehensive system of laws and regulations dealing with
economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade.
However, because these laws and regulations are relatively new, and because of the limited volume of published cases and
their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties.
Our vessels that are chartered to Chinese customers are subject to various risks as a result of uncertainties in Chinese
law, including (1) the risk of loss of revenues, property or equipment as a result of expropriation, nationalization, changes
in laws, exchange controls, war, insurrection, civil unrest, strikes or other political risks and (2) being subject to foreign
laws and legal systems and the exclusive jurisdiction of Chinese courts and tribunals.
Although our charterparties and many of our financing arrangements are governed by English law, if we are required
to commence legal proceedings against a customer, a charter guarantor or a lender based in China with respect to the
provisions of a time charter, a time charter guarantee or a credit agreement, we may have difficulties in enforcing any
judgment rendered by an English court (or other non-Chinese court) in China. Similarly, our shipbuilders based in China
provide warranties against certain defects for the vessels that they will construct for us and we have refund guarantees from
Chinese financial institutions for installment payments that we will make to the shipbuilders. Although the shipbuilding
contracts and refund guarantees are governed by English law, if we are required to commence legal proceedings against
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these shipbuilders or against the refund guarantor, we may have difficulties enforcing in China any judgment obtained in
such proceeding.
Such charters, shipbuilding agreements and financing agreements, and any additional agreements that we enter into
with Chinese counterparties, may be subject to new regulations in China that may require us to incur new or additional
compliance or other administrative costs and pay new taxes or other fees to the Chinese government. In addition, China has
enacted a recent tax for non-resident international transportation enterprises engaged in the provision of services of
passengers or cargo, among other items, in and out of China using their own, chartered or leased vessels, including any
stevedore, warehousing and other services connected with the transportation. The recent law and relevant regulations
broaden the range of international transportation companies which may find themselves liable for Chinese enterprise
income tax on profits generated from international transportation services passing through Chinese ports. This tax or
similar regulations by China may reduce our operating results and may also result in an increase in the cost of goods
exported from China and the risks associated with exporting goods from China, as well as a decrease in the quantity of
goods to be shipped from or through China, which would have an adverse impact on our charterers’ business, operating
results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to
renew and increase the number of their time charters with us.
Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities
could affect our vessels chartered to Chinese customers as well as our vessels calling to Chinese ports, our vessels being
built at Chinese shipyards and the financial institutions with whom we have entered into financing agreements, and could
have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows,
including cash available for dividends to our shareholders.
Risks related to tax
We, or any of our subsidiaries, may become subject to income tax in jurisdictions in which we are organized or
operate, including the United States, the United Kingdom, Hong Kong, China and other jurisdictions, which would
reduce our earnings.
We intend that our affairs and the business of each of our subsidiaries will be conducted and operated in a manner
that minimizes income taxes imposed upon us and our subsidiaries. However, there is a risk that we will be subject to
income tax in one or more jurisdictions, including the United States, the United Kingdom, Hong Kong and China, if under
the laws of any such jurisdiction, we or such subsidiary is considered to be carrying on a trade or business there or earn
income that is considered to be sourced there and we do not or such subsidiary does not qualify for an exemption or
reduced taxation under local taxation rules or applicable tax treaties. For example, our mobile power generation segment
operates in jurisdictions around the world and may be subject to corporate income taxes to the extent there is taxable
income generated in such jurisdictions. Please read “Item 4. Information on the Company—B. Business Overview—
Taxation of the Company.”
Changes to tax laws and tax treaties could have an adverse impact on our business, results of operation and
financial condition.
Any change in tax law, interpretation or practice, or in the terms of tax treaties, in a jurisdiction where we are subject
to tax could increase the amount of tax payable by us. In addition, the U.K. government, the Organization for Economic
Co-operation and Development (the “OECD”), and other government agencies in jurisdictions where we do business have
had an extended focus on issues related to the taxation of multinational corporations. Recently, the OECD has published
proposals aimed at reforming the profit allocation and nexus rules for taxing the profits of, and achieving a global
minimum level to taxation for, certain multinational corporations. As a result of the OECD projects and the focus on the
taxation of multi-national corporations, the tax laws in the U.K. and other countries in which we do business could change
on a prospective or retroactive basis, and any such changes could have an adverse impact on our business, results of
operation and financial condition.
U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S.
federal income tax consequences to U.S. shareholders.
A non-U.S. corporation will be treated as a “passive foreign investment company” (“PFIC”) for U.S. federal income
tax purposes in any taxable year for which either (1) at least 75% of its gross income consists of “passive income” or (2) at
least 50% of the average value of the corporation’s assets is attributable to assets that produce, or are held for the
production of, “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gains from the
sale or exchange of investment property, and rents and royalties (other than rents and royalties that are received from
unrelated parties in connection with the active conduct of a trade or business) but does not include income derived from the
performance of services.
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There are legal uncertainties involved in determining whether the income derived from our time chartering activities
constitutes rental income or income derived from the performance of services, including the decision in Tidewater Inc. v.
United States, 565 F.3d 299 (5th Cir. 2009), which held that income derived from certain time chartering activities should
be treated as rental income rather than services income for purposes of a foreign sales corporation provision of the Internal
Revenue Code of 1986, as amended (the “Code”). However, the Internal Revenue Service (the “IRS”), stated in an Action
on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to, the way that the rental versus services
framework was applied to the facts in the Tidewater decision, and in its discussion stated that the time charters at issue in
Tidewater would be treated as producing services income for PFIC purposes. The IRS’s statement with respect to
Tidewater cannot be relied upon or otherwise cited as precedent by taxpayers. Consequently, in the absence of any binding
legal authority specifically relating to the statutory provisions governing PFICs, there can be no assurance that the IRS or a
court would not follow the Tidewater decision in interpreting the PFIC provisions of the Code. Nevertheless, based on the
current composition of our assets and operations (and those of our subsidiaries), we intend to take the position that we are
not now and have never been a PFIC. No assurance can be given, however, that this position would be sustained by a court
if contested by the IRS, or that we would not constitute a PFIC for any future taxable year if there were to be changes in
our assets, income or operations.
If the IRS were to determine that we are or have been a PFIC for any taxable year during which a U.S. Holder (as
defined below under “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Considerations”)
held shares, such U.S. Holder would face adverse U.S. federal income tax consequences. For a more comprehensive
discussion regarding our status as a PFIC and the tax consequences to U.S. Holders if we are treated as a PFIC, please read
“Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Considerations—U.S. Federal Income
Taxation of U.S. Holders—PFIC Status and Significant Tax Consequences.”
Atlas Corp. is U.K. tax resident. If Atlas’ U.K. tax residency is not maintained, the amount of tax payable by us
could increase, which could have a material adverse impact on the business, results of operation and financial
condition.
As a company incorporated in the Republic of the Marshall Islands, Atlas is not automatically treated as U.K. resident
for tax purposes. Our directors intend to meet all requirements of U.K. tax residency for Atlas by establishing that central
management and control is carried out in the United Kingdom. If tax residency is not maintained solely in the United
Kingdom or if Atlas does not meet the conditions for the exemptions from U.K. corporation tax in respect of dividends, the
amount of tax payable by us could increase, which could have a material adverse impact on our business, results of
operation and financial condition. In addition, were Atlas to be treated as tax resident in an alternative and/or additional
jurisdiction, this could increase the aggregate tax burden of us and our shareholders.
Risks related to our status as a non-U.S. company
Atlas and Seaspan are incorporated in the Republic of the Marshall Islands, which does not have a well-developed
body of corporate law.
The corporate affairs of Atlas and Seaspan are governed by their respective articles of incorporation and bylaws and
by the Marshall Islands Business Corporations Act (“BCA”). The provisions of the BCA resemble provisions of the
corporation laws of some states in the United States. However, there have been few judicial cases in the Republic of the
Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic
of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes
or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the
BCA does specifically incorporate non-statutory law, or judicial case law, of the State of Delaware and other states with
substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in
the face of actions by management, directors or controlling shareholders than would shareholders of a corporation
incorporated in a U.S. jurisdiction.
Because Atlas and Seaspan are organized under the laws of the Republic of the Marshall Islands, and our principal
executive offices and most of our assets are located outside the United States, it may be difficult to serve us with
legal process and enforce judgments against Atlas, Seaspan or their respective directors or management, and the
applicable law and outcome of any bankruptcy proceedings may be difficult to predict.
Atlas and Seaspan are organized under the laws of the Republic of the Marshall Islands, Atlas’s and Seaspan’s
principal executive offices are located in the United Kingdom and Hong Kong, respectively, a majority of our directors and
officers are resident outside of the United States, and we conduct operations in countries around the world. In addition, a
substantial portion of our assets and the assets of our directors, officers and experts are located outside of the United States.
As a result, it may be difficult or impossible for you to bring an action against us or against our directors or officers in the
United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are
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successful in bringing an action of this kind, the laws of the Republic of the Marshall Islands and of other jurisdictions may
prevent or restrict you from enforcing a judgment against our assets or our directors and officers. Furthermore, in the event
of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our
subsidiaries, bankruptcy laws other than those of the United States could apply. If we become a debtor under U.S.
bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever
located, including property situated in other countries. There can be no assurance, however, that we would become a debtor
in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy
case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy
court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.
We are a “foreign private issuer” under the NYSE rules, and as such we are entitled to exemption from certain
NYSE corporate governance standards, and you may not have the same protections afforded to stockholders of
companies that are subject to all of the NYSE corporate governance requirements.
We are a “foreign private issuer” under the securities laws of the United States and the rules of the NYSE. Under the
securities laws of the United States, “foreign private issuers” are subject to different disclosure requirements than U.S.
domiciled registrants, as well as different financial reporting requirements. Under the NYSE rules, a “foreign private
issuer” is subject to less stringent corporate governance requirements. Subject to certain exceptions, the rules of the NYSE
permit a “foreign private issuer” to follow its home country practice in lieu of the listing requirements of the NYSE. As
permitted by the exemption, as well as by our bylaws and the laws of the Republic of the Marshall Islands, we currently
have a board of directors with a majority of independent directors, an audit committee comprised solely of three
independent directors and a combined corporate governance and compensation committee comprised of independent
directors. It is possible that, in the future, you may not have the same protections afforded to stockholders of companies
that are subject to all of the NYSE corporate governance requirements.
Risks related to financing and indebtedness
We may not be able to timely pay, or be able to refinance, amounts owed under our credit facilities, Notes, and
vessel lease and other financing arrangements.
We have significant normal course payment obligations under our credit facilities, Notes, and vessel lease and other
financing arrangements, both prior to and at maturity, of approximately $0.8 billion in 2022 and an additional $5.7 billion
through to maturity, which extends to 2036. In addition, under our credit facilities, vessel lease and other financing
arrangements, a payment may be required in certain circumstances as a result of events such as the sale or loss of a vessel,
a termination or expiration of a charter (where we do not enter into a replacement charter acceptable to the lenders within a
specified grace period) or termination of a shipbuilding contract. The amount that must be paid may be calculated based on
the loan to market value ratio or some other ratio that takes into account the market value of the relevant asset (with the
repayment amount increasing if asset values decrease), or may be the entire amount of the financing in regard to a credit
facility or a pre-determined termination sum in the case of vessel lease arrangements.
Our ability to make payments under our credit facilities, Notes, vessel lease and other financing arrangements will
depend on our ability to generate cash in the future. This is, to a certain extent, subject to general economic, financial,
competitive and other factors that are beyond our control. Our business may not be able to generate sufficient cash flow
from operations and future borrowings may not be available to us in an amount sufficient to enable us to pay our debts as
they come due or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or
before maturity.
If we are able to obtain financing and refinancing, it may not be on commercially reasonable terms. If we are not
able to refinance outstanding amounts at interest rates and other terms acceptable to us, or at all, we will have to dedicate a
significant portion of our cash flow from operations to repay such amounts, which could reduce our ability to satisfy our
payment obligations, or require us to delay certain business activities, capital expenditures or investments or cease paying
dividends. If we are not able to satisfy these obligations (whether or not refinanced) with cash flow from operations, we
may have to seek to restructure our debt, vessel lease and other arrangements, undertake alternative financing plans (such
as additional debt or equity capital) or sell assets, which may not be available on terms attractive to us or at all.
The market values of our vessels and power generation assets fluctuate with market conditions. A reduction in our
net assets could result in a breach of certain financial covenants applicable to our credit, lease and other facilities and our
Notes which could limit our ability to borrow additional funds or require us to repay outstanding amounts. Further,
declining containership values could affect our ability to raise cash by limiting our ability to refinance vessels or use
unencumbered vessels as collateral for new loans or result in mandatory prepayments under certain of the credit facilities or
our Notes.
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If we are unable to meet or otherwise default on our debt, and vessel lease and other financing obligations, the
holders of our debt or our lessors could declare all outstanding indebtedness to be immediately due and payable. Holders of
our secured debt would also have the right to proceed against the collateral granted to them that secures the indebtedness.
Additionally, most of our debt instruments contain cross-default provisions, which generally cause a default or event of
default under each instrument upon a qualifying default or event of default under any other debt instrument.
We may not be able to repurchase our Notes or Series J preferred shares upon the occurrence of a change of
control or in connection with the exercise by the holders of our Notes of their right to call for early redemption.
Under the terms of our Notes, upon the occurrence of a change of control (as defined in the relevant indentures) and/
or certain other events, we may be required to purchase all or a portion of such Notes then outstanding at a purchase price
equal to (in the case of our Senior Secured Notes) 100.0% or (in the case of our other Notes) 101.0% of the principal
amount thereof plus accrued and unpaid interest. In addition, under the Subscription and Exchange Agreement (the
"Subscription and Exchange Agreement") entered into with certain affiliates of Fairfax pursuant to which we exchanged
$300.0 million of Fairfax Notes for 12,000,000 Series J preferred shares and 1,000,000 warrants (see “Item 5. Operating
and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Recent Developments in 2021 and 2022—Fairfax Notes Exchange and Redemption"), upon the occurrence of
a change of control (as defined in such agreement), we may be required to purchase all or a portion of the Series J preferred
shares held by affiliates of Fairfax for an amount equal to the liquidation preference set forth in the Statement of
Designation for the Series J preferred shares, plus any accrued and unpaid dividends. If a change of control were to occur,
we may not have sufficient funds to pay the purchase price for the Notes and/or Series J preferred shares tendered and, in
such case, expect that we would require third-party financing; however, we may not be able to obtain such financing on
favorable terms, if at all. In addition, the occurrence of a change of control may result in an event of default under, or
require us to purchase, our other existing or future senior indebtedness. Moreover, the exercise by the holders of their right
to require us to purchase the Notes could cause a default under our existing or future senior indebtedness, even if the
occurrence of a change of control itself does not, due to the financial effect of such purchase on us and our subsidiaries.
Our failure to purchase tendered Notes at a time when the purchase is required by the indenture would constitute an event
of default under the indenture, which, in turn, may constitute an event of default under future debt.
Our substantial debt levels and vessel lease and other financing obligations may limit our flexibility in obtaining
additional financing and in pursuing other business opportunities.
As of December 31, 2021, we had $4.3 billion aggregate principal amount of debt outstanding under our credit
facilities and Notes, and vessel lease and other financing arrangements of approximately $2.2 billion. The amounts
outstanding under our credit facilities and our vessel lease and other arrangements will increase following the delivery of
the 67 newbuild containerships that we have contracted to purchase.
Our level of debt and vessel lease and other financing obligations could have important consequences to us,
including the following:
•
•
•
•
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or
other purposes, may be impaired or such financing may not be available on favorable terms, or at all;
we may need to use a substantial portion of our cash from operations to make principal and interest payments on
our debt or make our lease payments, reducing the funds that would otherwise be available for operation and
future business opportunities;
our debt level could make us more vulnerable to competitive pressures, a downturn in our business or the
economy generally than our competitors with less debt; and
our debt level may limit our flexibility in responding to changing business and economic conditions.
Our ability to service our debt and vessel lease and other arrangements will depend upon, among other things, our
financial and operating performance, which will be affected by prevailing economic, financial, business and regulatory
conditions, as well as other factors, some of which are beyond our control. If our results of operations are not sufficient to
service our current or future indebtedness and vessel lease and other obligations, we will be forced to take actions such as
reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring
or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of
these remedies on satisfactory terms, or at all.
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Disruptions in global capital markets and economic conditions or changes in lending practices may harm our
ability to obtain financing on acceptable terms, which could hinder or prevent us from meeting our capital needs.
We rely on the global capital markets, especially the credit markets, to satisfy a significant portion of our capital
requirements. Beginning in February 2020, due in part to the COVID-19 pandemic, global capital markets experienced
significant volatility and a steep and abrupt downturn. Although the U.S. markets have since rebounded, and vaccine
programs are being administered worldwide, we cannot be certain when the COVID-19 pandemic will be over or that
subsequently waves or variants of the virus will not again disrupt global markets and economic activity. Beginning in
March 2022, the ongoing Russian-Ukraine conflict has also contributed to economic volatility and unpredictability, and
may continue to do so, as may future crises and conflicts. Significant instability or disruptions of the capital markets or
deterioration of our financial position due to internal or external factors could restrict or eliminate our access to, and/or
significantly increase the cost of, various financing sources, including bank credit facilities and issuance of corporate
bonds. This could occur because our lenders could become unwilling or unable to meet their funding obligations or we may
not be able to obtain funds at the interest rate agreed to in our credit facilities due to market disruption events or increased
funding costs. Such instability or disruptions in the capital markets may also cause lenders to be unwilling to provide us
with new financing to the extent needed to fund our ongoing operations and growth. In recent years, the number of lenders
for shipping companies has decreased and ship-funding lenders have generally lowered their loan-to-value ratios, shortened
loan terms and accelerated repayment schedules. These factors may hinder our ability to access financing.
Instability or disruptions of the capital markets and deterioration of our financial position, alone or in combination,
could also result in a reduction in our credit rating, which could prohibit or restrict us from accessing external sources of
short and long-term debt financing and/or significantly increase the associated costs.
If financing or refinancing is not available when needed, or is available only on unfavorable terms, we may be
unable to meet our obligations as they come due or we may be unable to implement our growth strategy, complete
acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could
negatively impact our business, results of operations and financial condition.
Exposure to interest rate fluctuations may result in fluctuations in our results of operations and financial
condition.
As of December 31, 2021, we had an aggregate of approximately $4.3 billion outstanding under our credit facilities
and our Notes, and vessel lease and other financing arrangements of approximately $2.2 billion. The majority of our credit
facilities and vessel lease and other financing arrangements are variable rate facilities and leases, under which our payment
obligations will increase as interest rates increase. While we have entered into interest rate swaps to manage some of our
interest rate risk, interest rate fluctuations and their impact on the fair value of our interest rate swaps may have a negative
effect on the results of our operations and financial condition. Please read “Item 11. Quantitative and Qualitative
Disclosures About Market Risk—Interest Rate Risk.”
Restrictive covenants applicable to our credit facilities, Notes and vessel lease and other financing arrangements
impose financial and other restrictions on us, which may limit, among other things, our ability to borrow funds
under such financing and lease arrangements and our ability to pay dividends on our shares or redeem our
preferred shares.
To borrow funds under our existing credit facilities and vessel lease and other financing arrangements, we must,
among other things, meet specified financial covenants. For example, we are prohibited under certain of our existing credit
facilities and vessel lease and other financing arrangements from incurring total borrowings in an amount greater than
65.0% of our total assets (as defined in the applicable agreement), and we must also ensure that certain interest coverage,
and interest and principal coverage ratios are met. Total borrowings and total assets are terms defined in such credit
facilities and vessel lease and other financing arrangements and differ from those used in preparing our consolidated
financial statements, which are prepared in accordance with U.S. GAAP. To the extent we are unable to satisfy such
requirements, we may be unable to borrow additional funds or may be in breach, which could require us to repay
outstanding borrowings. We may also be required to prepay amounts borrowed under our credit facilities, our Notes and
vessel lease and other financing agreements if we experience a change of control. These events may result in financial
penalties to us under our leases.
In addition, our financing and lease arrangements limit our ability to, among other things:
•
•
pay dividends if an event of default has occurred and is continuing under one of our credit facilities and capital
and operating lease arrangements or if the payment of the dividend would result in an event of default;
incur additional indebtedness under the credit facilities or otherwise, including through the issuance of
guarantees;
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•
•
create liens on our assets;
sell our vessels without replacing such vessels or prepaying a portion of our loan or lease arrangements; or
• merge or consolidate with, or transfer all or substantially all our assets to, another person.
Accordingly, we may need to seek consent from our lenders, lessors or holders of our Notes in order to engage in
some corporate actions. The interests of our lenders, lessors and holders of our Note may be different from ours, and we
may be unable to obtain our lenders’, lessors’ or Note holders’ consent when and if needed. In addition, we are subject to
covenants applicable to our preferred shares. If we do not comply with the restrictions and covenants applicable to our
credit facilities, Notes, or vessel lease and other financing arrangements, results of operations and financial condition and
ability to pay dividends on our shares or redeem our preferred shares will be negatively impacted.
Charterparty-related defaults under certain of our secured credit facilities and vessel lease and other financing
arrangements could permit the counterparties thereto to accelerate our obligations and terminate such facilities or
leases, which could subject us to termination penalties.
Most of our vessel financing credit facilities and other financing arrangements, as well as our operating leases, are
secured by, among other things, payments from the charterers for the applicable vessels and contain default provisions
relating to non-payment. The prolonged failure of a charterer to pay in full under the charter or the termination or
repudiation of the charter without our entering into a replacement charter contract within a specified period of time
constitutes an event of default under certain of our financing agreements. If such a default were to occur, our outstanding
obligations under the applicable financing agreements may become immediately due and payable, and the lenders’
commitments under the financing agreements to provide additional financing, if any, may terminate. This could also lead to
cross-defaults under other financing agreements and result in obligations becoming due and commitments being terminated
under such agreements. A default under any financing agreement could also result in foreclosure on certain applicable
vessels and other assets securing related loans or financings.
Risks related to an investment in our securities
Fairfax has significant influence over our policies and business.
Since 2018, Fairfax has made a number of investments in our Company. In addition, we acquired APR Energy from
Fairfax and other sellers, in consideration for which we issued common shares to Fairfax and the other sellers. If the
31,000,000 warrants currently held by Fairfax were exercised in full, as of March 10, 2022, Fairfax’s shareholdings,
including common shares owned by V. Prem Watsa (the chairman and chief executive officer of Fairfax Financial
Holdings Limited) that he acquired in the open market, would have represented approximately 47.1% of our outstanding
common shares on such date after taking into account the issuance of the shares to Fairfax upon exercise of those warrants.
For more information about these investments, see “Item 7. Major Shareholders and Related Party Transactions.”
The Subscription and Exchange Agreement provides Fairfax with the right to designate (and Fairfax has so
designated) (i) two members of our board of directors if and for so long as Fairfax holds at least 5,000,000 Series J
preferred shares or (ii) one member of our board of directors if Fairfax holds less than 5,000,000 but greater than 2,000,000
Series J preferred shares; provided, however, that in no event shall Fairfax have the right, when taken together with any
rights of the holders under the Statement of Designation for the Series J preferred shares, to designate more than two
members to the board of directors if the threshold described in clause (i) above is reached, or to designate more than one
member to the board of directors if the threshold described in clause (ii) above is reached. Lawrence Chin and Stephen
Wallace serve as Fairfax’s designees to our board of directors. The combination of Fairfax’s board representation and
position as a significant equity holder gives Fairfax significant influence over our policies and business, and Fairfax’s
objectives may conflict with those of other shareholders and stakeholders of us.
Anti-takeover provisions in our organizational documents could make it difficult for our shareholders to replace or
remove our current board of directors or have the effect of discouraging, delaying or preventing a merger or
acquisition, which could adversely affect the market price of our securities.
Several provisions of our articles of incorporation and our bylaws could make it more difficult for our shareholders
to change the composition of our board of directors, preventing them from changing the composition of management. In
addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider
favorable.
These provisions include:
•
•
authorizing our board of directors to issue “blank check” preferred shares without shareholder approval;
prohibiting cumulative voting in the election of directors;
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•
•
•
•
•
authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of at least a
majority of the outstanding shares entitled to vote for those directors;
prohibiting shareholder action by written consent unless the written consent is signed by all shareholders
entitled to vote on the action;
limiting the persons who may call special meetings of shareholders;
establishing advance notice requirements for nominations for election to our board of directors or for proposing
matters that can be acted on by shareholders at shareholder meetings; and
restricting business combinations with interested shareholders.
These anti-takeover provisions could substantially impede a potential change in control and, as a result, may adversely
affect the market price of our securities.
We may not have sufficient cash from our operations to enable us to pay dividends on our shares or redeem our
preferred shares following the payment of expenses.
Atlas Corp. itself has no earnings from operations and relies on payments from its subsidiaries to meet its
obligations. We pay quarterly dividends on our shares from funds legally available for such purpose when, as and if
declared by and in the discretion of our board of directors. We may not have sufficient cash available each quarter to pay
dividends. In addition, we may have insufficient cash available to redeem our preferred shares. The amount of dividends
we can pay or the amount we can use to redeem the preferred shares depends upon the amount of cash we generate from
and use in our operations, which may fluctuate significantly based on, among other things:
•
•
•
•
•
•
•
•
•
•
•
our continued ability to maintain, enter into or renew charters for vessels and leases of our power generation
assets with our existing customers or new customers;
the rates we obtain for such charters and leases and the ability of our customers to perform their obligations
thereunder;
the level of our operating costs;
the number of off-charter or unscheduled off-hire days for our fleet and the timing of, and number of days
required for, dry-docking of our containerships;
prevailing global and regional economic and political conditions;
the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of
our business;
changes in the basis of taxation of our activities in various jurisdictions;
our ability to service and refinance our current and future indebtedness;
our ability to raise additional debt and equity to satisfy our capital needs;
dividend and redemption payments applicable to other senior or parity equity securities; and
our ability to draw on our existing credit facilities and the ability of our lenders and lessors to perform their
obligations under their agreements with us.
We have recently paid quarterly dividends of $0.125 per common share; for additional information, please read
“Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Ongoing Capital
Expenditures and Dividends”. Any increase in such dividend (1) will result in an upward adjustment of the number of our
common shares issuable (a) upon exercise of the warrants held by Fairfax and (b) upon the exchange of the Exchangeable
Notes, and (2) may trigger a Potential Adjustment Event under the capped calls (as such term is defined therein) entered
into by us in connection with the issuance of the Exchangeable Notes.
The amount of cash we have available to pay dividends on our shares or to redeem our preferred shares will not
depend solely on our profitability, but is also subject to the discretion of our directors and the requirements of
Marshall Islands law, among other factors.
The actual amount of cash we will have available to pay dividends on our shares or to redeem our preferred shares
depends on many factors, including, among others:
•
changes in our operating cash flow, capital expenditure requirements, debt and lease repayment requirements,
working capital requirements and other cash needs;
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•
•
•
restrictions under our existing or future credit facilities, Notes, or vessel lease or other financing arrangements
may impact our ability to declare or pay dividends if an event of default has occurred and is continuing or if the
payment of the dividend would result in an event of default or would violate any restricted payments covenant
under the Notes;
the amount of any reserves established by our board of directors; and
restrictions under Marshall Islands law, which generally prohibits the payment of dividends other than from
surplus (i.e., retained earnings and the excess of consideration received for the sale of shares above the par value
of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a
dividend.
The amount of cash we generate from our operations may differ materially from our net income or loss for the
period, which is affected by non-cash items, and our board of directors in its discretion may elect not to declare any
dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we
record losses and may not pay dividends during periods when we record net income.
Our board of directors periodically assesses our need to retain funds rather than pay them out as dividends. Our
board of directors may decide to further reduce, or possibly eliminate, our dividend in order to retain funds necessary to
preserve our capital base.
We have granted registration rights to certain holders of our common shares, who could compel us to facilitate the
sale of large numbers of our common shares into the market, which could cause the price of our common shares to
decline.
As part of our initial public offering and subsequent transactions, we granted registration rights to certain holders of
our securities. Please refer to our discussion of these registration rights agreements at “Item 7. Major Shareholders and
Related Party Transactions—B. Related Party Transactions—Registration Rights Agreements”. These shareholders, who
include Fairfax and affiliates of the Washington family, have the right, subject to certain conditions, to require us to file
registration statements to allow the sale of their common shares. Following their sale under an applicable registration
statement, any such common shares will become freely tradable. By exercising their registration rights and selling a large
number of common shares, these shareholders could cause the price of our common shares to decline.
General risk factors
Disruptions and security threats to our technology systems could negatively impact our business.
In the ordinary course of business, we rely on the security of information and operational technology systems,
including those of our business partners and other third parties, to manage or support a variety of business activities
including operating and navigating our containership fleet and operating our power generation equipment; tracking
container contents and delivery; maintaining vessel and power plant infrastructure; communicating with personnel,
management, customers and business partners; collecting, processing, transmitting and storing electronic information,
including personal, employee, business, financial and operational data; facilitating business and financial transactions; and
providing services to our customers. A cyber-attack on us, or our business partners, could significantly disrupt these and
other commercial activities and business functions resulting in a loss of revenue and customer relationships. For
operational technology in particular, a cyber-attack could result in physical damage to assets and infrastructure, injury or
loss of life and environmental harm.
Our global technology network faces many threats from criminal hackers and competitors who may use phishing
emails, unauthorized network intrusions, electronic communications or portable electronic devices to distribute computer
viruses and ransomware, enable fraudulent transactions, or otherwise alter the confidentiality, integrity and availability of
our information and information systems. Despite our continuing efforts to secure our technology network infrastructure,
protect our critical data and systems, and ensure operational resiliency, cyber-attacks may occur that could have a material
impact on our financial performance, reputation and continuous operations. Cyber-attacks are becoming increasingly
common and more sophisticated, and may be perpetrated by computer hackers, cyber-terrorists or others engaged in
corporate espionage. Further, as the methods of cyber-attacks continue to evolve, we may be required to expend additional
resources to enhance and supplement our existing protective measures. A successful cyber-attack could also result in
significant costs associated with the investigation and remediation of our technology systems, as well as increased
regulatory and legal liability.
Currency exchange rate fluctuations and controls affect our results of operations.
Although all of our charter revenues are earned in U.S. dollars and a significant portion of our operating and general
and administrative costs are incurred in U.S. dollars, we conduct operations in many countries involving transactions
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denominated in a variety of currencies. We are subject to currency exchange rate risk to the extent that our costs are
denominated in currencies other than those in which we earn revenues. We monitor exchange rate fluctuations on a
continuous basis and seek to reduce our exposure in certain circumstances by denominating charter-hire revenue, ship
building contracts, purchase contracts and debt obligations in U.S. dollars when practical to do so; however, we do not
currently fully hedge movements in currency exchange rates. As a result, currency fluctuations may have a negative effect
on our results of operations and financial condition.
We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls
may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign
subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a
diminished value of funds denominated in the currency of the country instituting the devaluation.
The global COVID-19 pandemic has created significant economic disruption and adversely affected our business,
and is likely to continue to do so in the future.
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, created
significant volatility and disruption in financial markets and increased unemployment levels. The pandemic resulted in
temporary or permanent closures of many businesses and the institution of travel restrictions, quarantine requirements,
lockdowns and other governmental measures and regulations aimed at stopping or containing the spread of the virus, which
have also had the effect of depressing economic activity. The COVID-19 pandemic, including the measures implemented
to combat it, has created increased costs, operational challenges and delays in our businesses. In our containership business,
costs increased due to COVID-19’s impact on supply chains, on workers’, surveyors’ and other specialists’ access to the
shipyards to complete repairs and inspections, and on the ability to conduct crew transfers. In our power generation
business, COVID-19 delayed transport of our turbines and balance of plant equipment, as well as our personnel, to project
sites due to border closures and travel restrictions. In addition, COVID-19 has impacted new growth opportunities due to
delays in procurement processes and a general reduction in demand for power in certain markets.
The extent of the impact of the COVID-19 pandemic on our future business and financial results will depend on
future developments regarding the course and duration of the pandemic (including the severity and transmission rates of
new variants of the virus) within the markets in which we operate, the timing, distribution, rate of public acceptance and
efficacy of vaccines and other treatments, the related impact on consumer confidence and spending, the effect of
governmental regulations imposed in response to the pandemic and the extent to which consumers modify their behavior as
social distancing and related precautions are lifted, all of which are highly uncertain and ever-changing. The sweeping
nature of the COVID-19 pandemic makes it extremely difficult to predict how our business and operations will be affected
in the longer run, although such effects are highly likely to be negative. Any of the foregoing factors, or other cascading
effects of the COVID-19 pandemic or its aftermath, could materially harm our business, results of operations and financial
condition. To the extent the COVID-19 pandemic or its aftermath adversely affect our business and financial results, it may
also have the effect of heightening many of the other risks described in this “Risk Factors” section.
Item 4.
Information on the Company
A.
History and Development of the Company
Atlas Corp. is a Republic of the Marshall Islands corporation incorporated under the Marshall Islands Business
Corporations Act on October 1, 2019 for the purpose of facilitating the Reorganization (as discussed in Part I above). On
February 28, 2020, after the Reorganization, Atlas completed the acquisition of all the issued and outstanding common
shares of Apple Bidco Limited, which owns 100% of APR Energy. Atlas Corp. is a holding company and its sole assets are
its interests in Seaspan and APR Energy and their respective subsidiaries. We maintain our principal executive offices at 23
Berkeley Square, London, United Kingdom, W1J 6HE, and our telephone number is +44 20 7788 7819. We maintain an
Internet site at https://atlascorporation.com. The information contained on our website or information about us that can be
accessed through our website will not be deemed to be incorporated into this Form 20-F.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. All of the SEC filings made electronically by Atlas are available to
the public on the SEC website at www.sec.gov (commission file number 001-39237).
Atlas common shares trade on the New York Stock Exchange under the ticker symbol “ATCO”.
B.
Business Overview
General
Atlas Corp. is a global asset manager and the parent company of Seaspan and APR Energy. We have two reportable
segments: containership leasing and mobile power generation. Our containership leasing segment, which is conducted
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through Seaspan, owns and operates a fleet of containerships which it charters to major container liner companies. Our
power generation segment, which is conducted through APR Energy, owns and operates a fleet of power generation assets,
including gas turbines and other equipment, and provides power solutions to customers through various contracts. In
March 2021, Atlas entered into a joint venture with Zhejiang Energy Group (“ZE”) and executed a shareholders agreement
with ZE to form the joint venture (“ZE JV”). The purpose of the joint venture is to develop business in relation to
container vessels, LNG vessels, environmental protection equipment and power equipment supply.
Containership leasing
Through Seaspan, we are a leading independent charter owner and manager of containerships. We primarily deploy
our vessels on long-term, fixed-rate time charters to take advantage of the stable cash flow and high utilization rates that
are typically associated with long-term time charters. As at March 10, 2022, we operated a fleet of 132 vessels that have an
average age of approximately eight years, on a TEU weighted basis.
As of March 10, 2022, the charters on the 132 vessels in our operating fleet had an average remaining lease period
of approximately five years, on a TEU weighted basis, excluding the effect of charterers’ options to extend certain time
charters.
Customers for our operating fleet as of March 10, 2022 were as follows:
Customers for Current Fleet
Number of vessels
under charter
TEUs under charter
CMA CGM
COSCO
Hapag-Lloyd
Maersk
MSC
ONE
Yang Ming Marine
ZIM
17
28
14
20
9
23
15
6
160,950
243,750
114,350
90,500
103,600
194,550
210,000
30,600
Our primary objective for Seaspan is to continue to grow our containership leasing business through accretive vessel
acquisitions as market conditions allow. Most of our customers’ containership business revenues are derived from the
shipment of goods from the Asia Pacific region, primarily China, to various overseas export markets in the United States
and in Europe.
Seaspan Fleet
The following table summarizes key facts regarding our 134 operating vessels as of December 31, 2021, which
includes one vessel that is owned by the ZE JV:
Vessel Class
(TEU)
# Vessels (Total
fleet)
# Vessels (of
which are
unencumbered)
Average
Age
(Years)(1)
Average
Remaining
Charter
Period
(Years)(1)
Average
Daily
Charter
Rate (in
thousands
of USD)
2500-3500
4250-5100(4)
8500-9600(5)
10000-11000(6)
12000-13100(7)
14000+
14
33
18
33
19
17
Total/Average
134
Averages shown are weighted by TEU.
6
21
3
4
—
2
36
13.6
14.6
11.9
6.2
6.7
5.8
8.3
2.4
3.0
4.1
5.8
7.0
4.2
5.0
22.3
21.2
53.4
32.1
42.4
48.0
34.8
Days Off-
Hire(2)
Total
Ownership
Days(3)
99
413
7
80
9
6
614
5110
11982
6315
12045
6002
5878
47,332
Days Off-Hire includes scheduled and unscheduled days related to vessels being off-charter during the year ended December 31, 2021.
Total Ownership Days for the year ended December 31, 2021 includes time charters and bareboat charters and excludes days prior to the initial
charter hire date.
Includes 1 vessel that is owned by the ZE JV.
Includes 3 vessels on bareboat charter.
Includes 8 vessels on bareboat charter.
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(1)
(2)
(3)
(4)
(5)
(6)
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(7)
Includes 1 vessel on bareboat charter.
Charters
We charter our vessels primarily under long-term, fixed-rate time charters. The following table presents the number
of vessels chartered by each of our customers as of March 10, 2022.
Charterer
CMA CGM
COSCO
Hapag-Lloyd
Maersk
ONE
Yang Ming Marine
ZIM
Total time charters
MSC (bareboat charters)
CMA CGM (bareboat charters)
Total fleet
Number of Vessels in
Our Current Operating
Fleet
11
28
14
20
23
15
6
117
9
6
132
Time Charters and Bareboat Charters
A time charter is a contract for the use of a vessel with crew for a fixed period of time at a specified daily rate. A
bareboat charter is a contract for the use of a vessel without crew where the charterer also assumes responsibility for dry-
docking of the vessel, if needed. See “Glossary.”
The initial term for a time or bareboat charter commences when the charterer obtains the right to use the asset under
the relevant lease arrangement. Under all of our time charters, the charterer may also extend the term for periods in which
the vessel is off-hire. A summary of average remaining charter periods is included above under “—Seaspan Fleet.”
Hire Rate
Under all of our long-term time charters, charter hire is payable in U.S. dollars, as specified in the charter. The hire
rate is a fixed daily amount that, for some contracts may increase, or decrease at varying intervals during the term of the
charter and any extension to the term. Payments generally are made in advance on a monthly or semi-monthly basis. The
hire rate may be reduced in certain instances as a result of added cost to the charterer due to vessel performance
deficiencies in speed or fuel consumption. We have had no instances of such hire rate reductions.
Operations and Expenses
We operate our vessels on time charter and are responsible for vessel operating expenses. See “Glossary.” The
charterer generally pays the voyage expenses. See “Glossary.”
Off-hire
When a vessel is “off-hire,” or not available for service, the charterer generally is not required to pay the hire rate,
and we are responsible for all costs, including the fuel cost, unless the charterer is responsible for the circumstances giving
rise to the vessel’s lack of availability. A vessel generally will be deemed to be off-hire when there is an event preventing
the full working of the vessel due to, among other things:
•
•
•
•
•
operational deficiencies not due to actions of the charterers or their agents;
dry-docking for repairs, maintenance or inspection;
equipment or machinery breakdowns, abnormal speed and construction conditions;
delays due to accidents for which the vessel owner, operator or manager is responsible, and related repairs;
crewing strikes, labor boycotts caused by the vessel owner, operator or manager, certain vessel detentions or
similar problems; or
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•
a failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the
required crew.
Under most of our time charters, if a vessel is off-hire for a specified number of consecutive days or for a specified
aggregate number of days during a 12-month period, the charterer has the right to cancel the time charter with respect to
that vessel. Under some charter contracts, if a vessel is off-hire for specified reasons for a prolonged period, we are
obligated to charter a substitute vessel and to pay any difference in hire cost of the charter for the duration of the
substitution. The periods of off-hire that trigger such termination rights exclude, in addition to any other specific exclusions
in the charter, off-hire for routine dry-dockings or non-compliance with regulatory obligations. Our charter contracts
generally provide for hire adjustments for vessel performance deficiencies such as those in speed or fuel consumption, with
prolonged performance deficiencies giving the charterer a termination right under some charters.
Ship Management and Maintenance
Under each of our time charters, we are responsible for the operation and management of each vessel, including
maintaining the vessel, periodic dry-docking, cleaning and painting and performing work required by regulations.
We focus on risk reduction, operational reliability and safety. We believe we achieve high standards of technical
ship management by, among other methods:
•
•
•
developing a minimum competency standard for seagoing staff;
standardizing equipment used throughout the fleet, thus promoting efficiency and economies of scale;
implementing a voluntary vessel condition and maintenance monitoring program;
• maintaining a high retention rate for the senior officers on our vessels;
•
•
a cadet training program; and
recruiting and retaining highly-skilled and talented people in our technical ship management offices in
Vancouver and Hong Kong.
Our staff has skills in all aspects of ship management and experience in overseeing new vessel construction, vessel
conversions and general marine engineering, and has previously worked in various companies in the international ship
management industry. A number of senior managers also have sea-going experience, having served aboard vessels at a
senior rank. In all training programs, we place an emphasis on safety and regularly train our crew members and other
employees to meet our high standards. Shore-based personnel and crew members are trained to be prepared to respond to
emergencies related to life, property or the environment.
Sale and Purchase of Vessels
Under some of our time charters, the customer has the right to prior notice of or consent to any proposed sale of the
applicable vessel, which consent cannot be unreasonably withheld. A limited number of charters provide the charterer with
a right of first refusal for the proposed vessel sale, which would require us to offer the vessel to the charterer prior to
selling it to another entity. Sub-charters do not affect our ability to sell our time chartered vessels. Certain of our bareboat
charters have purchase obligations and require the charterer to purchase the vessel upon termination of the bareboat charter.
The purchase obligation may be at a pre-determined amount or at a purchase price equivalent to the fair value within a pre-
determined range depending on the charter.
Inspection by Classification Societies
Every seagoing vessel must be certified as seaworthy by a classification society. The classification society certifies
that the vessel has been built and maintained in accordance with the rules of the classification society and complies with
applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country
is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances
of a flag state, the classification society will undertake the surveys on application or by official order, acting on behalf of
the authorities concerned.
Each vessel is inspected by a surveyor of the classification society in three surveys of varying frequency and
thoroughness: every year for annual surveys, every two to three years for intermediate surveys, and every five years for
special surveys. If any defects are found, the classification surveyor will issue a “condition of class” or a “requirement” for
appropriate repairs that have to be made by the shipowner within the time limit prescribed. Vessels may be required, as part
of the annual and intermediate survey process, to be dry-docked for inspection of the underwater portions of the vessel and
for necessary repair stemming from the inspection. Special surveys always require dry-docking. The classification society
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also undertakes on request other surveys and inspections that are required by regulations and requirements of the flag state.
These surveys are subject to agreements made in each individual case or to the regulations of the country concerned.
Power Generation
Through APR Energy, we also operate a fleet of power generation assets (gas turbines and other power generation
equipment), providing electricity to customers including large corporations in the oil and gas, mining and other industries
and both government backed and private utilities. As of March 10, 2022, we operated a fleet of 30 gas turbines and 414
diesel generators. The average age of the turbines is eight years and the average age of our diesel generators is twelve
years.
Our primary objective is to drive sustained growth and optimize cash flow by delivering operational excellence and
providing a broad range of innovated technologies and offerings to generate customer value. Our revenues are primarily
derived from offering customized power solutions that include flexible plant design, fast-tracked installation of generating
equipment and balance of plant, plant operation and around-the-clock service and maintenance.
APR Energy fleet
The following table summarizes key facts regarding our mobile power fleet as of December 31, 2021:
Asset Type
Fleet Size
(MW)
Contracted Fleet
(MW)
Contracted Revenue
(USD millions)
Mobile Power Fleet
1,326
1,211
$
220.1
Average Remaining
Term (Years)(1)
1.0
(1)
Average remaining contract term excludes extensions; weighted by MW installed.
APR Energy operates in developed and developing markets worldwide. Each market has unique drivers for energy
demand along with a mix of competitors. Historically, outside of natural disasters and manmade events, APR Energy’s
main market has been in the developing market providing power for sovereign utilities and industry. Typically, the acute
demand for power in these markets evolves from a combination of lack of planning, electricity demand outstripping supply
in general, political events or delays in investment. As APR Energy’s gas turbines are quickly deployable, can run on
multiple fuels, have low emissions and are power-dense, we have successfully completed power projects of varying terms
in markets where utilities, grid operators and industrial customers require large blocks of power quickly for seasonal
peaking, augmenting baseload power, replacing power generation during maintenance of existing power plants, bridging to
permanent solutions plants, or exigent event-driven emergency response.
Region
2019(1)
Year Ended December 31,
2020(1)
2021
Power Revenues:
LATAM
North America
EMEA
Asia
O&M Revenues:
LATAM
North America
Asia
Other:
Asset sales
Fuel Revenue
Total
152.4
3.5
8.5
95.5
—
4.4
6.9
37.0
13.2
321.4
141.3
—
19.3
61.0
0.8
6.2
6.7
6.5
—
241.8
94.2
16.5
7.7
61.2
0.1
4.4
2.1
—
—
186.2
(1)
Atlas acquired APR Energy on February 28, 2020. For periods prior to this, APR Energy was not controlled by Atlas and the
revenue was not included in Atlas' operating results.
APR Energy’s contracts generally take the form of power purchase agreements. Under such a structure, customers
purchase a portion of APR’s generation capacity over a period of time on a take or pay basis. Additional fees may be
assessed for actual equipment run time. APR is obligated to deliver an operating power plant by a date certain, the plant
must be available for a certain percentage of time during the contract period, the plant must produce a certain number of
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megawatts and it must operate within certain fuel efficiency parameters. Failure to meet any of these conditions generally
subjects APR to monetary penalties.
Insurance
Containership leasing. We maintain marine hull and machinery, and war risks insurances, which covers the risk of
actual or constructive total loss and partial loss, for all of our vessels. Each of our vessels is covered up to at least fair
market value with certain deductibles, per vessel, per claim. We achieve this overall loss coverage by maintaining, as
included, nominal increased value coverage for each of our vessels, under which coverage, in the event of total loss of a
vessel, we will be entitled to recover amounts not recoverable under the hull and machinery policy beyond partial loss. We
have not obtained, and do not intend to obtain, loss-of-hire insurance covering the loss of revenue during extended off-hire
periods. We believe that this type of coverage is not economical and is of limited value to us. However, we evaluate the
need for such coverage on an ongoing basis, taking into account insurance market conditions and the employment of our
vessels. The charterer generally pays extra war risk insurance and broker commissions when the vessel is ordered by the
charterer to enter a notified war exclusion trading area.
Protection and indemnity insurance is provided by mutual protection and indemnity associations (“P&I
associations”), which insure our third-party pollution, wreck removal and crew liabilities in connection with our shipping
activities. Coverage includes third-party liability, crew liability and other related expenses resulting from the abandonment,
injury or death of crew, and other third parties, the loss or damage to cargo, claims arising from collisions with other
vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other
related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance,
extended by P&I associations. Subject to a limit, our coverage is nearly unlimited, but subject to the rules of the particular
protection and indemnity insurer.
The 13 P&I associations that comprise the International Group insure approximately 90% of the world’s commercial
blue-water tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. As a member of a
mutual P&I association, which is a member or affiliate of the International Group, we are subject to calls payable to the
associations based on the International Group’s claim records as well as a proportioned impact of claim records of all other
members of the individual associations.
Power generation. APR Energy maintains customary insurances for its industry, including cover for transportation
of its equipment, machinery breakdown, losses due to fire and natural disasters and business interruption. In certain
jurisdictions coverage against political risk is also in place. We evaluate the need for cover, limits and deductibles on an
ongoing basis in consultation with our insurance brokers and other subject matter experts.
Competition
Containership Leasing. We operate in markets that are highly competitive and based primarily on supply and
demand of containerships. We compete for charters based upon price, customer relationships, operating and technical
performance, professional reputation and size, age and condition of the vessel.
Competition for providing new containerships for chartering purposes comes from a number of experienced
shipping companies, including direct competition from shipping and lease financing companies, other independent charter
owners and indirect competition from state-sponsored and other major entities with their own fleets. Some of our
competitors may have greater financial resources than we do and can operate larger fleets and may be able to offer better
charter rates. An increasing number of marine transportation companies have entered the containership sector, including
many with positive reputations and extensive resources and experience. This increased competition may cause greater price
competition for time charters.
Power Generation. Competition for APR Energy comes from power generation equipment manufacturers (OEMs),
regional and global IPPs, fuel companies, and other specialty power generation companies including local and regional
power rental companies. Barriers to entry in our market space remain high, but there are new and expanding entrants
competing with APR Energy with different solutions and technologies, including renewables. This may create pricing
pressure in the market, slower contracting of our gas turbine solutions, and lead to reduced margins.
Seasonality
Containership Leasing. Our vessels primarily operate under long-term charters and are generally not subject to the
effect of seasonal variations in demand.
Power Generation. A portion of APR Energy’s demand is subject to seasonality as it pertains to customers with
increased power demand due to either hot temperatures in the summertime or cold temperatures in the wintertime. The
exigent events that drive some of APR Energy’s response driven projects are seasonal such as hurricane or drought driven
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demand but can easily occur any time of year such as power plant failures, earthquakes or tsunamis. The bulk of APR
Energy’s demand results from a lack of planning, electricity demand outstripping supply in general, political events or
delays in investment, none of which are driven by seasonality.
Environmental and Other Regulations
Government regulation significantly affects our business and the operation of our vessels and power plants. We are
subject to international conventions and codes, and national, state, provincial and local laws and regulations in the
jurisdictions in which our businesses operate or where our vessels are registered, including, among others, those governing
the generation, management and disposal of hazardous substances and wastes, the cleanup of oil spills and other
contamination, air emissions, water discharges and noise abatement.
A variety of government, quasi-government and private entities require us to obtain permits, licenses or certificates
for our business operations. Failure to maintain necessary permits or approvals could require us to incur substantial costs or
temporarily suspend the operation of one or more of our power plants or our vessels in one or more ports.
Increasing environmental concerns have created a demand for vessels that conform to the strictest environmental
standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality
maintenance, continuous training of our officers and crews and compliance with United States, Canadian and international
regulations and with flag state administrations.
The following is an overview of certain material governmental regulations that affect our business and the operation
of our vessels. It is not a comprehensive summary of all government regulations to which we are subject.
International Maritime Organization
The IMO is the United Nations’ agency for maritime safety. The IMO has negotiated international conventions that
impose liability for pollution in international waters and a signatory’s territorial waters. For example, the IMO’s
International Convention for the Prevention of Pollution from Ships (“MARPOL”), imposes environmental standards on
the shipping industry relating to, among other things, pollution prevention and procedures, technical standards, oil spills
management, transportation of marine pollutants and air emissions. Annex VI of MARPOL, which regulates air pollution
from vessels, sets limits on sulfur oxide, nitrogen oxide and particulate matter emissions from vessel exhausts and prohibits
deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. We believe all of our vessels currently are
Annex VI compliant, as applicable. Annex VI also includes a global cap on the sulfur content of fuel oil with a lower cap
on the sulfur content applicable inside Emission Control Areas (“ECAs”). Existing ECAs include the Baltic Sea, the North
Sea, including the English Channel, the North American area and the U.S. Caribbean Sea area. Additional geographical
areas may be designated as ECAs in the future.
Annex VI called for incremental reductions in sulfur in fuel between 2012 and 2020, and the use of advanced
technology engines designed to reduce emissions of nitrogen oxide, with a “Tier II” emission limit applicable to engines
installed on or after January 1, 2011 and a more stringent “Tier III” emission limit applicable to engines installed on or
after January 1, 2016 operating in the North American and U.S. Caribbean Sea and to engines installed on or after January
1, 2021 for vessels operating in the Baltic and North Sea. For future nitrogen oxide ECA designations, Tier III standards
will apply to engines installed on ships constructed on or after the date of ECA designation, or a later date as determined by
the country applying for the ECA designation.
The global sulfur cap came into force on January 1, 2020, following amendments to Annex VI of MARPOL. This
cap requires marine vessels to consume fuels with a maximum sulfur content of 0.5%. Compliance with Annex VI for the
emission of sulfur oxides can be achieved by means of the primary control of using low sulfur content fuel or through a
secondary control by removing the sulfur oxide pollutant using an exhaust gas cleaning system. Our time charters call for
our customers to supply fuel that complies with Annex VI. Currently, 14 vessels in our fleet use an exhaust gas cleaning
system to achieve compliance with IMO’s 2020 sulfur cap. The remainder of our fleet has achieved compliance by
switching to compliant fuels.
In 2018, the IMO adopted a measures to reduce Green House Gases ("GHG") emission from international shipping,
which measures are consistent with the Paris Agreement goals. The measures are primarily centered on design
improvements for newbuild vessels and operational measures to improve energy efficiency of ships. In maintaining
alignment with its strategy and corresponding targets, in November 2020, the Marine Environment Protection Committee
of the IMO adopted additional short-term measures which include design improvements for existing ships and verification
of operational efficiency by measuring Carbon Intensity, which will come into force starting in 2023. To comply with the
new requirements, existing vessels will have to take measures to align with the design index applicable to IMO’s phase 3
design criteria for new ships. Limiting engine power is one of the several ways to achieve the required Energy Efficiency
Design Index for Existing ships and comply with the new MARPOL requirement. Several vessels in our fleet will go
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through the process of limiting engine power to achieve compliance by due date. There are other ongoing initiatives to
improve operational efficiency of our vessels such as hydrodynamic modifications, selection of high performance hull
coatings and cargo loadability improvements, amongst others measures to improve carbon footprint from our vessels. We
may be subject to significant costs and expenses if we fail to meet these new requirements and any of our ships is non-
compliant. The IMO also requires ships of 5,000 gross tonnage or more to record and report their fuel consumption to their
flag state at the end of each calendar year. Flag states of respective vessels will subsequently transfer this data to IMO Ship
Fuel consumption database. The Database will help IMO measure GHG emissions and take measures to reduce the
emissions in line with its strategic goals. Some of our ships will be affected by the new requirements and we will have to
agree with our charterers on new speed limitations and possible ship modifications to meet these requirements.
The IMO’s International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker
Convention”), imposes, subject to limited exceptions, strict liability on vessel owners for pollution damage in jurisdictional
waters of ratifying states, which does not include the United States, caused by discharges of “bunker oil.” The Bunker
Convention also requires owners of registered vessels over a certain size to maintain insurance for pollution damage in an
amount generally equal to the limits of liability under the applicable national or international limitation regime. We believe
our vessels comply with the Bunker Convention.
The IMO’s Ballast Water Management Convention requires ships to manage their ballast water in such a way that
aquatic organisms and pathogens are removed or rendered harmless before discharging the water. The compliance deadline
for installation of ballast water treatment ("BTW") systems is 2024. We adopted the BTW technology for our newbuild
vessels in the early stages and are on track to complete installation of approved BWT systems before the IMO compliance
date.
The IMO also regulates vessel safety. The International Safety Management Code (the “ISM Code”), provides an
international standard for the safe management and operation of ships and for pollution prevention. The ISM Code requires
our vessels to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and
environmental protection policy and implementation procedures. A Safety Management Certificate is issued under the
provisions of SOLAS to each vessel with a Safety Management System verified to be in compliance with the ISM Code.
Failure to comply with the ISM Code may subject a party to increased liability, may decrease available insurance coverage
for the affected vessels, and may result in a denial of access to, or detention in, certain ports. All of the vessels in our fleet
are ISM Code-certified.
Increasingly, various regions are adopting additional, unilateral requirements on the operation of vessels in their
territorial waters. These regulations, such as those described below, apply to our vessels when they operate in the relevant
regions’ waters and can add to operational and maintenance costs, as well as increase the potential liability that applies to
violations of the applicable requirements.
United States
The United States Oil Pollution Act of 1990 and CERCLA
The United States Oil Pollution Act of 1990 (“OPA”), establishes an extensive regulatory and liability regime for the
protection and cleanup of the environment from oil spills. The Comprehensive Environmental Response, Compensation
and Liability Act (“CERCLA”), governs spills or releases of hazardous substances other than petroleum or petroleum
products. Under OPA and CERCLA, vessel owners, operators and bareboat charterers are jointly and, subject to limited
exceptions, strictly liable for all containment and clean-up costs and other damages arising from discharges or threatened
discharges of oil or hazardous substances, as applicable, from their vessels. OPA and CERCLA define these damages
broadly to include certain direct and indirect damages and losses, including the assessment of damages, remediation,
damages to natural resources such as fish and wildlife habitat, and agency oversight costs.
Under certain conditions, liabilities under OPA and CERCLA may be limited due to base or gross ton caps, which
are periodically updated. Liability caps do not apply under OPA and CERCLA if the incident is caused by gross
negligence, willful misconduct or a violation of certain regulations.
We maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for each of our vessels.
If the damages from a catastrophic spill were to exceed our insurance coverage it could harm our business, financial
condition and results of operation. Vessel owners and operators must establish and maintain with the U.S. Coast Guard
evidence of financial responsibility sufficient to meet their potential aggregate liabilities under OPA and CERCLA.
Evidence of financial responsibility may be demonstrated by showing proof of insurance, surety bonds, self-insurance or
guarantees. We have obtained the necessary U.S. Coast Guard financial assurance certificates for each of our vessels
currently in service and trading to the United States. Owners or operators of certain vessels operating in U.S. waters also
must prepare and submit to the U.S. Coast Guard a response plan for each vessel, which plan, among other things, must
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address a “worst case” scenario environmental discharge and describe crew training and drills to address any discharge.
Each of our vessels has the necessary response plans in place.
OPA and CERCLA do not prohibit individual states from imposing their own liability regimes with regard to oil
pollution or hazardous substance incidents occurring within their boundaries, and some states have enacted legislation
providing for unlimited liability for spills. In some cases, states that have enacted such legislation have not yet issued
implementing regulations defining vessel owners’ responsibilities under these laws. We intend to comply with all
applicable state regulations in the ports where our vessels call.
Clean Water Act and Ballast Water Regulation
The Clean Water Act (“CWA”), establishes the basic structure for regulating discharges of pollutants into the waters
of the United States and regulating quality standards for surface waters. Civil and criminal penalties are expressly
authorized by the CQAS for discharges of pollutants without a permit and the failure to satisfy permit requirements. The
Act also authorizes citizens to bring claims against alleged violators under its citizen suit provisions. The CWA also
authorizes the Environmental Protection Agency (“EPA”) to impose on responsible parties costs associated with the
removal, and remediation of hazardous substances, as well other damages. In this way, the CWA complements the
remedies available under OPA and CERCLA. The CWA does not prohibit individual states from imposing more stringent
conditions, which many states have done.
Rules relating to ballast water, and specifically, ballast water discharge, have been adopted by the EPA and the
United States Coast Guard. In general, these rules require the pre-treatment of ballast water prior to discharge. Additional
requirements relating to ballast water management apply to vessels visiting different port facilities. Failure to comply with
these rules could restrict our ability to operate within U.S. waters and result in fines, penalties or other sanctions.
As of December 2019, the EPA is regulating ballast water discharges and other discharges incidental to the normal
operation of certain vessels pursuant to the Vessel Incidental Discharge Act (“VIDA”), which replaces the 2013 Vessel
General Permit (“VGP”) program. VIDA requires the EPA to develop performance standards for discharges within two
years of enactment, and requires the U.S Coast Guard to develop complementary regulations within two years of EPA’s
promulgation of standards. Under VIDA, existing regulations regarding ballast water treatment remain in effect until the
EPA and U.S. Coast Guard regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length
must continue to comply with the requirements of the VGP, including submission of the Notice of Intent (“NOI”) or
retention of the PARI form and submission of annual reports. We submit the NOIs for our vessels where required.
Compliance with these and other regulations could require the installation of ballast water treatment equipment or the
implementation of the other port facility disposal procedures at potentially significant costs. Non-compliance with these
regulations may result in fines, penalties or other sanctions.
In addition, the Act to Prevent Pollution from Ships (“APPS”), implements various provisions of MARPOL and
applies to larger foreign-flag ships when operating in U.S. waters. The regulatory mechanisms established in APPS to
implement MARPOL are separate and distinct from the CWA and other federal environmental laws. Civil and criminal
penalties may be assessed under APPS for non-compliance.
Additional Ballast Water Regulations
The United States National Invasive Species Act (“NISA”), and certain regulation enacted by the U.S. Coast Guard
("USCG") under NISA, impose mandatory ballast water management practices for all vessels equipped with ballast water
tanks entering U.S. waters, including a limit on the concentration of living organisms in ballast water discharged in such
waters. Vessels constructed after December 1, 2013 are required to have a USCG-approved BTW system installed, and
vessels constructed prior to December 1, 2013 are required to have a BTW system installed on the first scheduled dry-dock
after January 1, 2016. As of January 2022, there are approximately 46 USCG-approved BTW systems, and additional
systems are currently under review or testing. Because approvals were initially slow to be given, individual vessel
implementation schedules have been extended in cases where vessel owners have demonstrated that compliance is not
technologically feasible. Some of our vessels which adopted the BWT technology in an early stage are in the process of
upgrading the treatment systems to meet the standards set by USCG. The compliance deadline for these vessels was
extended by the USCG considering the early installation.
The USCG regulations also require vessels to maintain a vessel-specific ballast water management plan that
addresses training and safety procedures, fouling maintenance and sediment removal procedures. Individual U.S. states
have also enacted laws to address invasive species through ballast water and hull cleaning management and permitting
requirements.
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Clean Air Act
The Clean Air Act (the “CAA”), and its implementing regulations impose requirements on our vessels regarding
vapor control and establish recovery requirements for cleaning fuel tanks and conducting other operations in regulated port
areas. In addition, the EPA has adopted standards pursuant to the CAA concerning air emissions that apply to certain
engines installed on U.S. vessels and to marine diesel fuels produced and distributed in the United States. These standards
are consistent with Annex VI of MARPOL and mandate significant reductions for vessel emissions of particulate matter,
sulfur oxides and nitrogen oxides.
The CAA also requires states to draft State Implementation Plans (“SIPs”), designed to attain national health-based
air quality standards in primarily major metropolitan and industrial areas. Several SIPs regulate emissions from degassing
operations by requiring the installation of vapor control equipment on vessels. For example, California has enacted
regulations that apply to ocean-going vessels’ engines when operating within 24 miles of the California coast and require
operators to use low sulfur distillate fuels. California has also approved regulations to reduce emissions from diesel
auxiliary engines on certain ocean-going vessels while in California ports, including container ship fleets that make 25 or
more annual visits to California ports. The rules require that every regulated vessel coming into an applicable California
port either use shore power (e.g., plug into the local electrical grid) or a control technology approved by the California Air
Resources Board to reduce harmful emissions. The new rules do not go into effect until January 1, 2023. These, and
potential future federal and state requirements may increase our capital expenditures and operating costs while in
applicable ports. As with other U.S. environmental laws, failure to comply with the CAA may subject us to enforcement
action, including payment of civil or criminal penalties and citizen suits.
Canada
Canada has established a complex regulatory enforcement system under the jurisdiction of various ministries and
departments for preventing and responding to a marine pollution incident. The principal statutes of this system prescribe
measures to prevent pollution, mandate remediation of marine pollution, and create civil, administrative and quasi-criminal
liabilities for those responsible for a marine pollution incident.
Canada Shipping Act, 2001
The Canada Shipping Act, 2001 (“CSA 2001”), is Canada’s primary legislation governing marine transport,
pollution and safety. CSA 2001 applies to all vessels operating in Canadian waters and in the Exclusive Economic Zone of
Canada. CSA 2001 requires shipowners to have in place an arrangement with an approved pollution response organization.
Vessels must carry a declaration, which identifies the vessel’s insurer and confirms that an arrangement with a response
organization is in place. CSA 2001 also makes it a strict liability offense to discharge from a vessel a pollutant, including,
among other things, oil. Vessels must have a shipboard oil pollution plan and implement the same in respect of an oil
pollution incident. CSA 2001 provides the authorities with broad discretionary powers to enforce its requirements, and
violations of CSA 2001 requirements can result in significant administrative and quasi-criminal penalties. CSA 2001
authorizes the detention of a vessel where there are reasonable grounds for believing that the vessel caused marine
pollution or that an offense has been committed. Canada’s Department of Transport has also enacted regulations on ballast
water management under CSA 2001. These regulations require the use of management practices, including mid-ocean
ballast water exchange. Each of our vessels is currently CSA 2001 compliant.
Canadian Environmental Protection Act, 1999
The Canadian Environmental Protection Act (the “CEPA”), regulates water pollution, including disposal at sea and
the management of hazardous waste. CEPA prohibits the disposal or incineration of substances at sea except with a permit
issued under CEPA, the importation or exportation of a substance for disposal at sea without a permit, and the loading on a
ship of a substance for disposal at sea without a permit. Contravention of CEPA can result in administrative and quasi-
criminal penalties, which may be increased if damage to the environment results and the person acted intentionally or
recklessly. A vessel also may be seized or detained for contravention of CEPA’s prohibitions. Costs and expenses of
measures taken to remedy a condition or mitigate damage resulting from an offense are also recoverable. CEPA establishes
liability to the Canadian government authorities that incur costs related to restoration of the environment, or to the
prevention or remedying of environmental damage, or an environmental emergency. Limited defenses are provided but
generally do not cover violations arising from ordinary vessel operations.
Marine Liability Act
The Marine Liability Act (“MLA”), is the principal legislation dealing with liability of shipowners and operators in
relation to passengers, cargo, pollution and property damage. The MLA implements various international maritime
conventions and creates strict liability for a vessel owner for damages from oil pollution from a ship, as well as for the
costs and expenses incurred for clean-up and preventive measures. Both governments and private parties can pursue vessel
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owners for damages sustained or incurred as a result of such an incident. Although the act does provide some limited
defenses, they are generally not available for spills or pollution incidents arising out of the routine operation of a vessel.
The act limits the overall liability of a vessel owner to amounts that are determined by the tonnage of the containership.
The MLA also provides for the creation of a maritime lien over foreign vessels for unpaid invoices to ship suppliers
operating in Canada.
Wildlife Protection
The Migratory Birds Convention Act (“MBCA”), implements Canada’s obligations under a bilateral treaty between
the United States and Great Britain (on behalf of Canada) designed to protect migrating birds that cross North American
land and water areas. The MBCA prohibits the deposit of any substance that is harmful to migratory birds in any waters or
area frequented by migratory birds. A foreign vessel involved in a violation may be detained within Canada’s Exclusive
Economic Zone with the consent of the attorney general. The Fisheries Act prohibits causing the death of fish or the
harmful alteration, disruption or destruction of fish habitat or the deposit of a deleterious substance in waters frequented by
fish. The owner of a deleterious substance, the person having control of the substance and the person causing the spill must
report the spill and must take all reasonable measures to prevent or remedy adverse effects resulting from a spill. The
Species at Risk Act protects endangered aquatic species and migratory birds and their designated critical habitat. Violations
of these Acts can be committed by a person or a vessel and may result in significant administrative and quasi-criminal
penalties.
China
Prior to our vessels entering any ports in the PRC, we are required to enter into pollution clean-up agreements with
pollution response companies approved by the PRC. Through a local agency arrangement, we have contracted with
approved companies. These pollution clean-up agreements are not required if the vessel is only passing through PRC
waters.
China has established a coastal emission control area (ECA) and inland emission control areas that cap sulfur
content of marine fuels. The coastal ECA extends 12 nautical miles from the baseline of Chinese territorial waters. Marine
fuels used by seagoing vessels entering the inland emission control areas shall not exceed 0.10% sulfur, from January 1,
2020.
Authorities in Hong Kong and Taiwan have also imposed similar cap on sulfur content of fuels consumed by vessels
calling ports in their respective territories.
Mirroring the IMO and EU’s efforts to monitor and measure carbon footprint from shipping, China introduced its
own regulation to monitor energy consumption from ships operating in Chinese ports. Beginning January 1, 2019, all
vessels entering or leaving ports in China report to authorities in prescribed format. All our vessels trading in Chinese ports
are currently complying with the local regulatory requirements.
European Union Requirements
In waters of the EU, our vessels are subject to regulation by EU-level legislation, including directives implemented
by the various member states through laws and regulations of these requirements. These laws and regulations prescribe
measures, among others, to prevent pollution, protect the environment and support maritime safety. For instance, the EU
has adopted directives that require member states to refuse access to their ports to certain sub-standard vessels, according to
various factors, such as the vessel’s condition, flag, and number of previous detentions (Directive 2009/16/EC on Port State
Control as amended and supplemented from time to time). Member states must, among other things, inspect minimum
percentages of vessels using their ports annually (based on an inspection “share” of the relevant member state of the total
number of inspections to be carried out within the EU and the Paris Memorandum of Understanding on Port State Control
region), inspect all vessels which are due for a mandatory inspection (based, among other things, on their type, age, risk
profile and the time of their last inspection) and carry out more frequent inspections of vessels with a high risk profile. If
deficiencies are found that are clearly hazardous to safety, health or the environment, the state is required to detain the
vessel or stop loading or unloading until the deficiencies are addressed. Member states are also required to implement their
own separate systems of proportionate penalties for breaches of these standards.
Our vessels are also subject to inspection by appropriate classification societies. Classification societies typically
establish and maintain standards for the construction and classification of vessels, supervise that construction in accordance
with such standards, and carry out regular surveys of ships in service to ensure compliance with such standards. The EU
has adopted legislation (Regulation (EC) No 391/2009 and Directive 2009/15/EC, as amended and supplemented from time
to time) that provides member states with greater authority and control over classification societies, including the ability to
seek to suspend or revoke the authority of classification societies that are negligent in their duties. The EU requires member
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states to monitor these organizations’ compliance with EU inspection requirements and to suspend any organization whose
safety and pollution prevention performance becomes unsatisfactory.
The EU’s directive on the sulfur content of fuels (Directive (EU) 2016/802, which consolidates Directive 1999/32/
EC and its various amendments) restricts the maximum sulfur content of marine fuels used in vessels operating in EU
member states’ territorial seas, exclusive economic zones and pollution control zones. The directive provides for more
stringent rules on maximum sulfur content of marine fuels applicable in specific Sulfur Emission Control Areas
(“SECAs”), such as the Baltic Sea and the North Sea, including the English Channel. Further sea areas may be designated
as SECAs in the future by the IMO in accordance with Annex VI of MARPOL. Under this directive, we may be required to
make expenditures to comply with the sulfur fuel content limits in the marine fuel our vessels use in order to avoid delays
or other obstructions to their operations, as well as any enforcement measures which may be imposed by the relevant
member states for non-compliance with the provisions of the directive. We also may need to make other expenditures (such
as expenditures related to washing or filtering exhaust gases) to comply with relevant sulfur oxide emissions levels. The
directive has been amended to bring the above requirements in line with Annex VI of MARPOL. It also makes certain of
these requirements more stringent. These and other related requirements may require additional capital expenditures and
increase our operating costs.
Through Directive 2005/35/EC (as amended by Directive 2009/123/EC and as further amended and supplemented
from time to time), the EU requires member states to cooperate to detect pollution discharges and impose criminal
sanctions for certain pollution discharges committed intentionally, recklessly or by serious negligence and to initiate
proceedings against ships at their next port of call following the discharge. Penalties may include fines and civil and
criminal penalties. Directive 2000/59/EC (as amended and supplemented from time to time) requires all ships (except for
warships, naval auxiliary or other state-owned or state-operated ships on non-commercial service), irrespective of flag,
calling at, or operating within, ports of member states to deliver all ship-generated waste and cargo residues to port
reception facilities. Under the directive, a fee is payable by the ships for the use of the port reception facilities, including
the treatment and disposal of the waste. The ships may be subject to an inspection for verification of their compliance with
the requirements of the directive and penalties may be imposed for their breach.
The EU also authorizes member states to adopt the IMO’s Bunker Convention, discussed above, that imposes strict
liability on shipowners for pollution damage caused by spills of oil carried as fuel in vessels’ bunkers and requires vessels
of a certain size to maintain financial security to cover any liability for such damage. Most EU member states have ratified
the Bunker Convention.
The EU has adopted a regulation (EU Ship Recycling Regulation (1257/2013)) which sets forth rules relating to
vessel recycling and management of hazardous materials on vessels. The regulation contains requirements for the recycling
of vessels at approved recycling facilities that must meet certain requirements, so as to minimize the adverse effects of
recycling on human health and the environment. The regulation also contains rules for the control and proper management
of hazardous materials on vessels and prohibits or restricts the installation or use of certain hazardous materials on vessels.
The regulation seeks to facilitate the ratification of the IMO’s Hong Kong International Convention for the Safe and
Environmentally Sound Recycling of Ships, 2009. The regulation applies to vessels flying the flag of a member state and
certain of its provisions apply to vessels flying the flag of a third country calling at a port or anchorage of a member state.
For example, when calling at a port or anchorage of a member state, a vessel flying the flag of a third country will be
required, among other things, to have on board an inventory of hazardous materials which complies with the requirements
of the new regulation and the vessel must be able to submit to the relevant authorities of that member state a copy of a
statement of compliance issued by the relevant authorities of the country of the vessel’s flag verifying the inventory. The
regulation entered into force on December 30, 2013, although certain of its provisions are to apply at different stages, with
certain of them applicable from December 31, 2020. Pursuant to this regulation, the EU Commission adopted the first
version of a European List of approved ship recycling facilities meeting the requirements of the regulation, as well as four
further implementing decisions dealing with certification and other administrative requirements set out in the regulation.
The EU is considering other proposals to further regulate vessel operations. The EU has adopted an Integrated
Maritime Policy for the purposes of achieving a more coherent approach to maritime issues through coordination between
different maritime sectors and integration of maritime policies. The Integrated Maritime Policy has sought to promote the
sustainable development of the European maritime economy and to protect the marine environment through cross-sector
and cross-border cooperation of maritime participants. The EU Commission’s proposals included, among other items, the
development of environmentally sound end-of-life ship dismantling requirements (as described above in respect of the EU
Ship Recycling Regulation (1257/2013)), promotion of the use of shore-side electricity by ships at berth in EU ports to
reduce air emissions, and consideration of options for EU legislation to reduce greenhouse gas emissions from maritime
transport. The European Maritime Safety Agency has been established to provide technical support to the EU Commission
and member states in respect of EU legislation pertaining to maritime safety, pollution and security. The EU, any
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individual country or other competent authority may adopt additional legislation or regulations applicable to us and our
operations.
Other Greenhouse Gas Legislation
The Paris Agreement, which was adopted in 2015 by a large number of countries and entered into force in
November 2016, deals with greenhouse gas emission reduction measures and targets from 2020 to limit the global average
temperature increase to well below 2˚ Celsius above pre-industrial levels. International shipping was not included in this
agreement, but it is expected that its adoption may lead to regulatory changes in relation to curbing greenhouse gas
emissions from shipping.
The IMO, EU, Canada, the United States and other individual countries, states and provinces are evaluating various
measures to reduce greenhouse gas emissions from international shipping, which may include some combination of
market-based instruments, a carbon tax or other mandatory reduction measures. The EU adopted Regulation (EU)
2015/757 concerning the monitoring, reporting and verification of carbon dioxide emissions from vessels (the “MRV
Regulation”), which entered into force in July 2015 (as amended by Regulation (EU) 2016/2071). The MRV Regulation
applies to all vessels over 5,000 gross tonnage (except for a few types, including, but not limited to, warships and fish-
catching or fish-processing vessels), irrespective of flag, in respect of carbon dioxide emissions released during voyages
within the EU as well as EU incoming and outgoing voyages. The first reporting period commenced on January 1, 2018.
The monitoring, reporting and verification system adopted by the MRV Regulation may be the precursor to a market-based
mechanism to be adopted in the future. The EU is currently considering a proposal for the inclusion of shipping in the EU
Emissions Trading System as from 2023 in the absence of a comparable system operating under the IMO. This may result
in additional costs to us as ship owners if the commercial operators of our ships (i.e., the charterer or party responsible for
the purchase of fuel, choice of cargo, route and speed) are not held responsible for these costs under the proposed EU
regulations.
The European Commission has launched a "Fit for 55" package of proposals intended to reduce the EU’s total GHG
emissions by 55% by 2030, with the ultimate goal to achieve full EU decarbonization by 2050. As a result, shipping is
likely to face new stringent EU regulations. The proposal includes following:
•
•
•
•
The European Trading System Directive - Shipping will become subject to the Emission Trading Scheme, with the
ships presently reporting emissions under the EU MRV regulation required to purchase carbon emission credits.
All intra-EU emissions will be included, but only 50% of the emissions for voyages when arriving in or departing
from the EU. There will also be a phase-in period starting with 20% coverage in 2023 and increasing to 100% in
2026. Non-compliance is punishable by fines and could eventually lead to a ban from EU waters. Shipping
companies, particularly those whose administering bodies are based outside the EU such as ourselves, will likely
face increased administrative and compliance costs once the proposals are enacted. It remains to be seen what
form the enactments will take when the final text of the EU ETS is published.
The Fuel EU Marine Regulation - This is a new regulation coming into effect in 2025, imposing life cycle GHG
footprint requirements on the energy used onboard ships. It will apply to the same ships that are covered by the
EU MRV regulation and will, in addition to CO2, cover methane and nitrous oxide, all in a well-to-wake
perspective. The GHG intensity of the energy used will be required to improve by 2% in 2025 relative to 2020,
ramping up to 75% by 2050. Credits will be granted for energy generated on board, such as by wind power. The
regulation will also require container and passenger vessels to connect to shore power from 2030 for stays longer
than two hours. Same as for the ETS, non-compliance may lead to fines and being banned from EU waters.
The Alternative Fuels Infrastructure - This regulation is an update of an existing directive and will require EU
member states to ramp up the availability of LNG by 2025 and onshore electrical power supply by 2030 in core
EU ports.
The Energy Taxation Directive - This directive is being revised to remove the tax exemption for conventional
fuels used between EU ports as of 1 January 2023. International bunker for extra-EU voyages remains tax exempt.
For heavy fuel oil, the new tax rate will be approximately €37 per tonne. LNG will initially be taxed at a rate of
€0.6 per GJ. Alternative fuels will be tax exempt for a ten-year period.
Any passage of climate control legislation or other regulatory initiatives by the IMO, EU, Canada, the United States
or other individual jurisdictions where we operate, that restrict emissions of greenhouse gases from vessels, could require
us to make significant capital expenditures and may materially increase our operating costs.
Other Regions
We may be subject to environmental and other regulations that have been or may become adopted in other regions
of the world that may impose obligations on our containership and/or power generation businesses and may increase our
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costs to own and operate them. Compliance with these requirements may require significant expenditures on our part and
may materially increase our operating costs.
Vessel Security Regulations
Since September 2001, there have been a variety of initiatives intended to enhance vessel security. In November
2002, the Maritime Transportation Security Act of 2002 (the “MTSA”), came into effect. To implement certain portions of
the MTSA, the United States Coast Guard has issued regulations requiring the implementation of certain security
requirements aboard vessels operating in U.S. waters. Similarly, amendments to SOLAS created a new chapter of the
convention dealing specifically with maritime security, which came into effect in July 2004. The new chapter imposes
various detailed security obligations on vessels and port authorities, most of which are contained in the International Ship
and Port Facilities Security Code (“ISPS Code”). Among the various requirements are:
•
•
•
•
on-board installation of automatic information systems, to enhance vessel-to-vessel and vessel-to-shore
communications;
on-board installation of ship security alert systems;
the development of vessel security plans; and
compliance with flag state security certification requirements.
The United States Coast Guard regulations, intended to align with international maritime security standards, exempt
non-U.S. vessels from MTSA vessel security measures if such vessels have on board a valid International Ship Security
Certificate, that attests to the vessel’s compliance with SOLAS security requirements and the ISPS Code. Our existing
vessels have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code. Any failure
to maintain such certifications may subject us to increased liability and may result in denial of access to, or detention in,
certain ports. Furthermore, compliance with the ISPS Code requires us to incur certain costs. Although such costs have not
been material to date, if new or more stringent regulations relating to the ISPS Code are adopted by the IMO and the flag
states, these requirements could require significant additional capital expenditures or otherwise increase the costs of our
operations.
Currency control regulations
APR Energy operates in a number of developing jurisdictions which may, from time to time, impose currency
controls such that APR’s ability to repatriate revenue from that jurisdiction is substantially delayed and can result in
significant increased costs. Market conditions may not provide APR with the opportunity to cover such conditions in its
contracts. APR closely monitors government policies relating to currency controls and mitigates the effects whenever
possible.
Taxation of the Company
United States Taxation
The following is a discussion of the expected material U.S. federal income tax considerations applicable to us. This
discussion is based upon the provisions of the Code, applicable U.S. Treasury Regulations promulgated thereunder,
legislative history, judicial authority and administrative interpretations, as of the date of this Annual Report, all of which
are subject to change, possibly with retroactive effect or are subject to different interpretations. Changes in these authorities
may cause the U.S. federal income tax considerations to vary substantially from those described below.
The following discussion is for general information purposes only and does not purport to be a comprehensive
description of all of the U.S. federal income tax considerations applicable to us. No ruling has been requested from the IRS
regarding any matter affecting us. The statements made herein may not be sustained by a court if contested by the IRS.
Taxation of Operating Income
We expect that substantially all of our gross income will be attributable to the transportation of cargo. For this
purpose, gross income attributable to transportation (“Transportation Income”), includes income from the use (or hiring or
leasing for use) of a vessel to transport cargo and the performance of services directly related to the use of any vessel to
transport cargo and, thus, includes time charter and bareboat charter income.
Fifty percent (50%) of Transportation Income attributable to transportation that either begins or ends, but that does
not both begin and end, in the United States (“U.S. Source International Transportation Income”), is considered to be
derived from sources within the United States. Transportation Income attributable to transportation that both begins and
ends in the United States (“U.S. Source Domestic Transportation Income”), is considered to be 100% derived from sources
within the United States. Transportation Income attributable to transportation exclusively between non-U.S. destinations is
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considered to be 100% derived from sources outside the United States. Transportation Income derived from sources outside
the United States generally is not subject to U.S. federal income tax.
We believe that we have not earned any U.S. Source Domestic Transportation Income, and we expect that we will
not earn any such income in future years. However, certain of our activities give rise to U.S. Source International
Transportation Income, and future expansion of our operations could result in an increase in the amount of our U.S. Source
International Transportation Income. Unless the exemption from tax under Section 883 of the Code (the “Section 883
Exemption”), applies, our U.S. Source International Transportation Income generally will be subject to U.S. federal income
taxation under either the net basis and branch profits tax or the 4% gross basis tax, each of which is discussed below.
The Section 883 Exemption
In general, the Section 883 Exemption provides that if a non-U.S. corporation satisfies the requirements of Section
883 of the Code and the Treasury Regulations thereunder (the “Section 883 Regulations”), it will not be subject to the net
basis and branch profits taxes or the 4% gross basis tax described below on its U.S. Source International Transportation
Income. The Section 883 Exemption does not apply to U.S. Source Domestic Transportation Income.
A non-U.S. corporation will qualify for the Section 883 Exemption if, among other things, it (1) is organized in a
jurisdiction outside the United States that grants an exemption from tax to U.S. corporations on international
Transportation Income (an “Equivalent Exemption”), (2) satisfies one of three ownership tests (“Ownership Tests”),
described in the Section 883 Regulations and (3) meets certain substantiation, reporting and other requirements.
We are organized under the laws of the Republic of the Marshall Islands. The U.S. Treasury Department has
recognized the Republic of the Marshall Islands as a jurisdiction that grants an Equivalent Exemption. We also believe that
we will be able to satisfy all substantiation, reporting and other requirements necessary to qualify for the Section 883
Exemption. Consequently, our U.S. Source International Transportation Income should be exempt from U.S. federal
income taxation provided we satisfy the Ownership Tests and provided we file a U.S. federal income tax return to claim the
Section 883 Exemption. We believe that we currently should satisfy the Ownership Tests because our common shares
represent more than 50% of the vote and value of all classes of stock and are primarily and regularly traded on an
established securities market in the United States (and are not treated as closely held) within the meaning of the Section
883 Regulations. We can give no assurance, however, that changes in the trading, ownership or value of our common
shares will permit us to continue to qualify for the Section 883 Exemption.
The Net Basis and Branch Profits Tax
If the Section 883 Exemption does not apply, our U.S. Source International Transportation Income may be treated as
effectively connected with the conduct of a trade or business in the United States “Effectively Connected Income”, if we
have a fixed place of business in the United States and substantially all of our U.S. Source International Transportation
Income is attributable to regularly scheduled transportation or, in the case of bareboat charter income, is attributable to a
fixed place of business in the United States.
Generally, we believe that we do not have a fixed place of business in the United States. As a result, we believe that
substantially none of our U.S. Source International Transportation Income would be treated as Effectively Connected
Income. While we do not expect to acquire a fixed place of business in the United States, there is no assurance that we will
not have, or will not be treated as having, a fixed place of business in the United States in the future, which may, depending
on the nature of our future operations, result in our U.S. Source International Transportation Income being treated as
Effectively Connected Income.
Any income we earn that is treated as Effectively Connected Income would be subject to U.S. federal corporate
income tax (the highest statutory rate currently is 21%) and a 30% branch profits tax imposed under Section 884 of the
Code. In addition, a 30% branch interest tax could be imposed on certain interest paid, or deemed paid, by us.
If we were to sell a vessel that has produced Effectively Connected Income, we generally would be subject to the net
basis and branch profits taxes with respect to the gain recognized up to the amount of certain prior deductions for
depreciation that reduced Effectively Connected Income. Otherwise, we would not be subject to U.S. federal income tax
with respect to gain realized on the sale of a vessel, provided the sale is not considered to occur in the United States under
U.S. federal income tax principles.
The 4% Gross Basis Tax
If the Section 883 Exemption does not apply and we are not subject to the net basis and branch profits taxes
described above, we generally will be subject to a 4% U.S. federal income tax on our gross U.S. Source International
Transportation Income without the benefit of deductions. We estimate that the U.S. federal income tax on such U.S. Source
International Transportation Income would be approximately $2 million if the Section 883 Exemption and the net basis and
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branch profits taxes do not apply, based on the amount of our gross U.S. Source International Transportation Income we
have earned in prior years. However, many of our time charter contracts contain provisions in which the charterers would
be obligated to bear this cost. The amount of such tax for which we would be liable for in any year will depend upon the
amount of income we earn from voyages into or out of the United States in such year, however, which is not within our
complete control.
Hong Kong Taxation
The following is a discussion of the expected material Hong Kong profits tax considerations applicable to us. This
discussion is based upon the provisions of the Inland Revenue Ordinance (Cap. 112) (the “IRO”) as of the date of this
Annual Report, all of which are subject to change, possibly with retroactive effect, and subject to different interpretations
by the Inland Revenue Department of Hong Kong (the “IRD”). Changes to the IRO or other relevant authorities may cause
the Hong Kong profits tax considerations to vary substantially from those described below.
The following discussion is for general information purposes only and does not purport to be a comprehensive
description of all of the Hong Kong profits tax considerations applicable to us. We believe Seaspan’s central management
and control is in Hong Kong.
Profits tax
In general, the IRO provides that profits tax shall be charged for each year of assessment on every person (which
includes corporations) carrying on a trade, profession or business in Hong Kong in respect of such person’s assessable
profits arising in or derived from Hong Kong for that year from such trade, profession or business (excluding profits arising
from the sale of capital assets) as ascertained in accordance with the IRO. In ascertaining the chargeable profits, applicable
deductions are allowed for all costs and expenses to the extent they are incurred by that person during the relevant basis
period in the production of chargeable profits.
Under the two-tiered profits tax rates regime in Hong Kong, for corporations, the prevailing profits tax rate for the
first HK$2 million of assessable profits will be 8.25% and assessable profits above HK$2 million will continue to be
subject to the rate of 16.5%.
There are specific provisions in the IRO in relation to the ascertainment of the assessable profits of a ship-owner
carrying on business in Hong Kong.
A person is deemed to be carrying on business as an owner of ships in Hong Kong if the business is normally
controlled or managed in Hong Kong or the person is a corporation incorporated in Hong Kong, or any ship owned by that
person calls at any location within the waters of Hong Kong (except where the IRD is convinced that the call is of a casual
nature). In this context, “business as an owner of ships” means a business of chartering or operating ships.
If a corporation is deemed to be carrying on business as an owner of ships in Hong Kong, certain sums received by
the corporation will be considered as relevant sums when ascertaining the assessable profits in accordance with the IRO.
The relevant sums include, but are not limited to, all the sums derived from any charter hire in respect of the operation of a
ship navigating solely or mainly within the waters of Hong Kong and half of the sums derived from any charter hire in
respect of the operation of a ship navigating between any location within the waters of Hong Kong and any location within
river trade waters.
The IRO also provides that certain sums will be considered as exempted sums, which are exempted from the
determination of the relevant sums. In particular, if a ship is registered in Hong Kong, its income from the relevant carriage
abroad proceeding to sea from any location within the waters of Hong Kong or any other location within those waters will
be exempted.
In June 2020, the Inland Revenue (Amendment) (Ship Leasing Tax Concessions) Ordinance 2020 (the “Ship
Leasing Amendment Ordinance”) was enacted to provide tax concessions for qualifying ship leasing and ship leasing
management businesses. Under the Ship Leasing Amendment Ordinance, a qualifying ship lessor is entitled to have its
qualifying profits charged at a concessionary profits tax rate (currently set at 0% for the year of assessment commencing on
or after 1 April 2020). Such tax concession applies to a corporation for a year of assessment only if (i) during the basis
period for that year of assessment, (a) the central management and control of the corporation is exercised in Hong Kong,
(b) the activities that produce its qualifying profits for that year are carried out in Hong Kong by the corporation; or
arranged by the corporation to be carried out in Hong Kong, and (c)those activities are not carried out by a permanent
establishment outside Hong Kong, and (ii) the corporation has made an election in writing, which is irrevocable, that the
tax concession applies to it.
If we and/or Seaspan are deemed to be carrying on business as owners of ships in Hong Kong, and if our ships are
navigating solely or mainly within the waters of Hong Kong and/or navigating between any location within the waters of
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Hong Kong and any location within river trade waters, the relevant sums falling within the definition of the IRO are subject
to the profits tax, with the exception of the exempted sums. The same will apply to our other vessel-holding subsidiaries
that are registered as non-Hong Kong companies in Hong Kong (the “vessel-holding subsidiaries”) under the Hong Kong’s
Companies Ordinance (Cap. 622) (the “Companies Ordinance”). Based on our operation and our understanding of the
relevant provisions of the IRO, we do not believe that our charter hire income is, nor do we expect our charter hire income
to be, subject to the profits tax under the IRO, because the ships owned by us, Seaspan and/or our other vessel-holding
subsidiaries are not navigating solely or mainly within the waters of Hong Kong and/or are not navigating between any
location within the waters of Hong Kong and any location within river trade waters. While currently the ships owned by us,
Seaspan and/or our other vessel-holding subsidiaries are not navigating solely or mainly within the waters of Hong Kong
and/or are not navigating between any location within the waters of Hong Kong and any location within river trade waters,
there is no assurance that these ships will not be operating within the said waters in the future, depending on the nature of
our future operations.
In the event that the ships owned by us, Seaspan and/or our other vessel-holding subsidiaries do navigate solely or
mainly within the waters of Hong Kong and/or navigate between any location within the waters of Hong Kong and any
location within river trade waters and our charter hire income does not fall within the definition of exempted sums under
the IRO, we are likely to be subject to the profits tax in respect of such income. In such circumstances, for the purpose of
ascertaining the profits tax payable, the assessable profits will be calculated as the sum bearing the same ratio to the
aggregate of the relevant sums earned by or accrued to the relevant company during the basis period for that year of
assessment as that relevant company’s total shipping profits for the basis period bear to the aggregate of the total shipping
income earned by or accrued to that relevant company during that basis period for that year of assessment. However,
instead of the calculating the assessable profits based on the above, the IRD may assess the profits on a fair percentage of
the aggregate of the relevant sums of the relevant basis period.
In respect of other service-providing subsidiaries (which are registered as non-Hong Kong companies under the
Companies Ordinance), if the services are performed in Hong Kong, the service fee income will be considered as being
arising in or derived from Hong Kong and the corresponding profits will be subject to the profits tax. The profits tax
payable will be calculated using the then prevailing profits tax rate.
In addition, Management is considering a restructuring plan to restructure some MSC bareboat charter contracts to
take advantage of the tax concessions from the new ship leasing regime under the Ship Leasing Amendment Ordinance.
The People’s Republic of China Taxation
The following is a discussion of the expected material China tax considerations applicable to us. This discussion is
based upon the provisions of the laws and regulations described below as in effect as of the date of this Annual Report, all
of which are subject to change, possibly with retroactive effect, and subject to different interpretations by the relevant
Chinese tax authorities. Changes to these laws and regulations may cause the Chinese tax considerations to vary
substantially from those described below.
The following discussion is for general information purposes only and does not purport to be a comprehensive
description of all of the Chinese tax considerations applicable to us
Corporation Income Tax (“CIT”)
The relevant China tax regulation in respect of the China taxation of our voyage charter and time charter revenue is
“Provisional Measures on the Collection of Tax on Non-Resident Taxpayers Engaged in International Transportation
Business” (Bulletin of the State Administration of Taxation 2014, No. 37) (“Provisional Measures”).
China imposes CIT on non-resident shipping companies that operate international transportation business with
China. Effective from August 1, 2014, non-resident shipping companies are subject to CIT at the rate of 25% on their
China-sourced taxable income derived from the provision of international transportation services. Such services are defined
to include transportation of passengers, goods, mail or other items into and out of China via owned or leased ships,
airplanes and shipping spaces, as well as the provision of services such as loading and unloading, warehousing and related
services. Non-resident shipping companies are required to register with Chinese tax authorities and maintain sound
accounting records relating to the calculation of taxes.
China-sourced income derived by us and our vessel-owning subsidiaries from voyage charter and time charter of
vessels may be treated as international transportation service income and therefore would be subject to the imposition of
CIT under the Provisional Measures, unless exempted from China taxation based on the China/HK Tax Treaty (as defined
below).
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Value-added Tax (“VAT”)
Under the current Chinese VAT regulation, non-resident enterprises that derive income from provision of
international transportation services to Chinese customers are subject to VAT, unless exempted under the applicable tax
treaty. The applicable VAT rate is 9% for transportation services and 6% for storage and loading/unloading services. VAT
is generally withheld by the Chinese customers but non-resident shipping companies may also perform their own VAT
filings if they have already registered with the competent tax authorities.
We were granted VAT exemption in 2015 (as discussed below). As such, no China VAT has been paid by us or
withheld by Chinese customers since 2015.
Tax exemption
Article 8(1) of the Arrangement between Mainland and Hong Kong for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income and its Fourth Protocol (“China/HK Tax Treaty”) provide
exemptions from CIT and VAT for qualifying taxpayers. Specifically, according to the China/HK Tax Treaty, China
exempts from tax (including CIT and VAT) income and profits derived by a Hong Kong tax resident conducting
international transportation business in China.
We are in the process of obtaining the CIT and VAT exemption treatments pursuant to the China/HK Tax Treaty for
2021 from the competent Shanghai tax authority.
C.
Organizational Structure
Please read Exhibit 8.1 to this Annual Report for a current list of our significant subsidiaries.
D.
Property, Plant and Equipment
For information on our assets, please read “Item 4. Information on the Company—B. Business Overview—General
—Seaspan Fleet for containership leasing segment and APR Energy Fleet for power generation segment. For information
on environmental issues that may affect the company’s utilization of the assets, please read “Item 4. Information on the
Company—B. Business Overview—Environmental and Other Regulations.
Item 4A. Unresolved Staff Comments
None.
Item 5.
Operating and Financial Review and Prospects
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and notes
included elsewhere in this Annual Report.
Please see “Item 5. Operating and Financial Review and Prospects—A. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our 2020 Annual Report for a discussion related to the 2019/2020
comparative period.
Overview
We are Atlas Corp., a global asset manager and the parent company of Seaspan and APR Energy.
Seaspan is a leading independent owner and manager of containerships. We primarily deploy our vessels on long-
term, fixed-rate time charters to take advantage of the stable cash flow and high utilization rates that are typically
associated with long-term time charters. As of March 10, 2022, we operated a fleet of 132 vessels that have an average age
of approximately eight years, on a TEU weighted basis.
Customers for our operating fleet as of March 10, 2022, were CMA CGM, COSCO, Hapag-Lloyd, Maersk, MSC,
ONE, Yang Ming Marine and ZIM.
APR Energy is a global leasing business that owns and operates a fleet of capital-intensive assets (gas turbines and
other power generation equipment), providing power solutions to customers including large corporations and government
backed utilities. APR Energy focuses on deploying its assets to optimize cash flows across its lease portfolio. APR Energy
is the global leader in its market and offers a unique integrated platform to both lease and operate its assets.
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Recent Developments in 2021 and 2022
Vessel Acquisitions and Deliveries
During the year ended December 31, 2021, we took delivery of seven vessels. The additions to our fleet are
summarized below.
Vessel
Mediterranean Bridge
Gulf Bridge
CMA CGM Chile
CMA CGM Mexico
MSC Carole
MSC Alanya
MSC Rayshmi
Year Built
2010
2010
Vessel Class
(TEU)
8500
8500
2019
2019
2021
2021
2021
15000
15000
12200
12200
12200
Purchase price
(in millions of
US dollars)
$
52.3
52.3
127.0
127.0
84.0
84.0
84.0
Delivery
Date
April 2021
May 2021
May 2021
July 2021
September 2021
November 2021
November 2021
Shipbuilding Contracts for Newbuild Containerships
Commencing in December 2020, though to December 31, 2021, we entered into shipbuilding contracts for 70
newbuild containerships, three of which were delivered in 2021 as noted above. The remaining 67 vessels to be delivered
are summarized in the table below:
12200 TEU
24000 TEU
15000 TEU LNG
12000 TEU
15000 TEU
16000 TEU
15500 TEU
12000 TEU
15000 TEU
7000 TEU LNG
7000 TEU
Total
Newbuilds
2
2
10
4
4
9
6
2
3
15
10
67
Total TEU
24,400
48,000
150,000
48,000
60,000
144,000
93,000
24,000
45,000
105,000
70,000
811,400
Month Acquired
December 2020
February 2021
February 2021
February 2021
February 2021
March 2021
March 2021
June 2021
June 2021
July and September 2021
August 2021
These vessels will commence long-term charters with leading global liner companies, some of which are subject to
vessel purchase options or obligations at the conclusion of their respective charters.
Vessel Sales
In October 2021, we sold one 4,250 TEU vessel for a purchase price of $38.3 million. Through a series of
transactions, the vessel was ultimately purchased by a wholly owned subsidiary of Zhejiang Energy Atlas Marine
Technology Co., Ltd, which is 50% owned by Atlas (the “ZE JV”). Seaspan continues to manage the ship operations of the
vessel.
In December 2021, we entered into agreements to sell six 4,250 TEU vessels for an aggregate $186.8 million. Three
of the vessels will ultimately be purchased by subsidiaries of the ZE JV and three of the vessels are being purchased by a
liner customer. One sale completed in February 2022 for gross proceeds of $32.8 million. We continue to manage the ship
operations of this vessel. The remaining five vessel sales are expected to complete in the second quarter of 2022, subject to
closing conditions.
Amendment to APR Energy Acquisition Agreement
In February 2021, in connection with the acquisition of APR Energy, we and the sellers agreed, subject to
completion of definitive documentation, to amend the acquisition agreement to incorporate an indemnification and
compensation arrangement whereby the sellers would compensate the Company for future losses realized on the sale or
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disposal of certain property, plant and equipment and inventory items. Amendment No. 3 to the acquisition agreement,
reflecting this agreement, was entered into in April 2021. Concurrently with the execution of Amendment No. 3, we issued
to certain affiliates of Fairfax 5-year warrants to purchase 5,000,000 common shares, exercisable at a price of $13.00 per
share.
Notes Exchange Offer
In May 2021, Atlas completed an offer to exchange (the "Exchange Transaction") up to $80.0 million aggregate
principal amount of 7.125% senior unsecured notes due 2027 (the “Atlas Notes”) for any and all outstanding $80.0 million
aggregate principal amount of Seaspan’s substantially similar 7.125% senior unsecured notes due 2027 (the “Seaspan
Notes”). The Seaspan Notes were originally issued in October 2017. Pursuant to the Exchange Transaction, Atlas issued
approximately $52.2 million aggregate principal amount of the Atlas Notes in exchange for an equal principal amount of
the Seaspan Notes. In July 2021, Atlas exchanged an additional $0.2 million of Atlas Notes for Seaspan Notes. Seaspan
subsequently redeemed all remaining Seaspan Notes at par, plus accrued and unpaid interest in July 2021.
Fairfax Notes Exchange and Redemption
In June 2021, Atlas and Seaspan completed an exchange and amendment of $600.0 million aggregate principal
amount of Seaspan’s senior notes, including $250.0 million of 2025 Fairfax Notes, $250.0 million of 2026 Fairfax Notes
and $100.0 million of 2027 Fairfax Notes. The outstanding Fairfax Notes were held by certain affiliates of Fairfax
Financial Holding Limited (the “Fairfax Holders”).
Pursuant to this transaction, the Company exchanged $200.0 million aggregate principal amount of the 2026 Fairfax
Notes and all $100.0 million aggregate principal amount of the 2027 Fairfax Notes for (i) 12,000,000 Series J 7.00%
Cumulative Redeemable Perpetual Preferred Shares of the Company, representing total liquidation value of $300.0 million
and (ii) 1,000,000 five year warrants to purchase an equal number of common shares of the Company at an exercise price
of $13.71 per share (the “Fairfax Notes Exchange”). The exchanged 2026 Fairfax Notes and 2027 Fairfax Notes were
subsequently cancelled.
In August 2021, the Company redeemed the remaining Fairfax Notes, which included $250.0 million of 2025
Fairfax Notes and $50.0 million of 2026 Fairfax Notes, for cash on August 23, 2021.
Preferred Shares Redemptions
In July 2021, the Company redeemed all of its outstanding 8.25% Series E Cumulative Redeemable Preferred Shares
and outstanding 8.20% Series G Cumulative Redeemable Perpetual Preferred Shares for cash.
Enhancement of the Company’s Vessel Portfolio Financing Program
In May 2021, the Company entered into amendments and restatements (the “Amendment and Restatement”) of the
senior secured loan facilities and intercreditor and proceeds agreement that comprise its vessel portfolio financing program
(the “Program”) to, among other things, (i) increase the capacity under the Program to $2.5 billion, including the Senior
Secured Notes (as defined below), (ii) increase the size of the revolving credit facility from $300.0 million to $400.0
million, (iii) increase the commitments under the bank loan facilities by $180.0 million and (iv) extend the maturities of
tranches due in 2024 and 2025 by approximately two years.
Additional Financings
In January 2021, the Company made a payment of $69.2 million to early terminate a sale-leaseback financing
arrangement secured by a 11,000 TEU vessel. In March 2021, the Company entered into a new sale-leaseback financing
arrangement for $83.7 million, secured by the same 11,000 TEU vessel.
In April through November 2021, the Company entered into $3.3 billion in sale-leaseback financing arrangements
(the “Newbuild Sale-Leasebacks”) related to 35 newbuild containerships, subject to satisfaction of customary closing
conditions. The Newbuild Sale-Leasebacks partially fund pre-delivery payments related to the 35 newbuild containerships.
As of December 31, 2021, the Company received aggregate funding of $310.4 million from these financings related to
vessels under construction and three delivered vessels.
In October and December 2021, the Company entered into agreements providing for an aggregate $2.3 billion in
term loans, to finance 18 newbuild containerships. The facility agreements partially fund pre-delivery payments relating to
the 18 vessels. At delivery, pursuant to the facility agreements, the Company may elect to convert the term loan in respect
of each vessel into a lease financing arrangement, whereby we will sell the vessel to Japanese special purpose companies
("SPCs") and lease it back over a term of approximately 14 years, with one or more options to purchase the vessel at the
9.5 year anniversary and, for certain vessels, the 12-year anniversary of the lease for a pre-determined fair value purchase
price. As at December 31, 2021, the Company has not drawn on these facilities.
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In October 2021, the Company entered into agreements relating to underwritten financing arrangements totaling
$1.4 billion, related to 17 newbuild containerships. In December 2021, the Company entered into lease financing
arrangements for two of the 17 vessels. The lease financing arrangements are expected to provide gross financing proceeds
of approximately $113.0 million per vessel upon delivery of each vessel, or $226.0 million in total. Under the lease
financing arrangements, we will sell the vessels to SPCs and lease the vessels back over a term of 13.25 years, with an
option to purchase the vessels at the 5-year anniversary of the lease for a pre-determined fair value purchase price. As at
December 31, 2021, the Company has not drawn on these facilities.
In February 2022, the Company entered into a $250.0 million 3-year sustainability-linked unsecured revolving credit
facility, to be used to fund vessels under construction and secondhand vessel acquisitions and for general corporate
purposes (the "2022 RCF"). The 2022 RCF replaces the Company’s $150.0 million 2-year unsecured revolving credit
facility and bears interest at market rate. To date, the Company has not drawn on the 2022 RCF.
Debt Offerings
In February 2021 and April 2021, we issued $200.0 million and $300.0 million, respectively, of 6.5% senior
unsecured sustainability-linked bonds into the Nordic marketplace (collectively, the "NOK Bonds"). The bonds mature in
February 2024 and April 2026, respectively, and bear interest at 6.5% per annum. If certain sustainability linked targets in
the NOK Bonds are met, they are to be redeemed at maturity at 100.0% of the initial principal amount. If the sustainability
linked targets are not met, the NOK Bonds are to be settled at maturity at 100.5% of the initial principal amount. The NOK
Bonds are listed on the Oslo Stock Exchange.
In May 2021, the Company entered into a note purchase agreement to issue, in a private placement (the “Private
Placement”), $500.0 million aggregate principal amount of fixed rate, sustainability-linked senior secured notes (the
“Senior Secured Notes”). On May 21, 2021, the Company issued $450.0 million of such notes, comprised of $150.0
million aggregate principal amount of 3.91% Series A Senior Secured Notes due 2031, $170.0 million aggregate principal
amount of 4.06% Series C Senior Secured Notes due 2033 and $130.0 million aggregate principal of 4.26% Series D
Senior Secured Notes due 2036. The Company issued the remaining $50.0 million aggregate principal amount of 3.91%
Series B Senior Secured Notes due 2031 in August 2021. The Private Placement was completed as part of an amendment
and upsize of the Program.
In July 2021, the Company issued $750.0 million aggregate principal amount of 5.50% senior unsecured notes due
2029. The notes are a blue transition bond and Seaspan’s senior unsecured obligations and accrue interest at a rate of
5.50% per year, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2022.
The notes are not guaranteed by Atlas or any of its or Seaspan’s respective subsidiaries. The notes will mature on August 1,
2029, unless earlier repurchased or redeemed.
New Mobile Power Generation Contracts
In April 2021, APR Energy entered into contracts to provide 330 MW utilizing 10 aero-derivative gas turbines to
provide peaking power in Mexicali, Mexico. These contracts represent the third consecutive year of project engagement
and the contracts concluded at the end of the third quarter. In April, 2021, APR Energy also entered into contracts with
Imperial Irrigation District (“IID”) for three aero-derivative gas turbines to provide grid stabilization solutions to southern
California. This contract concluded on October 15, 2021. In January 2022, APR Energy entered into its first renewal with
IID for three turbines. In December 2021, APR Energy entered into an agreement with Evolution Power Partners for up to
226 MW of gas power generation capacity in Itaguaí, Rio De Janeiro, for a minimum of twelve consecutive months
commencing in May 2022. Additionally, in December 2021, APR Energy entered into a contract with a US counterparty
to provide a dry lease of five turbines representing 120 MW for a minimum of twelve consecutive months commencing in
February 2022.
Joint Venture Agreements
In March 2021, Atlas entered into a joint venture with ZE and executed a shareholders agreement with ZE to form
the ZE JV. The purpose of the joint venture is to develop business in relation to container vessels, LNG vessels,
environmental protection equipment and power equipment supply.
In March 2022, Seaspan entered into a joint venture agreement to form a procurement joint venture with a leading
independent ship management company to leverage the combined purchasing power of the partners and their respective
affiliates to procure products and services. The business of the joint venture may be expanded in future to include offering
procurement services to third party customers and any other business as may be agreed between the partners.
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Changes in Senior Management
In January 2021, Graham Talbot was appointed Chief Financial Officer of Atlas and Seaspan.
In February 2021, Alistair Buchanan resigned as a director of Atlas.
In March 2021, Phillip Lord was appointed Chief Financial Officer of APR Energy.
In July 2021, Katie Wade was appointed a non-executive board member effective September 2021.
In August 2021, Benjamin Church was appointed as Chief Executive Officer of APR Energy.
In February 2022, Karen Lawrie resigned as General Counsel of Atlas and Seaspan.
Market Conditions
Containership leasing. Containerships play an integral role in global trade, facilitating the movement of goods around
the world. GDP is an important measure of global trade, and global GDP growth is positively correlated with growth in
container throughput. Container throughput has varied significantly since 2000 and was greater than 10% per annum in
most years prior to the global credit crisis. In 2009, global container throughput declined by over 8% compared to the prior
year, and after growing sharply in 2010 and 2011, ranged between 1.4% and 5.7% per annum between 2012 and 2017, as
the global economy gradually recovered. In 2020, due to the impact of COVID-19, global economic expansion was halted
in the first half of the year, but swiftly recovered in the latter half of the year and into 2021. Container throughput decrease
for the year was approximately 1.4%. With the recovery from COVID-19, both charter rates and idle rates improved
significantly. The idle fleet at the end of December 2021 was approximately 0.6% of the global fleet, as measured by TEU,
compared to approximately 1.3% of the global fleet at the end of December 2020. Charter rates for 4,250 TEU Panamax
vessels, for example, were approximately $87,000 per day in December 2021, compared to approximately $19,000 per day
in December 2020.
The orderbook to global fleet rate was 23.3% at the end of December 2021, compared with 10.9% at the end of
December 2020. Approximately 76% (in terms of TEU capacity) of the current containership orderbook is for vessels
10,000 TEU and greater in size. Vessels less than 4,000 TEU represent approximately 13% of the global containership
orderbook, with only 106 vessels being on-order in the segments between 4,000 TEU and 9,999 TEU.
Power Generation. APR Energy’s market is influenced by global political and economic conditions. Declines in
economic activity, slowing of growth rates and customer access to funding could impact the growth strategies of the
business. Factors such as election cycles, economic downturns, fuel price variability, reliance on renewable energy and
political instability all impact customer decision making in addressing their power needs, creating a certain degree of
volatility. Additionally, changes in political regimes or political unrest pose potential risk to existing contracts and/or the
timing of potential new contract opportunities.
Global power investment declined by approximately 10% in 2020 due to delays in new power projects and grid
improvements stemming from the COVID-19 pandemic, the decrease in oil prices and the movement away from carbon
emissions and nuclear power. With the resurgence of the global economy upon recovery from COVID-19, global power
demand and global investment in energy projects is forecasted to continue increasing over the next few decades, driven by
the increasing global middle-class and its desire for reliable access to electricity and a transition to renewable energy
sources from aging technologies. The largest forecast demand increases are expected in China, India, the Middle East,
Southeast Asia and other geographies with large populations with expected wealth increases that result in an exponential
increase in demand for electric heating, cooling, cooking and home entertainment.
Impact of Recent Developments in Ukraine
In February 2022, as a result of the invasion of Ukraine by Russia, economic sanctions were imposed by the U.S.,
the EU, the UK and a number of other countries on Russian financial institutions, businesses and individuals, as well as
certain regions within the Donbas region of Ukraine. While it is difficult to estimate the impact of current or future
sanctions on the Company’s business and financial position, these sanctions could adversely impact the Company’s
operations and/or financial results. In the near term, we expect increased volatility in the region due to these geopolitical
events and, with the support of our customers, our vessels have ceased trading to Russia for the time being. We also
anticipate we could face challenges to recruit seafarers in sufficient numbers to replace Ukrainians seafarers who are not
able or permitted to leave their country, given that Ukrainians constitute a significant number of our seafarers. Finally, we
expect that the Russia-Ukraine conflict may exacerbate market volatility, and may impact access to and pricing of capital.
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For more information regarding the risks relating to economic sanctions as a result of Russia’s invasion of Ukraine as well
as the impact on retaining and sourcing our crew, see “Item 3. Key Information—D. Risk Factors."
Effects of COVID-19
The COVID-19 pandemic initially negatively affected global demand for seaborne transportation, decreasing freight
and charter rates in the first half of 2020. Since then, however, the shipping industry has seen robust demand for seaborne
transportation, with freight volumes and freight rates rebounding sharply. High demand for containerships has resulted in
negligible vessel capacity available in certain size segments as of December 31, 2021, increasing charter rates for all
segments and enabling us to recharter and forward fix many of our vessels which had charters expiring this year or in the
near term at higher rates. Increased demand has also enabled us to execute shipbuilding contracts for 70 newbuilds since
December 2020, with long-term charters attached. We believe future significant downside risk to our containership
business is mitigated by our longstanding business relationships and the long-term contracts securing the majority of our
fleet.
In our containership business, costs of operations have increased due to COVID-19’s impact on supply chains, on
workers’, surveyors’ and other specialists’ access to the shipyards to complete repairs and inspections, and on the ability to
conduct crew transfers. The average daily operating cost per vessel per day for vessels on time charter for the year ended
December 31, 2021 increased to $6,766.0 compared to $6,010.0 per vessel per day for the year ended December 31, 2020.
To mitigate, we have made logistical changes and worked with vendors to ensure continued access to equipment and
supplies. We have also intentionally delayed or altered plans for repairs and vessel projects where practicable. For our
crew, we have developed and implemented extended onboard management procedures and we have prepared response
plans should any crew member fall ill onboard. In addition, although embarkation and disembarkation of seafarers remains
challenging and there are increased costs associated, we are conducting crew changes at ports where transfers are
permitted. Management has obtained agreements from certain charterers to alter trading routes to facilitate crew changes.
During 2020, APR Energy’s business was challenged by COVID-19 by the effective shutdown of government
institutions in some jurisdictions, which impacted procurement processes for certain prospective projects. As economies
recover from the effects of the COVID-19 pandemic, electricity demand is increasing. This increasing demand is coupled
with a reduction in generation capacity from hydro-generation plants as a result of regional drought conditions and the
decommissioning of thermal generation power plants as certain markets transition to renewable generation, creating
shortfalls in anticipated power needs. APR Energy has secured contracts as a result of these conditions and continues to
develop existing customer relationships to extend and expand its current contracts whenever possible. As of March 10,
2022, APR Energy had four turbines off contract (compared to 14 turbines off contract in March 2021), representing 120
megawatt capacity and 9.0% of the overall fleet capacity.
Some of our office staff continue to work remotely, but many have started to return to our physical offices. The
return to office is being done on a gradual basis, as local health authorities ease COVID-19 related restrictions. During
2021, there was no meaningful increase in costs or expenses resulting from measures to facilitate remote working.
We continuously monitor the developing situation, as well as our customers’ response thereto, and make all
necessary preparations to address and mitigate, to the extent possible, the impact of COVID-19 to our company.
A.
Results of Operations
Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
The following discussion of our financial condition and results of operations is for the years ended December 31,
2021 and 2020 with the latter including the post-acquisition results of APR Energy from February 29, 2020.
Our consolidated financial statements have been prepared in accordance with U.S. GAAP and, except for number of
shares, per share amounts and where otherwise specifically indicated, all amounts are expressed in millions of U.S. dollars.
Year Ended December 31,
2021
2020
2019
Statement of operations data (in millions of USD):
Revenue
Operating expenses (income):
Operating expenses
Depreciation and amortization
General and administrative
Operating leases
$
1,646.6
$
1,421.1
$
1,131.5
339.6
366.7
90.6
146.3
274.6
353.9
65.4
150.5
229.8
254.3
33.1
154.3
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Indemnity claim under acquisition agreement
Goodwill impairment
Income related to modification of time charters
(Gain) Loss on sale
Operating earnings
Other expenses (income):
Interest expense
Interest income
Loss on debt extinguishment
(Gain) Loss on derivative instruments (1)
Other expenses(2)
Net earnings before income tax
Income tax expense
Net earnings
(42.4)
—
—
(16.4)
762.2
197.1
(3.1)
127.0
(14.1)
21.8
433.5
33.0
400.5
—
117.9
—
0.2
—
—
(227.0)
—
$
458.6
$
687.0
191.6
(5.0)
—
35.5
27.3
209.2
16.6
192.6
218.9
(9.3)
—
35.1
2.0
440.3
1.2
$
439.1
$
$
$
Common shares outstanding at year end:
247,024,699
246,277,338
215,675,599
Per share data (in USD):
Basic earnings per common share
Diluted earnings per common share
Dividends paid per common share
$
$
1.36
1.26
0.50
0.52
0.50
0.50
$
1.72
1.67
0.50
Statement of cash flows data (in millions of USD):
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
$
944.0
$
694.2
$
783.0
(1,693.9)
734.2
(859.9)
310.9
(475.6)
(481.5)
Net (decrease) increase in cash and cash equivalents
and restricted cash
$
(15.7)
$
145.2
$
(174.1)
Selected balance sheet data (at year end, in
millions of USD):
Cash and cash equivalents
Property, plant and equipment(3)
Other assets
Total assets
Current liabilities
Long-term debt
Operating lease liabilities
Other financing arrangements
Derivative instruments(1)
Other long-term liabilities
Shareholders’ equity
Cumulative redeemable preferred shares
$
288.6
$
304.3
$
195.0
6,952.2
3,328.8
6,974.7
2,010.1
5,707.7
2,014.3
$ 10,569.6
$
9,289.1
$
7,917.0
$
1,175.5
$
854.6
$
769.5
3,731.8
562.3
1,239.3
28.5
17.7
3,517.6
296.9
3,234.0
2,696.9
669.3
801.7
63.0
40.9
3,625.6
—
782.6
373.9
50.2
11.2
3,232.7
—
Total liabilities and shareholders’ equity
$ 10,569.6
$
9,289.1
$
7,917.0
52
Table of Contents
Other data:
Number of vessels in operation at year end
Average age of vessel fleet (TEU weighted basis) in
years at year end
Vessel TEU capacity at year end
Average remaining lease period on vessel charters
(TEU weighted basis)
Vessel utilization for the year ended(4)
Power fleet utilization for the year ended(5)
133
8.3
127
7.6
117
6.6
1,152,550
1,073,200
956,400
5.0
98.7 %
73.8 %
3.7
98.4 %
68.9 %
4.1
98.9 %
74.0 %
(1)
(2)
(3)
(4)
(5)
All of our interest rate swap agreements are marked to market and the changes in the fair value of these instruments are recorded in “(Gain) Loss
on derivative instruments”.
Other expenses include foreign exchange gain or loss, loss on repatriation of currency from a foreign jurisdiction and undrawn credit facility fees.
Property, plant and equipment include the net book value of vessels in operation, power generating equipment and other equipment.
Vessel utilization represents the number of Ownership Days On-Hire as a percentage of Total Ownership Days (including time charter and
bareboat ownership days) during the year. Ownership Days are the number of days a vessel is owned and available for charter. Ownership Days
On-Hire are the number of days a vessel is available to the charterer for use.
Power fleet utilization represents Average Megawatt On-Hire as a percentage of Average Megawatt Capacity. Average Megawatt On-Hire is the
amount of capacity that is under contract and available to customers for use. Average Megawatt Capacity is the average maximum megawatts that
can be generated by the power fleet. Atlas acquired APR Energy on February 28, 2020. For periods prior to this, APR Energy was not controlled
by Atlas.
Consolidated Financial Summary (in millions of USD, except for per share amount)
The following tables summarize Atlas’s consolidated financial results and segmental financial results, for the year
ended December 31, 2021 and 2020.
Years ended December 31,
Change
2021
2020
$
225.5
65.0
12.8
25.2
(42.4)
(4.2)
%
15.9 %
23.7 %
3.6 %
38.5 %
100.0 %
(2.8) %
(117.9)
(100.0) %
(16.6)
(8300.0) %
303.6
5.5
207.9
209.9
0.76
249.8
66.2 %
2.9 %
107.9 %
167.3 %
152.0 %
36.0 %
Revenue
Operating expense
Depreciation and amortization expense
General and administrative expense
Indemnity claim under acquisition agreement
Operating lease expense
Goodwill impairment
(Gain) Loss on sale
Operating earnings
Interest expense
Net earnings
Net earnings attributable to common shareholders
Earnings per share, diluted
Cash from operating activities
$
1,646.6 $
1,421.1
339.6
366.7
90.6
(42.4)
146.3
—
(16.4)
762.2
197.1
400.5
335.4
1.26
944.0
274.6
353.9
65.4
—
150.5
117.9
0.2
458.6
191.6
192.6
125.5
0.50
694.2
53
Table of Contents
Segment Financial Summary
Year Ended December 31, 2021
Containership
Leasing
Mobile Power
Generation
Elimination
and Other (1)
Total
Revenue
$
1,460.4 $
186.2 $
— $
1,646.6
Operating expense
Depreciation and amortization expense
General and administrative expense
Indemnity claim (income) under
acquisition agreement
Operating lease expense
Gain on sale
Interest expense
Interest income
Income tax expense
289.3
307.9
49.9
—
143.0
(15.9)
178.8
(0.3)
0.8
50.3
58.8
37.1
(42.4)
3.3
(0.5)
20.2
(2.8)
32.2
—
—
3.6
—
—
—
(1.9)
—
—
339.6
366.7
90.6
(42.4)
146.3
(16.4)
197.1
(3.1)
33.0
(1)
Elimination and Other includes amounts relating to change in contingent consideration asset, elimination of intercompany
transactions and unallocated amounts.
Operating Results - Containership Leasing Segment
Ownership Days are the number of days a vessel is owned and available for charter. Ownership Days On-Hire are
the number of days a vessel is available to the charterer for use. The primary driver of Ownership Days is the increase or
decrease in the number of vessels in our fleet.
Total Ownership days increased by 2,466 days for the year ended December 31, 2021 compared to 2020. The
increase was due to the delivery of seven vessels between December 2020 and December 2021, which contributed 1,040
days. Additionally, full year benefits from the fifteen vessels delivered during 2020 contributed 1,644 days.
Vessel Utilization represents the number of Ownership Days On-Hire as a percentage of Total Ownership Days. The
following table summarizes Seaspan’s Vessel Utilization for year ended December 31, 2021, and its comparative quarters:
2020
2021
Year Ended
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2020
2021
Vessel Utilization:
Time Charter Ownership Days(1)
Bareboat Ownership Days(1)
9,646
10,047
10,284
10,520
10,318
10,609
10,946
10,885
40,497
42,758
1,069
1,092
1,104
1,104
1,112
1,092
1,105
1,265
4,369
4,574
Total Ownership Days
10,715
11,139
11,388
11,624
11,430
11,701
12,051
12,150
44,866
47,332
Less Off-Hire Days:
Scheduled Dry-Docking
Unscheduled Off-Hire(2)
(131)
(90)
(195)
(90)
(89)
(68)
(20)
(29)
(63)
(25)
(111)
(60)
(123)
(44)
(95)
(93)
(435)
(277)
(392)
(222)
Ownership Days On-Hire
10,494
10,854
11,231
11,575
11,342
11,530
11,884
11,962
44,154
46,718
Vessel Utilization
97.9 % 97.4 % 98.6 % 99.6 % 99.2 % 98.5 % 98.6 % 98.5 % 98.4 % 98.7 %
(1)
(2)
Ownership Days for bareboat charters exclude days prior to the initial charter hire date.
Unscheduled off-hire includes days related to vessels being off-charter.
Vessel Utilization increased for the year ended December 31, 2021 compared to 2020. The increase was primarily
due to a decrease in the number of Scheduled Dry-Docking days and Unscheduled Off-Hire days.
During the year ended December 31, 2021, we completed dry-dockings for four 10,000 TEU vessels, three 4,500
TEU vessels, eight 4,250 TEU vessels and three 2,500 TEU vessels. During the year ended December 31, 2020, we
completed dry-dockings for five 14,000 TEU vessels, five 10,000 TEU vessels, four 8,500 TEU vessels, eight 4,250 TEU
vessels and two 2,500 TEU vessels.
Operating Results – Mobile Power Generation
Average Megawatt Capacity is the average maximum megawatts that can be generated by the power fleet. The
primary driver of Average Megawatt Capacity is the increase or decrease in the number of power generating units in the
power fleet. Average Megawatt On-Hire is the amount of capacity that is under contract and available to customers for use.
Power Fleet Utilization represents Average Megawatt On-Hire as a percentage of Average Megawatt Capacity.
54
Table of Contents
For the year ended December 31, 2021, the Average Megawatt Capacity was 1,355MW on a weighted average
basis. During this period 73.8% of the power fleet were under contract.
The following table summarizes the Power Fleet Utilization, for the year ended December 31, 2021, and its
comparative quarters:
Power Fleet
Average Megawatt On-Hire(2)
Average Megawatt Capacity(3)
Power Fleet Utilization(4)
2020(1)
2021
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2020
2021
934
1,428
966
1,413
1,131
1,414
866
866
1,402
1,360
1,063
1,360
1,246
1,356
826
1,345
974
1,414
1,000
1,355
65.4 % 68.4 % 80.0 % 61.8 % 63.7 % 78.2 % 91.9 % 61.4 % 68.9 % 73.8 %
(1)
(2)
(3)
(4)
Atlas acquired APR Energy on February 28, 2020. For periods prior to this, APR Energy was not controlled by Atlas.
Average Megawatt On-Hire is the amount of capacity that is under contract and available to the customer for use post commercial operation date.
Average Megawatt Capacity is the average maximum megawatts that can be generated by the power fleet.
Power fleet utilization in comparative periods has been adjusted to reflect average utilization during the quarter.
Power Fleet Utilization increased for the year ended December 31, 2021, compared with the year ended December
31, 2020. The increase was mostly due to the new contracts entered into during 2021.
Financial Results Summary
Revenue
Revenue increased by 15.9% to $1,646.6 million for the year ended December 31, 2021 compared to 2020. The
increase in revenue was primarily due to 16.7% revenue growth attributable to the Containership Leasing segment, of
which 87.6% was attributable to the existing asset base, and 12.4% was attributable to assets added during the year. The
remainder of the change was due to a 0.8% decrease attributable to the Mobile Power Generation segment.
Operating Expense
Operating expense increased by 23.7% to $339.6 million for the year ended December 31, 2021 compared to 2020.
The increase was primarily due to a growth of the Seaspan operating fleet. The remainder is due to Mobile Power
Generation segment expenses, mainly due to inventory obsolescence expense.
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 3.6% to $366.7 million for the year ended December 31, 2021
compared to 2020. The increase was primarily due to a growth of the Seaspan operating fleet offset by a decrease of APR
depreciation related to the remeasurement its asset retirement obligation and fixed assets disposals during the year.
General and Administrative Expense
General and administrative expense increased by 38.5% to $90.6 million for the year ended December 31, 2021
compared to 2020. The increase was attributable to change in fair value of the contingent consideration assets and increases
in share based compensation.
Operating Lease Expense
Operating lease expense decreased by 2.8% to $146.3 million for the year ended December 31, 2021 compared to
2020. The decrease was primarily due to a decrease in LIBOR and a reassessment due to a lease modification in Q3 2021.
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Table of Contents
Interest Expense
The following table summarizes our borrowings:
(in millions of US dollars)
Long-term debt:
Revolving credit facilities
Term loan credit facilities
Senior Unsecured Notes
Fairfax Notes
Senior Unsecured Exchangeable Notes
Senior Secured Notes
Debt discount and fair value adjustment
Deferred financing fees on long term debt
As of December 31,
2020
2021
Change
$
%
$
—
$
283.0
(283.0)
(242.0)
(100.0) %
(9.4) %
80.0
1,222.4
1,528.0 %
(600.0)
(100.0) %
2,341.8
1,302.4
—
201.3
500.0
(5.1)
(57.6)
1,339.8
80.9
5,703.5
(1,095.6)
2,583.8
600.0
201.3
—
(137.1)
(44.9)
879.5
(13.7)
865.8
—
500.0
132.0
(12.7)
716.7
483.6
(9.6)
474.0
0.0 %
100.0 %
96.3 %
(28.3) %
20.1 %
55.0 %
(70.1) %
54.7 %
38.1 %
27.0 %
58.6
22.3
4,490.5
1,213.0
(42.0)
(1,053.6)
(2,508.6) %
$ 4,607.9
$ 4,448.5
159.4
3.6 %
Long term debt
4,282.8
3,566.1
Other financing arrangements
1,363.1
Deferred financing fees on other financing arrangements
(23.3)
Other financing arrangement
Total deferred financing fees
Total borrowings(1)
Vessels under construction
Operating borrowings(1)
(1)
Total borrowings is a non-GAAP financial measure which comprises of long-term debt and other financing arrangements, excluding
deferred financing fees. The Company’s total borrowings include amounts related to vessels under construction, consisting primarily of
amounts borrowed to pay installments to shipyards. The interest incurred on borrowings related to the vessels under construction are
capitalized during the construction period. Total borrowings and operating borrowings are non-GAAP financial measures that are not
defined under or prepared in accordance with U.S. GAAP. Disclosure of total borrowings and operating borrowings is intended to provide
additional information and should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP.
Interest expense increased by $5.5 million to $197.1 million for the year ended December 31, 2021 compared to
2020 primarily due to the issuance of the senior secured and senior unsecured notes, partially offset by a decrease in
LIBOR.
Loss on Derivative Instruments
The change in fair value of financial instruments resulted in a gain of $14.1 million for the year ended December 31,
2021 compared to a loss of $35.5 million for the year ended December 31, 2020. The gain for this period was primarily due
to an increase in the forward LIBOR curve partially offset by the impact of swap settlements.
The fair value of our interest rate swaps are subject to change based on our company specific credit risk included in
the discount factor and current swap curve, including its relative steepness. In determining the fair value, these factors are
based on current information available to us. These factors are expected to change through the life of the instruments,
causing the fair value to fluctuate significantly due to the large notional amounts and long-term nature of our derivative
instruments. As these factors may change, the fair value of the instruments is an estimate and may deviate significantly
from the actual cash settlements realized during the term of the instruments. Our valuation techniques have not changed,
and we believe that such techniques are consistent with those followed by other valuation practitioners.
The fair value of our interest rate swaps is most significantly impacted by changes in the yield curve. Based on the
current notional amount and tenor of our interest rate swap portfolio, a one percent parallel shift in the overall yield curve is
expected to result in a change in the fair value of our interest rate swaps of approximately $6.9 million. Actual changes in
the yield curve are not expected to occur equally at all points and changes to the curve may be isolated to periods of time.
This steepening or flattening of the yield curve may result in greater or lesser changes to the fair value of our financial
instruments in a particular period than would occur had the entire yield curve changed equally at all points.
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Table of Contents
The fair value of our interest rate swaps is also impacted by changes in our company-specific credit risk included in
the discount factor. We discount our derivative instruments with reference to the corporate Bloomberg industry yield
curves. Based on the current notional amount and tenor of our swap portfolio, a one percent change in the discount factor is
expected to result in a change in the fair value of our interest rate swaps of approximately $16.6 million.
The fair value of the Fairfax derivative put instruments at each reporting period was subject to changes in our
company specific credit risk and the risk-free yield curve. With the Amendment of the Fairfax Notes in June 2021, the put
option was eliminated.
Our derivative instruments, including interest rate swap and put instruments were marked to market with all changes
in the fair value of these instruments recorded in “(Gain) Loss on Derivative instruments” in our Consolidated Statement of
Operations.
Please read “Item 11. Quantitative and Qualitative Disclosures About Market Risk” for further discussion.
Effects of Hyperinflation
APR Energy operates in Argentina, where repatriation of cash generated from operations is subject to the country’s
historically unpredictable currency regulations, resulting in the creation of a two-tiered currency market. Under current
currency controls, the amount of cash in pesos convertible to US dollars using the rate available at the central bank (the
“Central Bank rate”) is limited. Thus, the remaining pesos are converted using the Blue-Chip swap market, at
approximately a 49.8% discount to the Central Bank rate as of December 31, 2021.
Losses realized on repatriation is included in “Other Expenses” in our Consolidated Statement of Operations when
incurred.
To compensate us for losses being incurred by APR Energy on repatriation of Argentinian Pesos, sellers of APR
Energy agreed to indemnify Atlas for repatriation losses incurred, until the earlier of (1) reaching the maximum cash flows
subject to compensation, (2) termination of specified contracts, (3) sustaining the ability to repatriate cash without losses
and (4) April 30, 2022. The maximum amount of cash flows subject to compensation is $110,000,000. This indemnity
arrangement is included as a contingent consideration asset in “Other Assets” on our Consolidated Balance Sheet,
measured at fair value at the end of each reporting period with gains or losses reflected in the Consolidated Statement of
Operations.
The fair value of the contingent consideration asset is subject to fluctuations in the difference between the Central
Bank rate and Blue-Chip swap market rate, as well as our estimate of the amount of cash we expect to repatriate. These
factors are estimates and are expected to change through the life of the indemnity arrangement, causing the fair value to
fluctuate significantly. Based on current expectations of cash repatriation, an increase of 5% in the discount on the Central
Bank rate will result in an approximately $0.6 million increase in the fair value of the contingent consideration asset. As
these factors may change, the fair value of the contingent consideration asset is an estimate and may deviate significantly
from the actual cash settlements realized from the sellers of APR Energy.
B. Liquidity and Capital Resources
Liquidity
The Company’s business model is focused on generating stable long-term cash flows, and using that predictability to
reduce overall cost of capital. Maintaining strong liquidity is a core pillar of the Company’s financial strategy, allowing it
to take advantage of attractive opportunities to deploy capital quickly as they arise through economic and industry cycles.
A strong base of liquidity also allows the Company to mitigate short-term market shocks and maintain consistent
distributions to its shareholders. The Company’s primary sources of liquidity are cash and cash equivalents, undrawn credit
facilities, committed financings for its newbuild vessels, cash flows from operations, capital recycling, as well as access to
public and private capital markets.
Consolidated liquidity as of December 31, 2021 was comprised of the following:
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Table of Contents
(in millions of US dollars)
December 31,
Change
Cash and cash equivalents
Undrawn revolving credit facilities(1)
Undrawn term loan credit facilities(2)
Total liquidity
2021
2020
$
$
288.6
600.0
—
$
304.3
$
(15.7)
217.0
250.0
383.0
(250.0)
$
888.6
$
771.3
$
117.3
%
(5) %
176 %
(100) %
15 %
Total committed and undrawn newbuild financings
Total liquidity including newbuild financings
5,974.7
6,863.3
—
771.3
(1)
(2)
Undrawn revolving credit facilities as of December 31, 2021 included $550.0 million (2020 - $167.0 million) available from Seaspan and
$50.0 million (2020 - $50.0 million) available from APR energy.
Undrawn term loan credit facilities as of December 31, 2020 included $250.0 million available from sustainability-linked term loan maturing
on October 14, 2026.
As of December 31, 2021, consolidated liquidity was sufficient to meet near-term requirements. As of December 31,
2021, the Company had consolidated liquidity of $888.6 million, excluding $5,974.7 million of committed but undrawn
financings related to our newbuild vessels, which represents an increase from $771.3 million in the prior 2020 period.
Unencumbered Assets
The Company’s growing base of unencumbered assets is a fundamental objective to achieving an investment grade
credit rating, as well as a potential source of liquidity through secured financing or asset sales. Over the long-term, the
Company expects its unencumbered asset base to grow as it enhances its presence in the unsecured credit markets, and also
naturally as secured borrowings mature or are prepaid.
In the short-term, the Company expects that it’s unencumbered asset base may fluctuate as unencumbered assets
may be sold or financed from time to time, as part of normal course management of assets and liquidity.
The following table provides a summary of our unencumbered fleet and net book value over time.
(in millions of USD)
Number of Vessels
Net Book Value
Contracted Cash Flows
As at December 31,
2017
21
828
2018
31
912
2019
28
859
2020
31
1,109
2021
36
1,369
The Company’s focus on long-term contracted cash flows provides predictability and reduces liquidity risk through
economic cycles. As of December 31, 2021, the Company had total gross contracted cash flows of $10.8 billion, which
includes components that are accounted for differently, including i) minimum future revenues relating to operating leases
with customers, ii) minimum cash flows to be received relating to financing leases with certain customers, and iii)
contracted cash flows underlying leases for newbuild vessels which have not yet been delivered to customers. The
following tables provides a summary of gross contracted cash flows.
As of December 31, 2021, minimum future revenues on committed operating leases were as follows:
(in millions of USD)
Operating lease revenue (1)
2022
2023
2024
2025
2026
Thereafter
$
$
1,604.1
1,470.5
1,180.0
806.8
463.3
344.7
5,869.4
(1) Minimum future operating lease revenue includes payments from signed charter agreements on operating vessels that have not yet
commenced.
Minimum future revenues assume that, during the term of the lease, i) there will be no unpaid days, ii) extensions
included only if exercise is our unilateral option, and iii) no lease extensions. Minimum future revenues do not reflect
signed charter agreements for undelivered vessels.
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Table of Contents
As of December 31, 2021, the undiscounted minimum cash flows related to lease receivable on financing leases are
as follows:
(in millions of USD)
2022
2023
2024
2025
2026
Thereafter
Lease receivable on
financing leases
79.3
79.3
79.5
79.3
79.3
1,051.5
1,448.2
$
$
The Company’s 2021 growth strategy, included a strong focus on growing it’s vessel fleet. As of December 31,
2021, the gross contracted cash flows for its 67 undelivered vessels were as follows:
(in millions of USD)
Contracted cash flows
2022
2023
2024
2025
2026
Thereafter
$
$
62.8
431.9
975.8
967.4
967.4
7,415.4
10,820.7
The Company’s commitment to growth in 2021 was achieved in line with its capital structure objectives, focusing
on strengthening its balance sheet and increasing cash flows to become a platform for growth and consolidation in the
containership and power generation industries.
The Company lengthened and diversified the maturity profile of its debt and diversified its sources of capital
through multiple notes issuances in the U.S. and Norwegian unsecured credit markets, as well as long duration secured
notes issued to life insurance investors. This supported the Company’s initiative to successfully achieve committed
financings for its newbuild vessels program. In conjunction with its newbuild strategy and associated debt financing, the
Company dramatically increased its long-term gross contracted cash flows, primarily through increasing charter lengths for
its existing containership fleet and acquiring attractive second-hand containership assets coupled with long-term charter
contracts.
The Company is focused on continuing to allocate capital selectively into opportunities that enhance the long-term
value of the business and provide attractive risk-adjusted returns on capital, including evaluating synergistic opportunities
in adjacent businesses to diversify cash flow drivers.
The Company intends to continue its growth trajectory in 2022, further growing its liquidity through capital
recycling and expansion of its revolving credit facilities, diversifying sources of capital to enhance financial flexibility,
managing leverage in alignment with its long-term targets, and growing the value of its unencumbered asset base.
The Company’s primary liquidity needs include funding our investments in assets including our newbuild vessels
under construction, scheduled debt and lease payments, vessel purchase commitments, potential future exercises of vessel
purchase options, and dividends on our common and preferred shares.
Borrowings
The following table summarizes our borrowings:
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Table of Contents
(in millions of US dollars)
Long-term debt:
Revolving credit facilities
Term loan credit facilities
Senior unsecured notes
Fairfax Notes
Senior unsecured exchangeable notes
Senior secured notes
Debt discount and fair value adjustment
Deferred financing fees on long term debt
Long term debt
Other financing arrangements
Deferred financing fees on other financing arrangements
Other financing arrangement
Total deferred financing fees
Total borrowings
Vessels under construction
Operating borrowings
As of December 31,
2020
2021
Change
$
%
$
—
$
283.0
2,341.8
1,302.4
—
201.3
500.0
(5.1)
(57.6)
2,583.8
80.0
600.0
201.3
—
(137.1)
(44.9)
4,282.8
3,566.1
1,363.1
(23.3)
1,339.8
80.9
5,703.5
(1,095.6)
879.5
(13.7)
865.8
58.6
4,490.5
(42.0)
(283.0)
(242.0)
(100.0) %
(9.4) %
1,222.4
1,528.0 %
(600.0)
(100.0) %
—
500.0
132.0
(12.7)
716.7
483.6
(9.6)
474.0
22.3
1,213.0
—
100.0 %
96.3 %
(28.3) %
20.1 %
55.0 %
(70.1) %
54.7 %
38.1 %
27.0 %
(1,053.6)
(2,508.6) %
$
4,607.9
$ 4,448.5
159.4
3.6 %
The Company’s approach is to target a long-term debt-to-asset ratio of 50-60%, and to mitigate credit risk by diversifying
its maturity profile over as long a term as economically feasible, while maintaining or reducing its cost of capital. The
Company’s debt-to-asset ratio was 40.5% as of December 31, 2021 compared to 38.4% at December 31, 2020.
The consolidated weighted average interest rate for December 31, 2021 was 3.26% compared to 2.87% at December 31,
2020. The weighted average interest rates for the containership segment, power generation segment, and Atlas Corp. (on
an unconsolidated basis) were 3.14%, 5.55%, and 7.13%, respectively, for the year ended December 31, 2021 (December
31, 2020: 2.73%, 5.46%, and 0.0%, respectively).
Credit Facilities
The Company’s credit facilities are primarily secured by assets, including first-priority mortgages granted on 65 of
its vessels and substantially all of its power generation assets, together with other related security.
As of December 31, 2021, the Company had $2.3 billion principal amount outstanding under its credit facilities, of
which $2.1 billion was related to the containership leasing business and $213.2 million was related to the power generation
business. There were no amounts outstanding under our revolving credit facilities. A total of $600.0 million was undrawn,
of which $550.0 million was available to the containership leasing business ($150.0 million of which was unsecured), and
$50.0 million was available to the power generation business.
On a consolidated basis as of December 31, 2021, scheduled principal repayments on our credit facilities were as
follows:
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(in millions of
USD)
Scheduled
Amortization
Bullet Due on
Maturity
Total Future
Minimum
Repayments
Additional
Vessels
Unencumbered
Upon Maturity(1)
Net Book Value
of Vessels
Unencumbered(1)
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Thereafter
$
229.0 $
167.1
148.9
146.1
77.1
16.9
8.8
8.8
4.4
—
—
326.5 $
209.3
—
—
774.5
224.4
—
—
—
—
—
$
807.1 $
1,534.7 $
Total
(1)
555.5
376.4
148.9
146.1
851.6
241.3
8.8
8.8
4.4
—
—
2,341.8
8 $
3
—
—
—
—
—
—
2
—
52
65 $
679.6
362.2
—
—
—
—
—
—
171.7
—
3,226.3
4,439.8
APR Energy's debt matures in 2023 and 2026, and is secured by certain power generation assets.
Other Financing Arrangements
As part of the Company’s strategy to diversify its financing sources, it enters into sale-leaseback financing
arrangements with financial leasing companies, which under U.S. GAAP are considered "failed-sales". This accounting
treatment requires that the vessel asset remain on the Company’s balance sheet, along with the associated lease liability.
As of December 31, 2021, the Company has 26 vessels financed under these sale-leaseback financing arrangements.
As of December 31, 2021, these arrangements provided for borrowings of approximately $1,363.1 million.
On a consolidated basis as of December 31, 2021, scheduled repayments on our other financing arrangements were
as follows:
(in millions of
USD)
Scheduled
Amortization
Bullet Due on
Maturity
Total Future
Minimum
Repayments
Additional
Vessels
Unencumbered
Upon Maturity
Net Book Value of
Vessels
Unencumbered (1)(2)
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Thereafter
Total
$
101.0 $
101.4
102.6
97.4
94.2
94.2
94.2
86.5
61.3
44.8
98.1
— $
—
—
—
—
—
—
27.0
181.0
60.0
119.4
$
975.7 $
387.4 $
101.0
101.4
102.6
97.4
94.2
94.2
94.2
113.5
242.3
104.8
217.5
1,363.1
— $
—
—
—
—
—
—
2
7
2
7
18 $
—
—
—
—
—
—
—
191.1
576.4
169.3
589.0
1,525.8
Includes unencumbered vessels that are included on our balance sheet as “Vessels” and as “Net Investment in Lease”.
(1)
(2) Newbuilds that have not been delivered as at December 31, 2021, have not been included.
Notes
As of December 31, 2021, we had an aggregate of $2.0 billion outstanding under notes, $1.5 billion of which was
unsecured, with the remaining $0.5 billion secured by assets held by our containership segment. The Company’s
outstanding notes are summarized below.
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Table of Contents
7.125% 2027 Atlas
As of December 31, 2021, we had $52.3 million outstanding under the Atlas Notes. The Atlas Notes were issued in
May 2021 pursuant to the Exchange Transaction, and are callable at par plus accrued and unpaid interest, if any, at any
time after May 2023. In the event of certain changes in withholding taxes, at our option, we may redeem the notes, in each
case in whole, but not in part, at a redemption price equal to 100.0% of the outstanding principal amount, plus accrued and
unpaid interest, if any. Upon the occurrence of a change of control (as defined in the Atlas Notes), each holder of such
notes will have the right to require us to purchase all or a portion of such holder’s notes at a purchase price equal to 101.0%
of the principal amount thereof plus accrued and unpaid interest, if any.
3.75% 2025 Exchangeable Notes
As of December 31, 2021, we had $201.3 million outstanding under our 3.75% exchangeable senior notes due 2025
(the “Exchangeable Notes”). The Exchangeable Notes were issued in December 2020, and are exchangeable at the holders’
option into an aggregate 15,474,817 common shares at an initial exchange price of $13.005 per share, the cash equivalent
or a combination thereof, as elected by the Company, at any time on or after September 15, 2025, or earlier upon the
occurrence of certain market price triggers, significant corporate events, or in response to early redemption elected by us.
The holders may require us to redeem the notes upon the occurrence of certain corporate events qualifying as a
fundamental change in the business. The Company may redeem the Exchangeable Notes in connection with certain tax-
related events or on any business day on or after December 20, 2023 and prior to September 15, 2025, if the last reported
sale price of our common shares is at least 130.0% of the exchange price during a specified measurement period. A
redemption of the Exchangeable Notes is made at 100.0% of the principal amount, plus accrued and unpaid interest.
Concurrently with the issue of Exchangeable Notes, the Company entered into capped call transactions using
$15.5 million in proceeds from the issuance of the notes. The capped call transactions provide the Company with the option
to purchase up to 15,474,817 common shares at a price per share of $17.85. The capped call is intended to reduce the
potential dilution to shareholders and/or offset any cash payments that are required upon an exchange.
Sustainability-Linked NOK Bonds
As of December 31, 2021, we had an aggregate $500.0 million outstanding under our NOK Bonds. The NOK Bonds
were issued in the Nordic bond market in February 2021 ($200.0 million) and April 2021 ($300.0 million), bear interest at
6.5% per annum, and mature in February 2024 and April 2026, respectively. Upon maturity, 100.0% of the principal
balance is due, or 100.5% if certain sustainability-linked targets are not achieved, except in the event of certain eligible
changes in tax law. As of December 31, 2021, the sustainability-linked targets had been achieved, which targeted capital
expenditure for projects which mitigate carbon emissions, including LNG vessel technology. Upon the occurrence of a
change of control or a delisting event (each as defined in the NOK Bonds), each holder of NOK Bonds will have the right
to require the Company to purchase all or a portion of such holder’s NOK Bonds at a purchase price equal to 101.0% of the
principal amount thereof plus accrued and unpaid interest, if any.
Blue Transition 5.50% 2029 Notes
As of December 31, 2021, we had $750.0 million outstanding under our blue transition 5.5% senior unsecured notes
due 2029 (the “5.5% 2029 Notes”). The 5.5% 2029 Notes were issued in July 2021, bear interest at 5.5% per annum,
payable semi-annually beginning on February 1, 2022, and mature in 2029. The blue transition structure includes
designated uses of proceeds for carbon mitigating projects, and were developed to align with the Company’s sustainability
efforts.
Sustainability-Linked Senior Secured Notes
As of December 31, 2021, we had $500.0 million outstanding under our Senior Secured Notes. The notes were
issued pursuant to a U.S. private placement with life insurance companies and comprise four series. The Series A, Series C
and Series D Senior Secured Notes, totaling $450.0 million, were issued in May 2021, with interest rates ranging from
3.91% to 4.26% and maturities from June 2031 to June 2036. The Series B Senior Secured Notes, totaling $50.0 million,
were issued in August 2021, with an interest rate of 3.91%, and mature in 2031. The Senior Secured Notes contain certain
sustainability features, and are subject to adjustment based on Seaspan’s achievements relative to certain key performance
indicators.
Operating Leases
As of December 31, 2021, there were 14 vessel operating lease arrangements. Under 13 of the operating lease
arrangements the Company may purchase the vessels for a predetermined purchase price. As of December 31, 2021, there
were total commitments, excluding purchase options, under vessel operating leases from 2022 to 2029 of approximately
$791.2 million.
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Table of Contents
Based on current market conditions, the Company expects that it will exercise the purchase options for the 13
vessels under operating lease which include purchase options. These purchase option prices are $681.0 million in aggregate
for the 13 vessels, and would be exercised between January 2023 and November 2026. If exercised, the term of the
operating leases would be shortened, and the amount paid by the Company under the operating leases (excluding the
purchase option price) would be less than the total commitment outlined below. In January 2022, the Company exercised
its option to purchase one 10,000 TEU vessel. The purchase is expected to complete in January 2023 at the pre-determined
purchase price of $52.7 million.
At December 31, 2021, the commitment under operating leases relating to vessels was $780.7 million for 2022 to
2029, and for other leases it was $10.5 million for the remainder of 2021 to 2024. Total commitments under these leases
are as follows:
2022
2023
2024
2025
2026
Thereafter
Capital Commitments
$
$
145.1
147.7
150.6
126.8
111.9
109.1
791.2
As of December 31, 2021, the Company had 67 newbuild vessels under construction (December 31, 2020 – five
vessels). The Company had outstanding commitments for the remaining installment payments as follows:
2022
2023
2024
Total
$
$
1,103.2
2,712.5
2,457.8
6,273.5
Recently we have seen increasing consensus around expectations for heightened inflation that is more than temporal. These
expectations align with expectations for our business segments, as the cost of transport and power are major components of
inflation, and the underlying demand for our business segments is closely linked to both global GDP growth and inflation.
While we expect these factors to continue to be a net positive for our business segments, we anticipate that expectations of
quantitative tightening and rising interest rates intended to combat inflation may continue to cause volatility in the equity
and credit markets near-term, impacting the pricing of our publicly traded securities, notwithstanding strong and stable
underlying performance and asset values.
Certain Terms under our Long-Term Debt, Lease Arrangements, Other Financing Arrangements and Notes
We are subject to customary conditions before we may borrow under our credit, lease and other financing
arrangements, including, among others, that no event of default is outstanding and that there has been no material adverse
change in our ability to make all required payments under the arrangements.
Our credit, lease and other financing arrangements and our Notes also contain various covenants limiting our ability
to, among other things:
•
•
•
•
allow liens to be placed on the collateral securing the facility;
enter into mergers with other entities;
conduct material transactions with affiliates; or
change the flag, class or management of the vessels securing the facility.
The Company’s credit, lease and other financing arrangements also contain certain financial covenants, including,
among others, covenants requiring the relevant entities to maintain minimum tangible net worth, interest coverage ratios,
interest and principal coverage ratios, and debt to assets ratios, as defined. Seaspan’s 2022 RCF and 5.5% 2029 Notes
container incurrence-based covenants which may subject us to additional specified limitations, including limitations on
dividend payments in excess of a specified amount, subject to a specified calculation which may increase or decrease over
time. To the extent the Company is unable to satisfy the requirements under its credit facilities and lease and other
financing arrangements, the Company may be unable to borrow additional funds under the facilities, and if it is not in
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Table of Contents
compliance with specified financial ratios or other requirements under our credit, lease and other financing arrangements or
our Notes, we may be in breach of the facilities and lease and other financing arrangements or our Notes, which could
require us to repay outstanding amounts. We may also be required to prepay amounts under our credit facilities, operating
leases, other financing arrangements, or our Notes if we experience a change of control, and may also result in financial
penalties. We were in compliance with these covenants as at December 31, 2021.
Cash Flows
The following table summarizes our sources and uses of cash for the periods presented:
(in millions of USD)
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows from financing activities
Operating Cash Flows
Year Ended December 31,
2020
2021
$
944.0
$
(1,693.9)
734.2
694.2
(859.9)
310.9
Net cash flows from operating activities were $944.0 million for the year ended December 31, 2021, an increase of
$249.8 million compared to 2020. The increase in net cash flows from operating activities for the year ended December 31,
2021, compared to the prior year, was primarily due to net cash flows from chartering of seven additional vessels delivered
during 2021 and higher revenue due to increases in the charter rates in 2021.
For further discussion of changes in revenue and expenses, please read “Financial Results Summary.”
Investing Cash Flows
Net cash flows used in investing activities were $1,693.9 million for the year ended December 31, 2021, an increase
of $834.0 million compared to 2020. Increase in cash used was primarily due to the purchase of seven vessels during the
year ended December 31, 2021 and payment on installments for vessels under construction partially offset by proceeds
from sale of one vessel.
Financing Cash Flows
Net cash flows from financing activities were $734.2 million for the year ended December 31, 2021, compared to
net cash flows from financing activities of $310.9 million in 2020. This represents a net increase of $423.3 million in cash
flows from financing activities for the year ended December 31, 2021, compared to 2020. Increase was primarily due to
proceeds received from long-term debt and other financing arrangements related to newbuild financing, partially offset by
redemption of Fairfax notes and redemption of preferred shares.
Ongoing Capital Expenditures and Dividends
The average age of the vessels in our operating fleet is approximately eight years, on a TEU-weighted basis. Capital
expenditures for our containership fleet primarily relate to our regularly scheduled dry-dockings. During the year ended
December 31, 2021, we completed 18 dry-dockings, compared to 24 dry-dockings in 2020.
The average age of the turbines is eight years and the average age of our diesel generators is 12 years. Capital
expenditures for these assets primarily relate to mobilization and decommissioning requirements included in substantially
all lease contracts. During the year ended December 31, 2021, we mobilized and decommissioned four and five sites,
respectively.
We must make substantial capital expenditures over the long-term to preserve our capital base, which is comprised
of our net assets, to continue to refinance our indebtedness and to maintain our dividends. We will likely need to retain
additional funds at some time in the future to provide reasonable assurance of maintaining our capital base over the long-
term. We believe it is not possible to determine now, with any reasonable degree of certainty, how much of our operating
cash flow we should retain in our business and when it should be retained to preserve our capital base. The amount of
operating cash flow we retain in our business will affect the amount of our dividends. Factors that will impact our decisions
regarding the amount of funds to be retained in our business to preserve our capital base, include the following, many of
which are currently unknown and are outside our control:
(1) the remaining lives of our property plant and equipment;
(2) the returns that we generate on our retained cash flow, which will depend on the economic terms of any future
asset acquisitions and lease terms;
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(3) future contract rates for our assets after the end of their existing leases agreements;
(4) our future operating and interest costs;
(5) future operating and financing costs;
(6) our future refinancing requirements and alternatives and conditions in the relevant financing and capital markets
at that time;
(7) capital expenditures to comply with environmental regulations and asset retirement obligations; and
(8) unanticipated future events and other contingencies.
Our board of directors periodically considers these factors in determining our need to retain funds rather than pay
them out as dividends. Unless we are successful in making acquisitions with outside sources of financing that add a
material amount to our cash available for retention in our business, or unless our board of directors concludes that we will
likely be able to re-deploy our fleet upon expiration of existing leases at rates higher than the rates in our current leases, our
board of directors may determine at some future date to reduce, or possibly eliminate, our dividend for reasonable
assurance that we are retaining the funds necessary to preserve our capital base.
The following dividends were paid or accrued for the periods indicated:
(in millions of USD, except per share amounts)
Year Ended December 31,
2020
2021
Dividends on common shares
Declared, per share
Paid in cash
Reinvested in common shares through our dividend reinvestment plan
Dividends on preferred shares (paid in cash)
Series D
Series E
Series G
Series H
Series I
Series J
$
$
$
0.50 $
124.6
0.3
124.9 $
10.1 $
7.5
10.7
17.8
12.0
8.1
0.50
120.0
0.3
120.3
10.1
11.2
16.0
17.8
12.0
—
For more information on our dividend policy, please read “Item 8. Financial Information—A. Financial Statements
and Other Financial Information—Dividend Policy.”
For 2021 and 2020, dividends on our Series D, E, G, H and I preferred shares accrue at rates per annum of 7.95%,
8.25%, 8.20%, 7.875% and 8.00%, respectively. On July 1, 2021, we redeemed all of our outstanding Series E and Series
G preferred shares. Our Series J preferred shares were issued in June 2021 and dividends accrue at 7.0% per annum.
C.
Research and Development, Patents and Licenses
Not applicable.
D.
Trend information
See Item 5 “Operating and Financial Review and Prospects” for information on the following trend information:
a.
b.
c.
d.
“Recent Developments in 2021 and 2022” for detail on recent material events;
“Market Conditions” for information on the containership leasing and power generation markets;
“Effects of COVID” for detail on how COVID is impacting our business;
“Impact of Recent Developments in Ukraine” for information on how this conflict may impact our
business.
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Table of Contents
See Item 5.B. “Liquidity and Capital Resources” for detail on our commitments with respect to contracted lease
payment receipts as well as credit and other material obligations.
E.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make
estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. Our
estimates affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our
estimates on historical experience and anticipated results and trends and on various other assumptions that we believe are
reasonable under the circumstances. However, because future events and their effects cannot be determined with certainty,
actual results could differ from our assumptions and estimates, and such differences could be material. Accounting
estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of
our financial statements because they inherently involve significant judgments and uncertainties.
Senior management has discussed with our audit committee the development, selection and disclosure of accounting
estimates used in the preparation of our consolidated financial statements.
Amortization of Vessel Dry-Docking Activities
We defer costs incurred for dry-docking activities until the next scheduled dry-docking. Dry-docking of our vessels
is generally performed every five years and includes major overhaul activities that are comprehensive and all
encompassing. We have adopted the deferral method of accounting for dry-dock activities whereby costs incurred are
deferred and amortized on a straight-line basis over the period until the next scheduled dry-dock activity.
The major components of routine dry-docking costs include: (i) yard costs, which may include riggers, pilot/tugs,
yard fees, hull painting service, deck repairs (such as steel work, anchors, chains, valves, tanks, and hatches) and engine
components (such as shafts, thrusters, propeller, rudder, main engine and auxiliary machinery); (ii) non-yard costs which
include the paint, technician service costs and parts ordered specifically for dry-dock; and (iii) other costs associated with
communications, pilots, tugs, survey fees, port fees, fuel costs for mobilizing the vessel to and from the dry-dock and
classification fees.
Repairs and maintenance normally performed on an operational vessel either at port or at sea are limited to repairs to
specific damages caused by a particular incident or normal wear and tear, or minor maintenance to minimize the wear and
tear to the vessel. Above the water line repairs, minor deck maintenance and equipment repairs may be performed to the
extent the operations and safety of the crew and vessel are not compromised. All repairs and maintenance costs are
expensed as incurred.
Useful lives property, plant and equipment
Vessels
The carrying value of each of our vessels represents its original cost at the time of delivery or purchase, including
acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage, less
accumulated depreciation. We depreciate our vessels using the straight-line method over their estimated useful lives.
Second-hand vessels are depreciated from their date of acquisition over their remaining estimated useful life. We review
the estimate of our vessels’ useful lives on an ongoing basis to ensure they reflect current technology, service potential, and
vessel structure. We estimate that the useful life of the vessels will be 30 years from the date of initial completion. Should
certain factors or circumstances cause us to revise our estimate of vessel service lives in the future, depreciation expense
could be materially lower or higher. Such factors include, but are not limited to, the extent of cash flows generated from
future charter arrangements, changes in international shipping requirements, and other factors, many of which are outside
of our control.
Power generating equipment
The carrying value of our power generating equipment represent its original cost at the time of purchase, less
accumulated depreciation. We depreciate our power generating equipment using the straight-line method over their
estimated useful lives. Costs incurred to mobilize and install power-generating equipment pursuant to a contract for the
provision of power-generation services are also recorded in property, plant and equipment and are depreciated on a
straight-line basis over the non-cancellable lease term to which the power-generating equipment relates. In estimating the
useful lives of power generating equipment, we make certain judgments relating to expected usage, expected wear and tear,
residual values and technological and commercial obsolescence of the turbines and generators.
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Impairment of Long-lived Assets
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable, which occurs when the assets’ carrying value is greater than the
undiscounted future cash flows the asset is expected to generate over its remaining useful life. Examples of such events or
changes in circumstances related to our long-lived assets include, among others: a significant adverse change in the extent
or manner in which the asset is being used or in its physical condition; a significant adverse change in legal factors or in the
business climate that could affect the asset’s value, including an adverse action or assessment by a foreign government that
impacts the use of the asset; or a current-period operating or cash flow loss combined with a history of operating or cash
flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset’s use. If there has been
a general decline in the market value of assets, we analyze our assets for impairment to the extent that the decline in market
value is expected to impact the future cash flows of the asset. In cases where our assets are being analyzed is under a long-
term contracts, a decline in the current market value of the asset may not impact the recoverability of its carrying value.
The determination of whether impairment indicators exist requires significant judgment in evaluating underlying
significant assumptions including charter rates, utilization rates, operating costs and current vessel market values.
If an indication is identified, and the estimated undiscounted future cash flows of an asset, excluding interest
charges, expected to be generated by the use of the asset over its useful life exceeds the asset’s carrying value, no
impairment is recognized even though the fair value of the asset may be lower than its carrying value. If the estimated
undiscounted future cash flows are less than its carrying amount, an impairment charge is recorded for the amount by
which the net book value of the asset exceeds its fair value.
Vessels
When an indicator of impairment is identified for our vessels, our estimates of future cash flows involve
assumptions about future charter rates, vessel utilization, operating and dry-docking expenditures, vessel residual values,
inflation and the remaining estimated useful lives of our vessels. If undiscounted future cash flows are less than its carrying
value, fair value is calculated as the net present value of estimated future cash flows, which in certain circumstances may
approximate the estimated market value of the vessel.
Revenue assumptions are based on contracted time charter rates up to the end of the life of the current contract of
each vessel, as well as an estimated time charter rate, adjusted for future inflation, for the remaining life of the vessel after
the completion of its current contract. The estimated time charter rates for non-contracted revenue days are based on 10-
year average time charter rates incorporating historical time charter rate data from an independent third-party maritime
research service provider, as well as recent market charter rates relevant to future periods. We consider 10-year historical
average rates to be a reasonable estimation of expected future charter rates over the remaining useful life of our vessels
since such historical average generally represents a full shipping cycle that captures the highs and lows of the market.
Our estimates of vessel utilization, including estimated off-hire time for dry-docking, off-hire time between time
charters and equipment or machinery breakdown, are based on historical experience.
Our estimates of operating, dry-docking expenses and capital expenditures are based on historical and budgeted
operating and dry-docking costs and our expectations of future inflation and operating requirements. Expenses, including
dry-dock expenses, are impacted by the economic conditions of our industry, including, among other things, crewing costs,
insurance and bunker costs and availability of shipyards for dry-docking.
Vessel residual values are a product of a vessel’s lightweight tonnage and an estimated scrap rate which takes into
consideration historical average scrap prices based on information from third-party maritime research services. Although
we believe that the assumptions used to determine the scrap rate are reasonable and appropriate, such assumptions are
highly subjective because of the cyclical nature of future demand for scrap steel.
The remaining lives of our vessels used in our estimates of future cash flows are consistent with those used in our
calculations of depreciation.
In our experience, certain assumptions relating to our estimates of future cash flows are more predictable by their
nature, including estimated revenue under existing contract terms and remaining vessel life. Certain assumptions relating to
our estimates of future cash flows require more judgment and are inherently less predictable, such as future charter rates
beyond the firm period of existing contracts, ongoing operating costs and vessel residual values. We assess these
assumptions on a continuous basis and believe those used to estimate future cash flows of our vessels are reasonable at the
time they are made. We can make no assurances however, as to whether our estimates of future cash flows, particularly
future vessel charter rates or vessel values, will be accurate.
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For the year ended December 31, 2021 and December 31, 2020, based on our analysis, we have not identified any
events or changes in circumstances indicating that the carrying amount of the assets may not be recoverable and
accordingly, no impairment was recorded.
During 2021, Seaspan entered into agreements to sell a total of seven vessels, including the sale of one vessel which
was concluded during the fourth quarter of 2021.. Under current market conditions for our containership leasing segment,
we intend to continue to hold and operate our core vessels. Although time charter rates in 2021 have increased we expect
that in the near future they will stabilize. Future time charter rates impact our average estimated daily time charter rate used
in future impairment analyses and if this declines, this may result in estimated undiscounted future operating net cash flows
being less than the carrying value of certain of our Panamax-size vessels or below and may require us to recognize non-
cash impairment charges in the future equal to the excess of the impacted vessels’ carrying value over their fair value. The
determination of the fair value of vessels will depend on various market factors and our reasonable assumptions at that
time, including time charter rates, operating expenses, capital expenditures, inflation, fleet utilization, residual value,
remaining useful life and discount rates. The amount, if any, and timing of any impairment charges we may recognize in
the future will depend upon then current assumptions, which may differ materially from period to period.
The following table presents information with respect to the carrying amount of the vessels owned by us and
indicates whether their estimated charter-free market values are below their carrying values as of December 31, 2021. The
charter-free valuations assume that our vessels are in good and seaworthy condition without need for repair, and, if
inspected, they would be certified in class without notations of any kind. Because vessel values can be highly volatile, these
charter-free valuations may not be indicative of either the current or future prices that we could achieve if we were to sell
any of the vessels. We would not record an impairment charge for any of the vessels for which the charter-free market
value is below its carrying value unless we determine that the vessel’s carrying amount is not recoverable. For those vessels
that have carrying values in excess of their charter-free market values as of December 31, 2021, we have not identified any
events or changes in circumstances indicating that the carrying amount may not be recoverable. Accordingly, we have not
recorded an impairment charge related to those vessels as of December 31, 2021.
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Vessel Name
CMA CGM Chile
CMA CGM Mexico
YM Wish
YM Wellhead
YM Witness
YM World
YM Wondrous
YM Wholesome
YM Worth
YM Welcome
YM Wreath
COSCO Glory
COSCO Pride
COSCO Development
COSCO Harmony
COSCO Excellence
COSCO Faith
COSCO Hope
COSCO Fortune
Madrid Express
Paris Express
MSC Siya (formerly Kota Petani)
Buenos Aires Express (formerly
Kota Pemimpin)
Seaspan Harrier
Seaspan Falcon
Seaspan Raptor
Seaspan Osprey
APL Dublin
APL Paris
APL Southampton
Seaspan Ganges
Seaspan Yangtze
Seaspan Zambezi
Maersk Guayaquil
Seaspan Thames
Seaspan Amazon
Seaspan Hudson
CMA CGM Tuticorin
Seaspan Brilliance
Seaspan Belief
Seaspan Beauty
Seaspan Bellwether
Maersk Guatemala
Vessel Class
(TEU)
Year Built
Vessel Carrying Value
at December 31, 2021(1)
(in millions of USD)
Vessel Carrying Value
at December 31, 2020
(in millions of USD)
15000
15000
14000
14000
14000
14000
14000
14000
14000
14000
14000
13100
13100
13100
13100
13100
13100
13100
13100
13000
13000
12000
12000
12000
12000
12000
12000
10700
10700
10700
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
2019
2019
2015
2015
2015
2015
2015
2015
2015
2016
2017
2011
2011
2011
2011
2012
2012
2012
2012
2010
2011
2018
2018
2018
2018
2018
2018
2012
2012
2012
2014
2014
2014
2015
2014
2014
2015
2015
2014
2015
2015
2015
2015
69
$
125.2
$
123.9
91.5
91.3
88.8
86.1
86.2
86.2
86.3
90.7
95.2
118.2
118.3
119.5
119.5
123.5
124.3
122.9
123.2
69.2
69.4
—
85.9
88.3
88.3
88.3
87.1
58.6
58.6
58.4
79.7
80.0
80.6
74.7
65.0
65.0
67.6
67.7
65.0
67.8
67.7
68.5
67.9
—
—
94.9
94.7
92.1
89.5
89.5
89.6
89.5
94.0
95.6
123.1
123.2
124.7
124.4
128.8
129.4
127.9
128.2
72.1
72.3
88.5
88.6
91.1
91.2
91.2
89.8
60.9
60.9
60.8
82.8
83.1
83.7
77.5
67.5
67.5
70.2
70.2
67.5
70.3
70.3
71.0
70.6
Table of Contents
Maersk Gibraltar
CMA CGM Mundra
CMA CGM Mumbai
CMA CGM Cochin
CMA CGM Chennai
CSCL Zeebrugge
CSCL Long Beach
Seaspan Adonis
APL Mexico City
APL New York
APL Vancouver
Seaspan Oceania
CSCL Africa
COSCO Japan
COSCO Korea
COSCO Philippines
COSCO Malaysia
COSCO Indonesia
COSCO Thailand
COSCO Prince Rupert
COSCO Vietnam
Gulf Bridge
ZIM Charleston
Seaspan Emerald
Altamira Express (formerly
Seaspan Eminence)
MOL Emissary
MOL Empire
Brotonne Bridge
Seaspan Kyoto (formerly Brevik
Bridge)
Seaspan Kobe (formerly Bilbao
Bridge)
Seaspan Chiba (formerly Berlin
Bridge)
Budapest Bridge
Seaspan Hamburg
Seaspan Chiwan
Seaspan Ningbo
Seaspan Dalian
Seaspan Felixstowe
Seaspan Vancouver
Seaspan New York
Seaspan Melbourne
CSCL Brisbane
Seaspan New Delhi
Seaspan Dubai
Seaspan Jakarta
10000
10000
10000
10000
10000
9600
9600
9600
9200
9200
9200
8500
8500
8500
8500
8500
8500
8500
8500
8500
8500
8500
8500
5100
5100
5100
5100
4500
4500
4500
4500
4500
4250
4250
4250
4250
4250
4250
4250
4250
4250
4250
4250
4250
2016
2018
2018
2018
2018
2007
2007
2010
2013
2013
2013
2004
2005
2010
2010
2010
2010
2010
2010
2011
2011
2010
2010
2009
2009
2009
2010
2010
2011
2011
2011
2011
2001
2001
2002
2002
2002
2005
2005
2005
2005
2005
2006
2006
70
70.7
86.0
85.6
75.3
75.1
64.8
66.2
31.6
59.0
58.5
58.6
38.7
38.9
82.9
83.6
82.7
84.1
84.5
86.0
87.7
88.0
56.8
56.7
50.1
51.0
50.7
52.2
63.0
64.8
64.1
67.4
67.2
17.4
17.4
18.5
19.1
19.7
21.2
21.4
26.9
27.0
29.3
29.4
29.9
73.2
88.9
88.6
77.7
77.6
68.4
69.8
32.6
61.2
60.9
60.9
40.8
41.1
87.1
87.6
87.1
88.2
88.6
89.6
91.8
91.8
—
—
52.7
53.5
54.2
54.8
65.1
66.4
66.0
68.5
69.7
18.0
18.4
19.9
20.5
20.8
22.5
22.4
28.6
28.7
30.8
31.2
31.4
Table of Contents
Seaspan Saigon
Seaspan Lahore
Rio Grande Express
Seaspan Santos
Seaspan Rio de Janeiro
Seaspan Manila
Seaspan Loncomilla
Seaspan Lumaco
Seaspan Lingue
Seaspan Lebu
COSCO Fuzhou
COSCO Yingkou
Maersk Nile (formerly CSCL
Panama)
Maersk Nansha (formerly CSCL
Sao Paulo)
CSCL Montevideo
CSCL Lima
Maersk Nadi (formerly CSCL
Santiago)
Maersk Newark (formerly CSCL
San Jose)
Maersk New Delhi (formerly
CSCL Callao)
Maersk Ningbo (formerly CSCL
Manzanillo)
Seaspan Guayaquil
Seaspan Calicanto
Seaspan Loga
Seaspan Hannover
4250
4250
4250
4250
4250
4250
4250
4250
4250
4250
3500
3500
2500
2500
2500
2500
2500
2500
2500
2500
2500
2500
2500
2500
2006
2006
2006
2006
2007
2007
2009
2009
2010
2010
2007
2007
2008
2008
2008
2008
2008
2008
2009
2009
2010
2010
2006
2006
30.1
31.1
31.1
31.5
31.8
32.0
20.0
19.5
19.5
19.1
15.2
17.0
16.9
16.9
15.3
15.5
16.2
16.0
16.5
17.5
17.2
17.8
8.4
8.4
31.5
32.6
32.3
32.5
33.4
33.8
20.8
19.9
20.3
19.8
15.8
17.5
17.1
17.0
16.0
16.2
16.3
16.6
17.3
18.3
18.0
18.6
8.7
8.6
Total
(1)
At December 31, 2021, the charter-free market values for all vessels were greater than their carrying values.
$
6,580.3
$
6,555.2
Power generation equipment
We acquired the assets of APR Energy on February 28, 2020. When an indicator of impairment is identified for our
power generation equipment, our estimates of future cash flows used to determine fair value involve assumptions related to
future lease rates, asset utilization, off-hire and re-deployment periods, and the remaining estimated useful lives of our
assets. If undiscounted future cash flows are less than its carrying value, fair value is calculated as the net present value of
estimated future cash flows, which in certain circumstances may approximate the estimated market value of the assets.
Revenue assumptions are based on lease rates up to the end of the life of the current contract for each asset, as well
as estimated future lease rates, for the remaining life of the asset after the completion of its current contract. The estimated
future lease rates for non-contracted revenue periods are based adjusted historical averages. Our estimates of asset
utilization, including estimated off-hire periods for decommissioning, re-deployment and mobilization are also based on
historical experience.
The remaining lives of our power generation used in our estimates of future cash flows are consistent with those
used in our calculations of depreciation.
For the year ended December 31, 2021, based on our analysis, we have not identified any events or changes in
circumstances indicating that the carrying amount of these assets may not be recoverable and accordingly, no impairment
was recorded.
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Based on our experience, we recognize that key assumptions, including future lease rates and asset utilization
require significant judgement and are inherently volatile, given the unpredictable nature of our power generation segment.
We assess these assumptions on a continuous basis and believe those used to estimate future cash flows of our assets are
reasonable at the time they are made. We can make no assurances however, as to whether our estimates of future cash
flows will be accurate.
Based on current market conditions for our mobile power generation segment, we intend to continue to hold and
operate our assets. If we are unable to deploy our power generation equipment at rates consistent with historical averages,
due to shift in market demand or specific events such as further developments in the COVID-19 pandemic, future lease
revenue and utilization rates will decline, resulting in estimated undiscounted future operating net cash flows which may be
less than the carrying value of certain of our assets and requiring us to recognize non-cash impairment charges in the future
equal to the excess of the impacted asset’s carrying value over their fair value. The determination of the fair value of the
assets will depend on various market factors and our reasonable assumptions at that time. The amount, if any, and timing of
any impairment charges we may recognize in the future will depend upon then current assumptions, which may differ
materially from period to period.
Goodwill
We allocate the cost of acquired companies to the identifiable tangible and intangible assets and liabilities acquired,
with the remaining amount being classified as goodwill. Our future operating performance may be affected by the potential
impairment charges related to goodwill. Accordingly, the allocation of the purchase price to goodwill may significantly
affect our future operating results. Goodwill is not amortized, but reviewed for impairment annually, in the fourth quarter
or more frequently if impairment indicators arise. The process of evaluating the potential impairment of goodwill is highly
subjective and requires significant judgment at many points during the analysis.
The allocation of the purchase price of acquired companies requires management to make significant estimates and
assumptions, including estimates of future cash flows expected to be generated by the acquired assets and the appropriate
discount rate to value these cash flows. In addition, the process of evaluating the potential impairment of goodwill is highly
subjective and requires significant judgment at many points during the analysis. The fair value of our reporting unit is
estimated based on discounted expected future cash flows using a weighted-average cost of capital rate. The estimates and
assumptions regarding expected cash flows and the appropriate discount rates require considerable judgment and are based
upon existing contracts, historical experience, financial forecasts and industry trends and conditions.
Our goodwill comprising of $75.3 million from our January 2012 acquisition of Seaspan Management Services
Limited (“SMSL”), allocated to the containership leasing segment, and was tested for impairment on November 30, 2021.
We have the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a
reporting unit, is less than its carrying amount, including goodwill. Alternatively, we may bypass this step and use a fair
value approach to identify potential goodwill impairment and, when necessary, measure the amount of impairment.
On November 30, 2021, we performed a qualitative assessment to identify potential impairment. We evaluated
factors that would impact the discounted cash flow, including the time charter rates, vessel utilization rates, ship operating
expenses, operating life of our vessels, the inflation rate and our cost of capital and concluded that our goodwill was not
impaired. The amount, if any, and timing of any goodwill impairment charges that we may recognize in the future will
depend upon then current assumptions, which may differ materially from those used on November 30, 2021.
Derivative Instruments
Our hedging policies permit the use of various derivative financial instruments to manage interest rate risk. Interest
rate swap have been entered into to reduce our exposure to market risks from changing interest rates. We recognize the
interest rate swap and swaption agreements on the balance sheet at their fair values.
The fair values of the interest rate swap and swaption agreements have been calculated by discounting the future
cash flows of both the fixed rate and variable rate interest rate payments. The interest rate payments and discount rates
were derived from a yield curve created by nationally recognized financial institutions adjusted for the associated credit
risk related to the credit risk of the counterparties or our non-performance risk. The inputs used to determine the fair values
of these agreements are readily observable. Accordingly, we have classified the fair value of the interest rate swap Level 2
in the fair value hierarchy as defined by U.S. GAAP. Changes in the fair value of our interest rate swaps are recorded in
earnings.
We evaluate whether any of the previously hedged interest payments are remote of occurring. We have concluded
that the previously hedged interest payments are not remote of occurring. Therefore, unrealized gains or losses in
accumulated other comprehensive income associated with the previously designated interest rate swaps are recognized in
earnings when and where the interest payments are recognized. If such interest payments were to be identified as being
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remote of occurring, the accumulated other comprehensive income balance pertaining to these amounts would be reversed
through earnings immediately.
Asset Retirement Obligations
We record a provision and a corresponding long-lived asset for asset retirement obligations (“ARO”) as it relates to
our mobile power generation segment, when there is a legal obligation associated with the retirement of long-lived assets
and the fair value of the liability can be reasonably estimated. The fair value of the ARO is measured using expected future
cash flows discounted at our credit-adjusted risk-free interest rate. The liability is accreted up to the cost of retirement
through interest expense over the non-cancellable lease term. The long-lived asset is depreciated over the same period.
We use judgment in determining the amount and timing of settlements, which may change materially in response to
factors including, but not limited to changes in laws and regulations, the emergence of new technology, and changes to the
timing and scope of work. Changes in the amount or timing of the estimated ARO are recorded as an adjustment to the
related asset and liability or to depreciation expense if the asset is fully depreciated.
Business Combination
We recognize and measure the assets acquired and liabilities assumed in a business combination based on their
estimated fair values at the acquisition date. Any excess or surplus of the purchase consideration when compared to the fair
value of the net assets acquired, if any, is recorded as goodwill or gain from a bargain purchase. A significant amount of
judgment is involved in estimating the individual fair values of property, plant and equipment, intangible assets, contingent
consideration, taxes and other assets and liabilities. We use all relevant information to make these fair value
determinations. For material acquisitions, we engage an independent valuation specialist to assist when relevant.
An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired,
liabilities assumed, contingent consideration and non-controlling interest, if any, in a business combination.
The income valuation method which requires us to project future cash flows and apply an appropriate discount rate.
The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition
reduced for depreciation of the asset. The market valuation method uses market data and adjusts for company specific
factors. The estimates used in determining fair value are based on assumptions believed to be reasonable, but which are
inherently uncertain. Accordingly, results may differ materially from the projected results used in to determine fair value. If
the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition
occurs, an estimate will be recorded. Subsequent to the acquisition date, and not later than one year from the acquisition
date, we will record any material adjustments to the initial estimate based on new information obtained that would have
existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not exist as of the
date of the acquisition will be recorded in the period of the adjustment.
Recent Accounting Pronouncements
Measurement of Credit Loss
Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Measurement of
Credit Loss on Financial Instruments”. ASU 2016-13 replaces the current incurred loss impairment methodology with the
expected credit loss impairment model (“CECL”), which requires consideration of a broader range of reasonable and
supportable information to estimate expected credit losses over the life of the instrument instead of only when losses are
incurred. This standard applies to financial assets measured at amortized cost basis and net investments in leases
recognized by the lessor. Upon adoption, a cumulative effect adjustment of $2.3 million was made to deficit as part of the
modified retrospective transition approach.
Simplifying test for goodwill impairment
Effective January 1, 2020, the Company adopted ASU 2017-04, “Simplifying the Test for Goodwill Impairment.”
ASU 2017-04 eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to
measure the implied goodwill impairment. As a result of the adoption, the Company now calculates goodwill impairment
as the amount by which the carrying value exceeds fair value of a reporting unit, not to exceed the carrying amount of
goodwill.
Discontinuation of LIBOR
The Company adopted ASU 2020-04, “Reference Rate Reform (Topic 848)”, prospectively to contract
modifications. The guidance provides optional relief for the discontinuation of LIBOR resulting from rate reform. Contract
terms that are modified due to the replacement of a reference rate are not required to be remeasured or reassessed under
FASB’s relevant U.S. GAAP Topic. The election is available by Topic. The Company has elected to apply the optional
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relief for contracts under ASC 470, “Debt”, ASC 840 and 842, “Leases”, and ASC 815, “Derivatives and Hedging”. There
was no impact to the Company's financial statements upon initial adoption. The LIBOR replacement modifications for
Debt contracts will be accounted for by prospectively adjusting the effective interest rate in the agreements. Existing lease
and derivative contracts will require no reassessments. Transition activities are focused on the conversion of existing
LIBOR based contracts to the Secured Overnight Financing Rate.
Debt with conversion and other options
Effective January 1, 2022, the Company adopted ASU 2020-06, “Debt – Debt with Conversion and Other Options
(Subtopic 470-20)”, using the modified retrospective method, whereby the accounting for convertible debt instruments is
simplified by reducing the number of accounting models and circumstances when embedded conversion features are
separately recognized. This update also revises the method in which diluted earnings per share is calculated related to
certain instruments with conversion features, among other clarifications. As a result of the adoption, the Company
recognizes the maximum potential dilutive effect of our exchangeable notes in diluted EPS using the if-converted method.
F.
Off-Balance Sheet Arrangements
As at December 31, 2021, we do not have any off-balance sheet arrangements.
Item 6.
Directors and Senior Management
A.
Directors and Senior Management
Our directors and executive officers as of March 10, 2022, and their ages as of December 31, 2021, are listed below.
Name
Age
Position
David Sokol
Bing Chen
Graham Talbot
Tina Lai
Torsten Holst Pedersen
Sarah Pybus
Krista Yeung
Lawrence Chin
John Hsu
Nicholas Pitts-Tucker
Lawrence Simkins
Katie Wade
Stephen Wallace
65
55
57
45
51
43
41
45
58
71
60
49
66
Director and Chairman of the board of directors
Director, President & Chief Executive Officer
Chief Financial Officer
Chief Human Resources Officer
Chief Operating officer
Associate General Counsel & Compliance Officer
Vice President, Accounting & Tax
Director
Director
Director
Director
Director
Director
David Sokol. David Sokol was appointed a director and chairman of Atlas in November 2019 and served as a
director and chairman of Seaspan from 2017 to 2020. Mr. Sokol is also chair of the executive committee and a member of
the compensation and governance committee. Mr. Sokol has founded three companies in his career to date, taken three
companies public and as Chairman and CEO of MidAmerican Energy Holdings Company, he sold the company to
Berkshire Hathaway, Inc. in 2000. Mr. Sokol continued with Berkshire Hathaway, Inc., until he retired in March 2011,
when he left in order to manage his family business investments, Teton Capital, LLC, as Chairman and CEO. Teton
Capital, LLC is headquartered in Fort Lauderdale, Florida and is a family holding company which oversees investments in
the banking, manufacturing, consumer products, energy, real estate and technology businesses. Mr. Sokol is a member of
the executive committee of the board of directors of the Horatio Alger Association of Distinguished Americans. Over Mr.
Sokol’s 40 year career, he has chaired five corporate boards and over a dozen charitable or community boards. David
Sokol’s business philosophy, based upon vision, strategy and six operating principles, is described in a book he authored in
2008, Pleased But Not Satisfied. It is a simple business model with a definite focus on developing future leaders.
Bing Chen. Bing Chen was appointed as a director and President and Chief Executive Officer of Atlas Corp. in
November 2019, and as a director and President and Chief Executive Officer of Seaspan Corporation in January 2018.
Through a career spanning over 25 years, Mr. Chen’s experiences comprise executive roles in Asia, Europe and North
America. Before joining Atlas and Seaspan, he served as Chief Executive Officer of BNP Paribas (China) Ltd., leading the
bank’s growth strategy in China. As Director and General Manager for Trafigura Investment (China), Mr. Chen was
responsible for the P&L of domestic and international commodities trading in the country. He led the buildup of the greater
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China investment banking practice at Houlihan Lokey, Inc. as Managing Director and Head of Asia financial advisory. Mr.
Chen served as Chief Executive Officer and Chief Financial Officer at industrial leasing and aircraft chartering businesses
across Europe. In North America, he worked as Director, Business Strategy at Deutsche Bank in New York. Mr. Chen is a
Certified Public Accountant (inactive) and received a B.S. (Magna Cum Laude and Honors) in Accountancy from Bernard
Baruch College and MBA (Honors) from Columbia Business School.
Graham Talbot. Graham Talbot is the Chief Financial Officer of Atlas Corp. and also serves as Chief Financial
Officer of Seaspan Corporation. Mr. Talbot has worked in asset-intensive industries, primarily in the energy sector, for
more than 30 years. He has held executive finance roles in Abu Dhabi Power Corporation and Maersk Energy based in
Copenhagen. Prior to his time with Maersk, Mr. Talbot was Regional Finance Director for BG Group, in his native
Australia, where his responsibilities included the $20 billion Queensland Curtis LNG project. Prior to this, he spent 23
years with Shell in senior international finance roles based in Guam, United Kingdom, Netherlands, Kazakhstan, U.A.E.,
and Australia. Throughout his career, Mr. Talbot has held a broad range of functional accountabilities including – Finance,
Strategy, Trading, Procurement, Technology, Commercial and Business Integration/Separation. In addition, he has held
numerous Board positions in various jurisdictions. Mr. Talbot holds an MBA from Melbourne Business School, is a Fellow
of CPA Australia, a Fellow of the Governance Institute of Australia, a Fellow of the Energy Institute, and a Graduate
Member of the Institute of Company Directors.
Tina Lai. Tina Lai was appointed as Atlas’ chief human officer in November 2019 and has been Seaspan’s chief
human resources officer since July 2018. The position provides leadership in all aspects of Atlas and Seaspan’s functions
relating to human capital, including talent acquisition, communications, training & development, and total performance
rewards. Prior to joining Seaspan, Ms. Lai spent five years at Metrie, the largest supplier and manufacturer of solid wood
and composite molding in North America, with multiple manufacturing facilities and distribution centers across the United
States and Canada. As Vice President, Human Resources, she was part of the senior leadership team there, playing a key
role in building out the human resources function, which focused on bringing talent to the forefront of the company’s
business strategy. Ms. Lai has over 20 years of experience as a results-oriented human resources professional within a
number of industries, serving in leadership positions with broad oversight responsibilities, including sales and customer
service, channel marketing, corporate communications, culture transformation, and organizational effectiveness. She
graduated with a Bachelor of Arts from the University of British Columbia and from the Human Resources Management
program at the British Columbia Institute of Technology. Ms. Lai is a Chartered Professional in Human Resources (CPHR)
and is an active member of the CPHR BC & Yukon and of the Governing Body for the Vancouver chapter of Evanta’s
CHRO community.
Torsten Holst Pedersen. Torsten Holst Pedersen was appointed Chief Operating Officer of Seaspan in June 2020.
Mr. Pedersen was Seaspan’s Executive Vice President, Ship Management since November 2018 to June 2020. Mr.
Pedersen has over 20 years of experience in shipping, logistics and infrastructure, during which he held senior leadership
roles and board positions across Europe, Asia, Middle East and Africa. He started his career with the Maersk Group in
1996 and worked in several of the group’s business entities, holding C-level positions in Finance and HR. In 2016, Mr.
Pedersen joined Inchcape Shipping Service as Regional CEO for Middle East, Africa and South Asia. He then worked as
Head of Operations for V Group, leading the transformation of the global operations organization of more than 45,000
employees. Prior to joining Seaspan, Mr. Pedersen worked as a strategy consultant, assisting companies with strategy
execution and M&A due diligence in the Middle East and South Asia. He holds a Master of Economics from Aalborg
University, Denmark, and a Master of International Economics (with Distinction) from University of Essex, U.K. These
have been complemented by executive programs at Wharton and London Business School.
Sarah Pybus. Sarah Pybus was appointed as Compliance Officer of Atlas in August 2020, and is also Associate
General Counsel and Secretary of each of Atlas and Seaspan. Ms. Pybus has been in-house counsel at Seaspan since
August 2014. Prior to joining Seaspan, Ms. Pybus was in-house counsel at a brokerage firm for three years and, before that,
in private practice with the firm Blake, Cassels & Graydon LLP. In private practice, Ms. Pybus advised companies with
respect to mergers and acquisitions and corporate finance transactions, as well as on general corporate matters, corporate
governance and compliance with securities legislation. Ms. Pybus is a barrister and solicitor, called to the Alberta bar in
2006 and the British Columbia bar in 2007, and is designated as a Certified In-House Counsel – Canada by the Canadian
Bar Association, the Canadian Corporate Counsel Association and the Rotman School of Management (University of
Toronto). Ms. Pybus obtained her law degree from the University of Alberta.
Krista Yeung. Krista Yeung was appointed as Atlas Corp.’s Vice President, Accounting & Tax in October 2020 and
prior to that was Vice President, Finance from March 2020. Ms. Yeung is a seasoned executive with over 15 years of
experience. Previous to her current position, she has had various roles with Seaspan, including Corporate Controller and
Vice President Accounting. She graduated with a Bachelor of Commerce from the University of British Columbia. Ms.
Yeung is a Chartered Professional Accountant (CPA, CA) and prior to joining Seaspan she articled at KPMG LLP.
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Lawrence Chin. Lawrence Chin was appointed a director of Atlas in November 2019 and is a member of the
Compensation and Governance Committee. Mr. Chin had served as a director and a member of the Compensation and
Governance Committee of Seaspan since April 2018 to March 2020. Lawrence Chin has over 23 years of experience in
global capital markets and currently serves as Chief Operating Officer of Hamblin Watsa Investment Counsel (“HWIC”).
HWIC, a wholly-owned subsidiary of Fairfax Financial Holdings Limited, provides global investment management
services to the insurance and reinsurance subsidiaries of Fairfax. Mr. Chin previously served as Senior Vice President at
one of the largest investment management firms in Canada.
John C. Hsu. John Hsu was appointed a director of Atlas in November 2019 and is a member of the audit
committee. Mr. Hsu has been a director of Seaspan since April 2008. For generations, Mr. Hsu’s family have owned and
operated bulkers, tankers and specialized ships through entities such as Sincere Navigation Corp. (Taiwan-listed) and Oak
Maritime Group. Currently, Mr. Hsu is a director of the family’s single family office, OSS Capital, a member of the
Advisory and Investment Committee of Isola Capital Group (a multifamily office based in Hong Kong that manages direct
investments in private equity), and also holds directorships in various private companies and NGOs. From 2008 to 2012, he
was the chairman of TSSI Inc. (a Taiwan-based surveillance IC solutions provider). From 2003 to 2010, Mr. Hsu was a
partner of Ajia Partners, a prominent privately-owned alternative asset investment firm. From 1998 to 2002, he was chief
investment officer of Matrix Global Investments, a hedge fund of US listed technology companies. Mr. Hsu received his
Bachelor of Arts degree from Colgate University and his Masters of Business Administration degree from Columbia
University, and is also fluent in Japanese and Mandarin.
Nicholas Pitts-Tucker. Nicholas Pitts-Tucker was appointed as a director of Atlas in November 2019 and serves as
the chair of the audit committee. Mr. Pitts-Tucker served as a director of Seaspan from April 2010 to March 2020 and was
chair of the audit committee since April 2015. Mr. Pitts-Tucker joined Sumitomo Mitsui Banking Corporation in 1997,
following 14 years at Deutsche Morgan Grenfell and over 10 years at Grindlays Bank Limited in Asia. At Sumitomo
Mitsui Banking Corporation, Mr. Pitts-Tucker served for 13 years with particular emphasis on project shipping and
aviation finance in Asia, Europe and the Middle East. He also served on the Board as an executive director of SMBC
Europe and of Sumitomo Mitsui Banking Corporation in Japan, or SMBC Japan. He retired from SMBC Europe and
SMBC Japan in April 2010, and also retired as a non-executive director and as a member of the audit committee of SMBC
Europe in April 2011. From 2010 to February 2021, Mr. Pitts- Tucker was a director of Black Rock Frontier Investment
Trust PLC, which is listed on the London Stock Exchange. Mr. Pitts-Tucker is a member of the Royal Society for Asian
Affairs, which was founded in 1901 to promote greater knowledge and understanding of Central Asia and countries from
the Middle East to Japan. In August 2013, Mr. Pitts-Tucker was appointed as Governor of the University of Northampton,
UK's No 1 University for Social Enterprise. Mr. Pitts-Tucker has a Master of Arts degree from Christ Church, Oxford
University and a Master of Business Administration from Cranfield University.
Lawrence Simkins. Larry Simkins was appointed as a director of Atlas in November 2019 and served as a director
of Seaspan from April 2017 to March 2020. Mr. Simkins is chair of the compensation and governance committee. Since
2001, Larry Simkins has been President of The Washington Companies, an affiliate of Seaspan’s second largest
shareholder. As President and CEO, Mr. Simkins provides leadership and direction to the enterprise by serving as a
member of the board of directors of each individual company. The Washington Companies consist of privately owned
companies and selected public company investments employing over 6,000 people worldwide, generating nearly US$2
billion in annual revenue. Business is transacted in the sectors of rail transportation, marine transportation, shipyards,
mining, environmental construction, heavy equipment sales and aviation products. Mr. Simkins is a former director of the
Federal Reserve Bank of Minneapolis, completing his second term in December of 2016. Mr. Simkins currently serves on
the boards of Trustees of Gonzaga University and the Boy Scouts of America-Montana Council. He is a certified public
accountant (inactive), and received a B.S., Business Administration (Accounting) from the University of Montana.
Katie Wade. Katie Wade was appointed as a director of Atlas in July 2021, with effect from September 1, 2021, and
is a member of the audit committee. Ms. Wade currently serves as the Chief Financial Officer of Lloyd’s managing agency
AEGIS London, a specialist insurer offering specialist expertise and leadership to clients in more than 180 countries, across
a broad range of industry groups. Over her 25 year career in financial services, she previously held positions as the Chief
Financial Officer for ERS, the specialist motor insurer and syndicate, Aspen Insurance UK Limited and Aspen Managing
Agency Limited, and ACE Tempest Re, after having held various positions within the audit profession including with
PwC. Ms. Wade is a fellow of the Institute of Chartered Accountants of England and Wales and a Liveryman of the
Worshipful Company of Insurers.
Stephen Wallace. Stephen Wallace was appointed a director of Atlas in November 2019 and is a member of the
audit committee. Mr. Wallace served as a director of Seaspan from April 2018 to March 2020. Stephen Wallace has
worked for over 30 years in global affairs and public administration. A Deputy Minister in Canada’s federal government
until the end of 2017, he has worked extensively with emerging economies and large-scale enterprises, was responsible for
core government operations at the Treasury Board, led civil reconstruction programs in some of the world’s major conflict
zones, and was most recently the Secretary to the Governor General of Canada. He is a graduate of the Institute of
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Corporate Directors with an academic background in international trade and extensive experience in international
negotiation. Mr. Wallace grew up in an Atlantic Coast naval family and is currently an advisor to government, corporations
and academic institutions.
B.
Compensation
Compensation of Directors and Officers
Our non-employee directors receive cash and, as described below under “—Equity Incentive Plan,” equity-based
compensation.
In 2021, each non-employee member of the Atlas board of directors received the following annual cash retainers and
fees. Each non-employee director received an annual cash retainer of $75,000. The chair of the audit committee received an
annual payment of $20,000 and each other member of the audit committee received an annual payment of $10,000 for the
regular quarterly committee meetings. The chair of the compensation and governance committee received an annual
payment of $20,000 and each other member of the compensation and governance committee, other than David Sokol,
received an annual payment of $10,000 for the regular quarterly committee meetings. Each audit committee member and
each compensation and governance committee member, other than David Sokol, also received a payment of $1,500 for
each additional committee meeting attended during the calendar year.
All annual cash retainers and payments are payable in equal quarterly installments. Non-employee directors who
attend committee meetings (other than the regularly scheduled quarterly meetings) at the invitation of the chair of the
committee, but who are not members of any such committee, also received a payment of $1,500 per meeting.
Officers who also serve as directors do not receive compensation for their service as directors. Each director is
reimbursed for out-of-pocket expenses incurred while attending any meeting of our board of directors or any committee.
For services during the year ended December 31, 2021, Atlas directors and management (15 persons) received
aggregate cash compensation of approximately $5.6 million. We do not have a retirement plan for members of our
management team or our directors. The compensation amounts set forth above exclude equity-based compensation paid to
our directors and management as described below.
Employment Agreements with Senior Management
Mr. Bing Chen serves as President & Chief Executive Officer of Atlas Corp. and each of its portfolio companies
pursuant to an executive employment agreement between Mr. Chen and Seaspan Corporation, initially entered into in
October 2017 and most recently amended and restated in June 2020, with an effective date of January 1, 2021. Our senior
management other than Mr. Chen, including Graham Talbot, Tina Lai, Torsten Holst Pedersen, Sarah Pybus and Krista
Yeung, have employment arrangements with Seaspan Ship Management Limited (“SSML”).
Equity Incentive Plan
The Company has a Stock Incentive Plan (the “Plan”), which is administered by the board of directors and under
which the officers, employees and directors of the Company and its subsidiaries can be granted options, restricted shares,
phantom share units and other stock-based awards as determined by the board of directors.
In January 2021, each of Atlas’ non-employee directors (other than Mr. Sokol) was awarded 11,984 restricted
shares, which vested on January 1, 2022. Alistair Buchanan, who resigned from the board of directors in February 2021,
and Ms. Katie Wade, who joined the board effective September 1, 2021, each received pro rated awards of restricted shares
for their service on the board of directors during 2021.
In March 2022, the board of directors approved an award of 4,000,000 unrestricted, fully vested shares to Mr. Sokol,
as compensation for his continued service as chairman of the board of directors until September 1, 2027. Under the terms
of the grant agreement, should Mr. Sokol cease to act as a director at any time between the date of grant and December 31,
2022, other than for reason of his death or disability, he will forfeit and must return the shares to the Company. Thereafter
until September 1, 2027, should Mr. Sokol cease to act as a director for any reason other than his death or disability, he
agrees to return on a pro rata basis the number of shares for each month less than 56 that he serves.
In 2021, Atlas also granted an aggregate 179,763 restricted stock units to our executive officers of which certain of
these grants vested immediately, with the remainder vesting on February 28 of 2022 and 2023.
In August 2021, Atlas also granted an aggregate 550,000 restricted stock units to certain executive officers, not
including Mr. Chen, of which 1/5 of these grants vested on January 3, 2022, with the remainder to vest in four equal
tranches each January 2, 2023 through 2026.
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SSML has a Cash and Equity Bonus Plan (“CEBP”) under which its key employees are eligible to receive awards
comprised of 2/3 cash and 1/3 common shares under the Atlas Plan. The purpose of the CEBP is to align the interests of
SSML’s management with the interests of Atlas. In 2021, under the CEBP, SSML granted 8,721 common shares to Atlas
executive officers for the equity portion of the award.
In addition, Atlas has an Equity Bonus Plan (“EBP”) under which employees of Atlas’ subsidiaries who do not
participate in the CEBP may receive equity bonus awards. Like the CEBP, the purpose of the EBP is to align the interests
of Atlas personnel with the interests of Atlas. No grants to Atlas executive officers were made during 2021.
C.
Board Practices
General
As of March 10, 2022, the board of directors consisted of eight members. Each member of our board is elected to
hold office until the next succeeding annual meeting of shareholders and until such director’s successor is elected and has
been qualified. The chairman of our board of directors is David Sokol.
Our board of directors has determined that each of the current members of our board of directors, other than Bing
Chen, has no material relationship with us, either directly or as a partner, shareholder or officer of an organization that has
a material relationship with us, and is therefore independent from management.
The independent directors on our board considered the independence of Mr. Chin in light of the fact that he serves as
managing director Hamblin Watsa Investment Counsel Ltd., a wholly-owned subsidiary of Fairfax, our largest shareholder,
as well as the independence of Mr. Simkins, in light of his relationship with Dennis Washington, who controls entities that
together represent our second largest shareholder, and determined that each of Messrs. Chin and Simkins is an independent
director in accordance with our independent director standards.
Committees
The board of directors currently has two committees, including an audit committee and a compensation and
governance committee. The membership of the audit committee and compensation and governance committee during 2021
and the function of each of the committees are described below. Each of the committees operates under a written charter
adopted by the board, which are available under “Corporate Governance” in the Investor Relations section of our website at
www.atlascorporation.com.
During 2021, the board of directors held eight meetings, the audit committee held five meetings and the
compensation and governance committee held five meetings.
The audit committee of the board is composed entirely of directors who currently satisfy applicable New York Stock
Exchange (“NYSE”) and SEC audit committee independence standards. During 2021, the audit committee members were
Nicholas Pitts-Tucker (chair), John Hsu, Stephen Wallace and (until his resignation from the board in February 2021) Mr.
Buchanan. Katie Wade became a member of the audit committee in February 2022. All current members of the committee
are financially literate, and our board of directors has determined that Mr. Pitts-Tucker qualifies as an audit committee
financial expert. The audit committee assists our board of directors in fulfilling its responsibilities for general oversight of:
(1) the integrity of our consolidated financial statements; (2) our compliance with legal and regulatory requirements; (3) the
independent auditors’ qualifications and independence; (4) the performance of our internal audit function and independent
auditors; and (5) potential conflicts and related party transactions.
The compensation and governance committee of the board consists of Lawrence Simkins (chair), David Sokol and
Lawrence Chin. The compensation and governance committee is tasked with: (1) reviewing, evaluating and approving our
agreements, plans, policies and programs to compensate our officers and directors; (2) reporting on executive
compensation, which is included in our proxy statement; (3) otherwise discharging the board’s responsibilities relating to
the compensation of our officers and directors; (4) assisting the board with corporate governance practices, evaluating
director independence and conducting periodic performance evaluations of the members of the board; (5) overseeing our
approach and disclosures relating to environmental, social and governance (“ESG”) matters; and (6) performing such other
functions as the board may assign to the committee from time to time.
Exemptions from NYSE Corporate Governance Rules
As a foreign private issuer, we are exempt from certain corporate governance rules that apply to U.S. domestic
companies under NYSE listing standards. The significant ways in which our corporate governance practices differ from
those followed by U.S. domestic companies are that (1) we are not required to obtain shareholder approval prior to the
adoption of equity compensation plans or certain equity issuances, including, among others, issuing 20% or more of our
outstanding common shares or voting power in a transaction, and (2) our board of directors, rather than a separate
nominating committee of independent directors, evaluates and approves our director nominees.
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Unlike domestic companies listed on the NYSE, foreign private issuers are not required to have a majority of
independent directors and the standard for independence applicable to foreign private issuers may differ from the standard
that is applicable to domestic issuers. Our board of directors has determined that all of our directors, other than Bing Chen,
satisfy the NYSE’s independence standards for domestic companies.
D.
Employees
As of December 31, 2021, we employed approximately 6,200 employees (2020 – 5,300, 2019 – 4,700) on a
consolidated basis. Seaspan had approximately 5,600 seagoing staff (2020 – 4,800, 2019 – 4,400) serve on the vessels that
we manage and approximately 300 staff (2020 – 300, 2019 – 300) serve on shore in technical, commercial and
administrative roles in Canada, Hong Kong and India. APR Energy had approximately 100 employees serving at the
various plant sites and approximately 100 staff serve in technical, commercial and administrative roles in various locations
including the US, Argentina and Singapore.
In accordance with Maritime Labour Convention and Hong Kong employment regulations, all Seaspan seagoing
staff are covered under a Collective Bargaining Agreement with the Hong Kong Seafarers Co-ordination Committee which
is a consolidation of three Hong Kong seagoing staff unions, Merchant Navy Officers Guild (MNOG), Hong Kong
Seamans Union (HKSU) and Amalgamated Union of Seafarers (AUS). These unions are duly recognized members of the
International Tradeworkers Federation (ITF). Of the employees at APR, 70 employees located in Argentina are covered
under union contracts.
E.
Share Ownership
The following table sets forth certain information regarding the beneficial ownership of our common shares by:
•
•
•
each of our current directors;
each of our current executive officers; and
all our current directors and current executive officers as a group.
The information presented in the table is based on information filed with the SEC and on information provided to us
on or before March 10, 2022.
Name of Beneficial Owner
Common
Shares
Percentage of
Common Shares
(1)
3,000,000
1.2 %
David Sokol(2)
Bing Chen
Graham Talbot
Tina Lai
Torsten Holst Pedersen
Sarah Pybus
Krista Yeung
Lawrence Chin(3)
John Hsu
Nicholas Pitts-Tucker(3)
Lawrence Simkins(3)
Katie Wade
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
5,245,559
2.1 %
Stephen Wallace
All directors, executive officers, senior management and key employees
as a group (13 persons)(4)
_________________________
(1)
Percentages are based on 247,868,247 common shares that were issued and outstanding on March 10, 2022.
(2)
(3)
The Sokol Family Foundation, a charitable foundation of which David Sokol is a director, beneficially owns 1,458,359 common shares of
the Company. Mr. Sokol disclaims beneficial ownership of such shares. This information was provided to us by Mr. Sokol on or about
February 9, 2022.
The number of common shares shown for Lawrence Chin, Nicholas Pitts-Tucker and Lawrence R. Simkins includes shares beneficially or
directly owned by them as well as by certain members of their respective families. This information was provided to us by Messrs. Chin,
Pitts-Tucker and Simkins on or before February 14, 2022.
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(4)
*
Includes an aggregate 700,000 common shares issuable upon the exercise of vested stock options granted to Bing Chen in January 2018
and June 2020. Please see note 20 to our consolidated financial statements included in this Annual Report for a description of these
awards.
Less than 1%.
Item 7.
Major Shareholders and Related Party Transactions
A. Major Shareholders
The following table sets forth certain information regarding the beneficial ownership of our common shares by each
person known by us to be a beneficial owner of more than 5% of the common shares. The information provided in the table
is based on information filed with the SEC and on information provided to us on or about March 10, 2022.
Name of Beneficial Owner
Fairfax Financial Holdings Limited(2)
Dennis R. Washington(3)
Copper Lion, Inc.(4)
_________________________
(1)
Common
Shares
130,805,753
48,076,493
14,007,238
Percentage of
Common Shares(1)
46.9 %
19.4 %
5.7 %
Percentages are based on the 247,868,247 common shares that were issued and outstanding on March 10, 2022; however, percentages for Fairfax
Financial Holdings Limited are based on both the number of outstanding common shares issued and outstanding on March 10, 2022 plus
31,000,000 common shares issuable upon the exercise of warrants held by affiliates thereof.
(2)
(3)
(4)
The number of common shares shown for Fairfax Financial Holdings Limited consists of 99,805,753 common shares and warrants exercisable for
up to 31,000,000 common shares. As of the date hereof, Fairfax has not exercised any of such warrants. This information is based on SEC filings
and information provided by Fairfax and certain of its affiliates on or before February 18, 2022. The information lists other affiliated individuals
and entities that beneficially own all or a portion of the 99,805,753 common shares beneficially owned by Fairfax. As well, the information
reports an additional 678,021 common shares are beneficially owned by V. Prem Watsa (the chairman and chief executive officer of Fairfax) and
The Second 810 Holdco Ltd., and 231,922 common shares are beneficially owned by The Sixty Three Foundation, a registered Canadian
charitable foundation to which Fairfax contributes to fund charitable donation, which total shares represent 47.2% of our outstanding common
shares (including the 31,000,000 shares issuable upon exercise of the warrants described in this note).
The number of common shares shown for Dennis R. Washington includes shares beneficially owned by Deep Water Holdings, LLC, Washington
Investments, LLC and The Roy Dennis Washington Revocable Living Trust u/a/d November 16, 1987. This information is based on prior SEC
filings and information provided to us by Mr. Washington on or about February 15, 2022. Lawrence R. Simkins, the manager of Deep Water
Holdings, LLC and Washington Investments, LLC and a director of the Company, has voting and investment power with respect to the common
shares held by Deep Water Holdings, LLC.
The number of common shares shown for Copper Lion, Inc. includes those shares beneficially owned by The Kevin Lee Washington 2014 Trust,
The Kyle Roy Washington 2005 Irrevocable Trust u/a/d July 15, 2005 and The Kyle Roy Washington 2014 Trust, for which trusts Copper Lion,
Inc. serves as trustee. This information is based on prior SEC filings and information provided to us by Copper Lion, Inc. on or before February
15, 2022. Kevin L. Washington and Kyle R. Washington are sons of Dennis R. Washington, who controls our second largest shareholder.
Lawrence R. Simkins, a director of the Company, is a director of Copper Lion, Inc.
In connection with the acquisition of APR Energy, Fairfax received an aggregate 23,418,798 common shares of
Atlas in consideration of its equity interests in Apple Bidco Limited and in settlement of indebtedness owing to Fairfax by
Apple Bidco Limited at the Closing Date. Such issuance increased Fairfax’s holdings from 42.4% to 46.2% (including
25,000,000 shares issuable upon the exercise of warrants then held by Fairfax's affiliates) as at the date of the acquisition.
In addition, on the closing date of the acquisition, Atlas reserved for issuance 2,137,541 Holdback Shares to Fairfax in
connection with post-closing purchase price adjustments and indemnification obligations of the sellers, including Fairfax.
In August 2020, in connection with purchase price adjustments pursuant to the acquisition agreement and
Amendment No. 2 thereto, Fairfax forfeited its right to receive 391,246 Holdback Shares and returned 1,253,883
previously issued common shares to Atlas. Of the 1,253,883 common shares returned, 760,807 shares were permanently
forfeited; 493,076 shares were (and remain) held in reserve as treasury shares and may be issuable to Fairfax at a future
date, subject to settlement of potential indemnified events.
During the years ended December 31, 2020 and 2021, none of the Holdback Shares were released from holdback
and issued to Fairfax; however, Fairfax purchased 668,775 common shares that were released from the holdback of the
minority Sellers, pursuant to the terms of Amendment No. 1 to the acquisition agreement. In January 2022, Fairfax
purchased an additional 48,985 of such common shares.
On April 30, 2021 and June 11, 2021, concurrently with the execution of Amendment No. 3 to the APR acquisition
agreement and the Fairfax Notes Exchange, respectively, the Corporation and certain affiliates of Fairfax entered into
warrant agreements pursuant to which the Corporation issued warrants to purchase 5,000,000 common shares at an
exercise price of $13.00 and 1,000,000 common shares at an exercise price of $13.71, respectively. For more information,
see “Item 5. Operating and Financial Review and Prospects—Management’s Discussion and Analysis of Financial
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Condition and Results of Operations—Recent Developments in 2021 and 2022—Amendment to APR Energy Acquisition
Agreement" and "—Fairfax Notes Exchange and Redemption."
Fairfax has disclosed that, on August 23, 2021, Fairfax completed its previously announced transaction with CVC
Strategic Opportunities Fund II ("CVC") to sell all of its interests in RiverStone Europe to CVC. Certain subsidiaries of
RiverStone Europe are record owners of 9,018,474 common shares (the "RiverStone Shares") as well as warrants
exercisable for 40,000 common shares. Fairfax discloses that Fairfax and its affiliates remain the continuous beneficial
owners of the RiverStone Shares, and retain pecuniary interest in the RiverStone Shares. Fairfax retains full operational
control and direction over the RiverStone Shares, including having sole control over all voting and related matters
involving the RiverStone Shares, other than where the exercise of such right could reasonably be expected, in the opinion
of the current holders of the RiverStone Shares, to result in liability, regulatory breach or material reputational damage.
Our major holders of common shares do not have different voting rights than other holders of our common
shareholders.
As of March 10, 2022, a total of 55,213,078 of our common shares were held by 39 holders of record in the United
States.
We are not aware of any arrangements, the operation of which may at a subsequent date result in a change of
control.
B.
Related Party Transactions
From time to time, we have entered into agreements and have consummated transactions with certain related parties.
These related party agreements and transactions have included the sale and purchase of our common and preferred shares,
Seaspan’s private placements with affiliates of Fairfax Financial Holdings Limited (the transactions by which they became
a related party) (see “Issuance of Securities to Fairfax” below), our acquisition of APR Energy and other matters. We may
enter into related party transactions from time to time in the future. Our board has an audit committee, comprised entirely
of independent directors, which must review, and if applicable, approve all proposed material related party transactions.
Lawrence Simkins, one of our directors, serves as the chief executive officer and president of certain of The
Washington Companies and as manager of Deep Water and Washington Investments, and as a director on multiple private
company boards of the Washington Companies. He is also a member of the board of directors of Copper Lion, Inc.
Lawrence Chin, one of our directors, serves as a managing director of Hamblin Watsa Investment Counsel Ltd., a
wholly-owned subsidiary of Fairfax. Fairfax is currently our largest shareholder. Mr. Chin is one of the appointees to our
board by the holders of the Series J Preferred Shares.
Stephen Wallace, one of our directors, is the other appointee to our board by the holders of the Series J Preferred
Shares. Mr. Wallace has no employment relationship with Fairfax. Mr. Wallace served as a director of APR Energy prior to
the APR Energy acquisition.
Issuances of Securities to Fairfax
Since 2018, we have completed a number of private placements and other transactions with Fairfax involving the
issuance of an aggregate $600.0 million aggregate principal amount of Fairfax Notes, all of which Fairfax Notes have since
been exchanged and then cancelled in connection with the Fairfax Notes Exchange or redeemed, and an aggregate
107,923,078 warrants exercisable for an equivalent number of common shares, of which 31,000,000 warrants remain
unexercised. Our chairman, David Sokol, serves on a charitable board with Prem Watsa, the chairman and chief executive
officer of Fairfax Financial Holdings Limited. Fairfax became a related party as a result of private placements completed in
2018 and 2019.
If the 31,000,000 warrants held by Fairfax were exercised in full, as of March 10, 2022, Fairfax’s shareholdings,
including shares owned by V. Prem Watsa (the chairman and chief executive officer of Fairfax Financial Holdings
Limited) that he acquired in the open market, would have represented approximately 47.1% of our outstanding common
shares on such date after taking into account the issuance of the shares to Fairfax.
Registration Rights Agreements
In connection with Seaspan’s initial public offering, 2009 issuance of Series A preferred shares, acquisition of GCI,
acquisition of SMSL in 2012, the August 2017 private placement of common stock to David Sokol, the Fairfax private
placements and the Fairfax Notes Exchange, we (including Seaspan as predecessor) entered into one or more registration
rights agreements pursuant to which it agreed to file, subject to the terms and conditions of the applicable registration rights
agreements, registration statements under the Securities Act of 1933, as amended, or the Securities Act, and applicable
state securities laws, covering common shares issued and/or issuable pursuant to the relevant transaction. Atlas assumed the
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obligations of Seaspan under these registration rights agreements upon the completion of the Reorganization. Shareholders
of Atlas entitled to such registration rights include, among others, entities affiliated with Dennis R. Washington, his son
Kyle R. Washington, a former member our board, David Sokol, chairman of our board, and Fairfax. The registration rights
agreements give the counterparties piggyback registration rights allowing them to participate in certain offerings by us to
the extent that their participation does not interfere or impede with our offering. In each case, we are obligated to pay
substantially all expenses incidental to the registration, excluding underwriting discounts and commissions.
Sale of Vessel to ZE JV
In October 2021, we sold one 4,250 TEU vessel to a wholly-owned subsidiary of the ZE JV, of which we are a 50%
owner. We continue to manage the ship operations of the vessel. In December 2021, we entered into agreements to sell an
additional three 4,250 TEU vessels to subsidiaries of the ZE JV. These sales are expected to complete in the second
quarter of 2022, subject to closing conditions. For more information, see “Item 5. Operating and Financial Review and
Prospects—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent
Developments in 2021 and 2022—Vessel Sales."
Item 8.
Financial Information
A.
Financial Statements and Other Financial Information
Please see Item 18 below.
Legal Proceedings
We have not been involved in any legal proceedings that may have, or have had a significant effect on our business,
financial position, results of operations or liquidity, and we are not aware of any proceedings that are pending or threatened
that may have a material effect on our business, financial position, results of operations or liquidity. From time to time, we
may be subject to legal proceedings and claims in the ordinary course of business, including commercial disputes and
personal injury and property casualty claims. With respect to personal injury and property casualty claims, we expect that
these claims would be covered by insurance, subject to customary deductibles. Any legal proceedings, even if lacking
merit, could result in the expenditure of significant financial and managerial resources.
Dividend Policy
Our quarterly dividend is $0.125 per common share. We intend to use a significant portion of our internally
generated cash flow to fund our capital requirements and reduce our debt levels, and the dividend policy adopted by our
board contemplates the distribution of a portion of our cash available to pay dividends on our common shares. We offer a
dividend reinvestment plan for common shareholders which provides shareholders with the opportunity to purchase
additional common shares at a discount from the market price, as described in the prospectus for this plan.
Our board could modify or revoke our dividend policy at any time. Even if our dividend policy is not modified or
revoked, the actual amount of dividends distributed under the policy, and the decision to make any distribution, will remain
at all times entirely at the discretion of our board. Accordingly, there can be no assurance that Atlas Corp. will continue to
pay regular quarterly dividends on our common shares at the current amount, or at all.
There are a number of factors that could affect the dividends on our common shares in the future. Many of these
factors could also affect our ability to pay dividends on our preferred shares. As a result of these factors, you may not
receive dividends based on current amounts or at all. These factors include, among others, the following:
•
•
•
•
as a holding company, Atlas Corp. depends on Seaspan’s and APR Energy’s ability to pay dividends to Atlas
Corp.;
Seaspan and APR Energy may not have enough cash to pay dividends due to changes in their operating cash
flow, capital expenditure requirements, credit and other financing arrangements repayment obligations, working
capital requirements and other cash needs;
Seaspan’s ability to pay dividends to Atlas Corp. is dependent upon the charter rates on new vessels and those
obtained upon the expiration of our existing charters;
the amount of dividends that Seaspan and APR Energy may distribute to Atlas Corp. is limited by restrictions
under Seaspan’s and APR Energy’s existing credit and lease facilities, the Notes, and Seaspan’s and APR
Energy’s future indebtedness which could contain covenants that are even more restrictive; Seaspan's 2022 RCF
and 5.5% 2029 Notes contain incurrence-based covenants which may subject us to additional specified
limitations, including limitations on dividend payments;
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•
•
•
•
Seaspan’s and APR Energy’s credit and lease facilities and the Notes require us to comply with various
financial covenants, and Seaspan’s and APR Energy’s credit and lease facilities and the Notes prohibit the
payment of dividends if an event of default has occurred and is continuing thereunder or if the payment of the
dividend would result in an event of default;
Atlas Corp.’s ability to pay a cash dividend on Atlas Corp. common shares may be limited under debt
instruments issued by Atlas Corp. in the future;
the amount of dividends that we may distribute is subject to restrictions under Marshall Islands Law; and
our common shareholders have no contractual or other legal right to dividends, and we are not otherwise
required to pay dividends.
All dividends are subject to declaration by our board. Our board may review and amend our dividend policy from
time to time in light of our plans for future growth and other factors. We cannot provide assurance that we will pay, or be
able to pay, regular quarterly dividends in the amounts and manner stated above.
Please read “Item 3. Key Information—D. Risk Factors” for a more detailed description of various factors that could
reduce or eliminate our ability to pay dividends.
B.
Significant Changes
None.
Item 9.
The Offer and Listing
Not applicable.
Item 10.
Additional Information
A.
Share Capital
Not applicable.
B. Memorandum and Articles of Association
Our (i) amended and restated articles of incorporation as well as our Series D Statement of Designation, Series H
Statement of Designation and Series I Statement of Designation were previously filed as Exhibits 3.1, 3.3, 3.6 and 3.7,
respectively, to our Form 6-K furnished to the SEC on February 27, 2020, (ii) amended and restated bylaws were
previously filed as Exhibit 1.2 to our Form 20-F filed with the SEC on March 19, 2021, and (iii) Series J Statement of
Designation was previously filed as Exhibit 1.1 to our Form 6-K furnished to the SEC on June 14, 2021, and are all hereby
incorporated by reference into this Annual Report. In addition, a summary of the material terms of our common shares and
preferred shares is filed herewith. Under the BCA, the Statements of Designation are deemed amendments to our articles of
incorporation. Our amended and restated articles of incorporation, Statements of Designation and amended and restated
bylaws have also been filed with the Registrar of Corporations of the Republic of the Marshall Islands.
The necessary actions required to change the rights of shareholders, and the conditions governing the manner in
which annual general meetings and special meetings of shareholders, are convened are described in our bylaws.
C. Material Contracts
The following is a summary of each material contract, other than contracts entered into in the ordinary course of
business, to which we are a party, for the two years immediately preceding the date of this Annual Report:
(a) Form of Indemnification Agreement between Atlas Corp. and each of its directors and officers, previously filed
as Exhibit 4.1 to Atlas Corp.’s Form 20-F, filed with the SEC on April 13, 2020.
(b) Registration Rights Agreement by and among Seaspan Corporation and the investors named therein dated
August 8, 2005, previously filed as Exhibit 10.1 to Seaspan Corporation’s Amendment No. 2 to Form F-1, filed with the
SEC on August 4, 2005.
(c) Registration Rights Agreement by and among Seaspan Corporation and the investors named therein dated
January 30, 2009, previously filed as Exhibit 10.3 to Seaspan Corporation’s Form 6-K, furnished to the SEC on February 2,
2009.
(d) Amended and Restated Management Agreement among Seaspan Corporation, Seaspan Management Services
Limited, Seaspan Advisory Services Limited, Seaspan Ship Management Ltd. and Seaspan Crew Management Ltd. dated
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as of May 4, 2007, previously filed as Exhibit 99.1 to Seaspan Corporation’s Form 6-K/A, furnished to the SEC on October
10, 2007.
(e) Amendment to Amended and Restated Management Agreement among Seaspan Corporation, Seaspan
Management Services Limited, Seaspan Advisory Services Limited, Seaspan Ship Management Ltd. and Seaspan Crew
Management Ltd. dated as of August 5, 2008, previously filed as Exhibit 4.9 to Seaspan Corporation’s Form 20-F, filed
with the SEC on March 30, 2011.
(f) Registration Rights Agreement by and among Seaspan Corporation and the investors named therein, dated
January 27, 2012, previously filed as Exhibit 4.5 to Seaspan Corporation’s Form 6-K, furnished to the SEC on January 30,
2012.
(g) Registration Rights Agreement, dated August 17, 2017, by and between Seaspan Corporation and David Sokol,
previously filed as Exhibit 10.1 to Seaspan Corporation’s Form 6-K, furnished to the SEC on August 23, 2017.
(h) Indenture, dated October 10, 2017, between Seaspan Corporation and The Bank of New York Mellon, as trustee,
previously filed as Exhibit 4.1 to Seaspan Corporation’s Form 6-K, furnished to the SEC on October 12, 2017.
(i) First Supplemental Indenture, dated October 10, 2017, between Seaspan Corporation and The Bank of New York
Mellon, previously filed as Exhibit 4.2 to Seaspan Corporation’s Form 6-K, furnished to the SEC on October 12, 2017.
(j) Second Supplemental Indenture, dated February 14, 2018, among Seaspan Corporation, the Guarantors (as
defined therein) and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.2 to Seaspan Corporation’s
Form 6-K, furnished to the SEC on February 15, 2018.
(k) Registration Rights Agreement, dated February 14, 2018 among Seaspan Corporation, the Guarantors specified
therein and the investors specified therein, previously filed as Exhibit 4.4 to Seaspan Corporation’s Form 6-K, furnished to
the SEC on February 15, 2018.
(l) Registration Rights Agreement Joinder, dated as of February 14, 2018, by and among Seaspan Corporation, the
subsidiary guarantors and the investors specified therein, dated as of March 26, 2018, by Seaspan Investment I Ltd,
previously filed as Exhibit 4.9 to Seaspan Corporation’s Form 6-K, furnished to the SEC on March 30, 2018.
(m) Third Supplemental Indenture, dated February 22, 2018, by and among Seaspan Corporation, the Subsidiary
Guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.1 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on February 22, 2018.
(n) Pledge Agreement, dated February 22, 2018, between Seaspan Corporation and The Bank of New York Mellon,
as trustee, previously filed as Exhibit 4.2 to Seaspan Corporation’s Form 6-K, furnished to the SEC on February 22, 2018.
(o) Agreement and plan of merger, dated as of March 13, 2018, by and among Seaspan Corporation, Seaspan
Investments III LLC, Greater China Intermodal Investments LLC and Greater China Industrial Investments LLC,
previously filed as Exhibit 4.1 to Seaspan Corporation’s Form 6-K, furnished to the SEC on March 14, 2018.
(p) Registration Rights Agreement, dated as of March 13, 2018, by and among Seaspan Corporation, Greater China
Industrial Investments LLC, Tiger Management Limited and Blue Water Commerce, LLC, previously filed as Exhibit 4.2
to Seaspan Corporation’s Form 6-K, furnished to the SEC on March 14, 2018.
(q) Registration Rights Agreement, dated as of March 13, 2018, by and among Seaspan Corporation and Deep Water
Holdings, LLC, previously filed as Exhibit 4.7 to Seaspan Corporation’s Form 6-K, furnished to the SEC on March 14,
2018.
(r) Fourth Supplemental Indenture, dated as of March 22, 2018, by and among Seaspan Corporation, the subsidiary
guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.5 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on March 30, 2018.
(s) Fifth Supplemental Indenture, dated as of March 26, 2018, by and among Seaspan Corporation, the subsidiary
guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.6 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on March 30, 2018.
(t) Sixth Supplemental Indenture, dated as of March 26, 2018, by and among Seaspan Corporation, the subsidiary
guarantors specified therein (including Seaspan Investment I Ltd.) and The Bank of New York Mellon, as trustee,
previously filed as Exhibit 4.7 to Seaspan Corporation’s Form 6-K, furnished to the SEC on March 30, 2018.
(u) Seventh Supplemental Indenture, dated as of June 8, 2018, by and among Seaspan Corporation, the subsidiary
guarantors specified therein (including Seaspan Investment I Ltd.) and The Bank of New York Mellon, as trustee,
previously filed as Exhibit 4.8 to Seaspan’s Form 6-K, furnished to the SEC on June 11, 2018.
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(v) Amended and Restated Seaspan Investment Pledge and Collateral Agent Agreement, dated as of June 8, 2018, by
and among Seaspan Corporation, Seaspan Investment I Ltd. and The Bank of New York Mellon, as trustee and collateral
agent, previously filed as Exhibit 4.9 to Seaspan Corporation’s Form 6-K, furnished to the SEC on June 11, 2018.
(w) Eighth Supplemental Indenture, dated as of July 16, 2018, by and among Seaspan Corporation, the subsidiary
guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.8 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on July 16, 2018.
(x) Warrant Agreement, dated July 16, 2018, by and among Seaspan Corporation and the Investors specified therein,
previously filed as Exhibit 4.9 to Seaspan Corporation’s Form 6-K, furnished to the SEC on July 16, 2018.
(y) Registration Rights Agreement, dated July 16, 2018, by and between Seaspan Corporation and the Investors
specified therein, previously filed as Exhibit 4.10 to Seaspan Corporation’s Form 6-K, furnished to the SEC on July 16,
2018.
(z) First Amendment to the Amended and Restated Seaspan Investment Pledge and Collateral Agent Agreement,
dated as of August 8, 2018, by and between Seaspan Investment I Ltd. and The Bank of New York Mellon, as collateral
agent, previously filed as Exhibit 4.2 to Seaspan Corporation’s Form 6-K, furnished to the SEC on August 13, 2018.
(aa) Second Amendment to the Amended and Restated Seaspan Investment Pledge and Collateral Agent Agreement,
dated as of August 31, 2018, by and between Seaspan Investment I Ltd. and The Bank of New York Mellon, as collateral
agent, previously filed as Exhibit 4.3 to Seaspan Corporation’s Form 6-K, furnished to the SEC on September 4, 2018.
(bb) Registration Rights Agreement, dated January 14, 2019, by and between Seaspan Corporation and the Investors
specified therein, previously filed as Exhibit 1.1 to Seaspan Corporation’s Form 6-K, furnished to the SEC on January 14,
2019.
(cc) Ninth Supplemental Indenture, dated as of January 15, 2019, by and among Seaspan Corporation, the subsidiary
guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.9 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on January 17, 2019.
(dd) Tenth Supplemental Indenture, dated as of January 15, 2019, by and among Seaspan Corporation, the
subsidiary guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.10 to
Seaspan Corporation’s Form 6-K, furnished to the SEC on January 17, 2019.
(ee) Registration Rights Agreement, dated January 15, 2019, by and among Seaspan Corporation, the guarantors
specified therein and the investors specified therein, previously filed as Exhibit 4.12 to Seaspan Corporation’s Form 6-K,
furnished to the SEC on January 17, 2019.
(ff) Eleventh Supplemental Indenture, dated as of August 22, 2019, by and among Seaspan Corporation, the
subsidiary guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.11 to
Seaspan Corporation’s Form 6-K, furnished to the SEC on August 23, 2019).
(gg) Twelfth Supplemental Indenture, dated as of August 22, 2019, by and among Seaspan Corporation, the
subsidiary guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.12 to
Seaspan Corporation’s Form 6-K, furnished to the SEC on August 23, 2019.
(hh) Acquisition Agreement, dated November 20, 2019, by and among the sellers party thereto, Apple Bidco
Limited, Seaspan Corporation, Atlas Corp. and Fairfax Financial Holdings Limited, as the seller representative, previously
filed as Exhibit 4.2 to Seaspan’s Form 6-K, furnished to the SEC on November 22, 2019.
(ii) Amendment No. 1 to the Agreement and Plan of Merger, dated December 31, 2019, by and among Seaspan
Corporation, Atlas Corp. and Seaspan Holdco V Ltd., previously filed as Exhibit 2.2 to Atlas Corp.’s Amendment No. 1 to
Registration Statement on Form 4-F, filed with the SEC on December 31, 2019.
(jj) Thirteenth Supplemental Indenture, dated January 13, 2020, by and among Seaspan Corporation, Atlas Corp.,
the subsidiary guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.13
to Seaspan’s Form 6-K, furnished to the SEC on January 14, 2020.
(kk) Assignment and Assumption Agreement, dated as of February 5, 2020, by and among Seaspan Corporation,
Atlas Corp., the guarantors specified therein and the investors specified therein, previously filed as Exhibit 4.1 to Seaspan
Corporation’s Form 6-K, furnished to the SEC on February 10, 2020.
(ll) Amendment and Waiver to Acquisition Agreement, dated February 21, 2020, by and among Apple Bidco
Limited, Atlas Corp., Fairfax Financial Holdings Limited, in its capacity as the “Seller Representative”, and the other
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Parties listed on the signature pages attached hereto, previously filed as Exhibit 4.1 to Seaspan’s Form 6-K, furnished to the
SEC on February 26, 2020.
(mm) Fourteenth Supplemental Indenture, dated February 28, 2020, by and among Seaspan Corporation, the
subsidiary guarantors specified therein and The Bank of New York Mellon, as trustee, previously filed as Exhibit 4.14 to
Atlas’ Form 6-K, furnished to the SEC on March 10, 2020.
(nn) Credit Agreement, dated February 28, 2020, by and among, inter alia, APR Energy, LLC, as borrower,
Citibank, N.A., as administrative agent, and the lenders from time to time party thereto, previously filed as Exhibit 4.44 to
Atlas Corp.’s Form 20-F, filed with the SEC on April 13, 2020.
(oo) Intercreditor and Proceeds Agreement, dated February 28, 2020, by and among APR Energy, LLC, as borrower,
certain affiliates of the borrower from time to time party thereto, the other secured parties from time to time party thereto,
UMB Bank, National Association and Citibank, N.A., previously filed as Exhibit 4.45 to Atlas Corp.’s Form 20-F, filed
with the SEC on April 13, 2020.
(pp) APR Guaranty, dated February 28, 2020, by and between Atlas Corp. and UMB Bank, National Association, in
its capacity as security trustee, previously filed as Exhibit 4.46 to Atlas Corp.’s Form 20-F, filed with the SEC on April 13,
2020.
(qq) Registration Rights Agreement, dated February 28, 2020, by and among Atlas Corp. and the investors specified
therein, previously filed as Exhibit 4.47 to Atlas Corp.’s Form 20-F, filed with the SEC on April 13, 2020.
(rr) Credit Agreement, dated March 6, 2020, by and among, inter alia, APR Energy, LLC, as borrower, Citibank,
N.A., as administrative agent, and the lenders from time to time party thereto, previously filed as Exhibit 4.48 to Atlas
Corp.’s Form 20-F, filed with the SEC on April 13, 2020.
(ss) APR Guaranty, dated March 6, 2020, by and between Atlas Corp. and UMB Bank, National Association, in its
capacity as security trustee, previously filed as Exhibit 4.49 to Atlas Corp.’s Form 20-F, filed with the SEC on April 13,
2020.
(tt) Amendment Side Letter to Credit Agreement, dated as of March 19, 2020, by and among APR Energy, LLC, as
Borrower, Atlas Corp., as Parent Guarantor, and Citibank, N.A., as Administrative Agent, previously filed as Exhibit 4.50
to Atlas Corp.’s Form 20-F, filed with the SEC on April 13, 2020.
(uu) Agreement and Amendment No. 2 to Acquisition Agreement, dated June 30, 2020, by and among Apple Bidco
Limited, Atlas Corp., each shareholder listed on the signature pages thereto, and Fairfax Financial Holdings Limited, in its
capacity as the Seller Representative, previously filed as Exhibit 10.1 to Atlas’s Form 6-K, furnished to the SEC on August
13, 2020.
(vv) Third Amendment to the Amended and Restated Seaspan Investment Pledge and Collateral Agent Agreement,
dated as of July 15, 2020, by and between Seaspan Investment I Ltd. and The Bank of New York Mellon, as collateral
agent, previously filed as Exhibit 10.1 to Atlas Corp.’s Form 6-K, furnished to the SEC on November 10, 2020.
(ww) Indenture, dated as of December 21, 2020, by and among Atlas Corp., Seaspan Corporation and The Bank of
New York Mellon, as Trustee (including form of 3.75% Exchangeable Senior Notes due 2025), previously filed as Exhibit
4.1 to Atlas Corp.’s Form 6-K, furnished to the SEC on December 23, 2020.
(xx) Registration Rights Agreement, dated December 21, 2020, by and among Atlas Corp., Seaspan Corporation and
BofA Securities, Inc. and BMO Capital Markets Corp., as representatives of the Initial Purchasers, previously filed as
Exhibit 4.2 to Atlas Corp.’s Form 6-K, furnished to the SEC on December 23, 2020.
(yy) Indenture, dated March 19, 2021, between Atlas Corp. and The Bank of New York Mellon, as trustee,
previously filed as Exhibit 4.1 to Atlas Corp.’s Form F-4, filed with the SEC on March 19, 2021.
(zz) Agreement and Amendment No. 3 to Acquisition Agreement, dated as of April 30, 2021, among Atlas Corp.,
Apple Bidco Limited and Fairfax Financial Holdings Limited, in its individual capacity and in its capacity as Seller
Representative, previously filed as Exhibit 4.1 to Atlas Corp.’s Form 6-K, furnished to the SEC on May 3, 2021.
(aaa) Warrant Agreement, dated as of April 30, 2021, among Atlas Corp. and the investors named therein,
previously filed as Exhibit 4.2 to Atlas Corp.’s Form 6-K, furnished to the SEC on May 3, 2021.
(bbb) Registration Rights Agreement, dated as of April 30, 2021, among Atlas Corp. and the investors named
therein, previously filed as Exhibit 4.3 to Atlas Corp.’s Form 6-K, furnished to the SEC on May 3, 2021.
(ccc) First Supplemental Indenture, dated May 17, 2021, between Atlas Corp. and The Bank of New York Mellon,
as trustee, previously filed as Exhibit 4.1 to Atlas Corp.’s Form 6-K, filed herewith.
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(ddd) First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain
Credit Agreement dated as of May 15, 2019, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan
Corporation, as guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and
Société Générale, Hong Kong Branch, as lead sustainability coordinator, previously filed as Exhibit 4.1 to Atlas Corp.’s
Form 6-K, furnished to the SEC on May 27, 2021.
(eee) First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain
Credit Agreement dated as of December 30, 2019, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan
Corporation, as guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and
Société Générale, Hong Kong Branch, as lead sustainability coordinator, previously filed as Exhibit 4.2 to Atlas Corp.’s
Form 6-K, furnished to the SEC on May 27, 2021.
(fff) First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain
Credit Agreement dated as of October 14, 2020, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan
Corporation, as guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and
Société Générale, Hong Kong Branch, as lead sustainability coordinator, previously filed as Exhibit 4.3 to Atlas Corp.’s
Form 6-K, furnished to the SEC on May 27, 2021.
(ggg) First Amended and Restated Intercreditor and Proceeds Agreement, dated as of May 19, 2021, amending and
restating that certain Intercreditor and Proceeds Agreement dated as of May 15, 2019, among Seaspan Holdco III Ltd.,
Seaspan Corporation, certain subsidiaries of Seaspan Holdco III Ltd. from time to time party thereto, as subsidiary
guarantors, the other secured parties from time to time party thereto, UMB Bank, National Association, as security trustee,
and Citibank, N.A., as administrative agent, previously filed as Exhibit 4.4 to Atlas Corp.’s Form 6-K, furnished to the
SEC on May 27, 2021.
(hhh) Note Purchase Agreement, dated as of May 21, 2021, among Seaspan Holdco III Ltd., Seaspan Corporation, a
group of institutional investors, Citibank N.A. as Note Administrative Agent, Registrar and Paying Agent, and Société
Générale, Hong Kong Branch, as lead sustainability coordinator, previously filed as Exhibit 4.5 to Atlas Corp.’s Form 6-K,
furnished to the SEC on May 27, 2021.
(iii) Subscription and Exchange Agreement, among Atlas Corp., Seaspan Corporation and the other signatory parties
thereto, dated June 11, 2021, previously filed as Exhibit 4.1 to Atlas Corp.’s Form 6-K, furnished to the SEC on June 14,
2021.
(jjj) Warrant Agreement, among Atlas Corp. and the other signatory parties thereto, dated June 11, 2021, previously
filed as Exhibit 4.2 to Atlas Corp.’s Form 6-K, furnished to the SEC on June 14, 2021.
(kkk) Registration Rights Agreement, among Atlas Corp. and the other signatory parties thereto, dated June 11,
2021, previously filed as Exhibit 4.3 to Atlas Corp.’s Form 6-K, furnished to the SEC on June 14, 2021.
(lll) Fifteenth Supplemental Indenture between Seaspan Corporation and The Bank of New York Mellon, as trustee,
dated June 11, 2021, previously filed as Exhibit 4.4 to Atlas Corp.’s Form 6-K, furnished to the SEC on June 14, 2021.
(mmm) Indenture, dated as of July 14, 2021, by and between Seaspan Corporation and The Bank of New York
Mellon, as trustee (including form of 5.50% Blue Transition Senior Notes due 2029), previously filed as Exhibit 4.1 to
Atlas Corp.’s Form 6-K, furnished to the SEC on July 14, 2021.
D.
Exchange Controls
We are not aware of any governmental laws, decrees or regulations in the Republic of the Marshall Islands that
restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends,
interest or other payments to non-resident holders of our securities.
We are not aware of any limitations on the right of non-resident or foreign owners to hold or vote our securities
imposed by the laws of the Republic of the Marshall Islands or our articles of incorporation and bylaws.
E.
Taxation
Material U.S. Federal Income Tax Considerations
The following is a discussion of certain material U.S. federal income tax considerations that may be relevant to our
shareholders. This discussion is based upon the provisions of the Code, applicable U.S. Treasury Regulations promulgated
thereunder, legislative history, judicial authority and administrative interpretations, as of the date of this Annual Report, all
of which are subject to change, possibly with retroactive effect, or are subject to different interpretations. Changes in these
authorities may cause the U.S. federal income tax considerations to vary substantially from those described below.
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This discussion applies only to beneficial owners of our shares that own the shares as “capital assets” (generally, for
investment purposes) and does not comment on all aspects of U.S. federal income taxation that may be important to certain
shareholders in light of their particular circumstances, such as shareholders subject to special tax rules (e.g., financial
institutions, regulated investment companies, real estate investment trusts, insurance companies, traders in securities that
have elected the mark-to-market method of accounting for their securities, persons liable for alternative minimum tax,
broker-dealers, tax-exempt organizations, shareholders that own, directly, indirectly or constructively, 10% or more of our
shares (by vote or value), or former citizens or long-term residents of the United States) or shareholders that hold our
shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax
purposes, all of whom may be subject to U.S. federal income tax rules that differ significantly from those summarized
below. If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds
our shares, the tax treatment of its partners generally will depend upon the status of the partner and the activities of the
partnership. Partners in partnerships holding our shares should consult their own tax advisors to determine the appropriate
tax treatment of the partnership’s ownership of our shares.
No ruling has been requested from the IRS regarding any matter affecting us or our shareholders. Accordingly,
statements made herein may not be sustained by a court if contested by the IRS.
This discussion does not address any U.S. estate, gift or alternative minimum tax considerations or tax
considerations arising under the laws of any state, local or non-U.S. jurisdiction. Each shareholder is urged to consult its
tax advisor regarding the U.S. federal, state, local, non-U.S. and other tax consequences of owning and disposing of our
shares.
U.S. Federal Income Taxation of the Reorganization
We have taken the position that the Reorganization constitutes for U.S. federal income tax purposes a
“reorganization” within the meaning of Section 368(a) of the Code. For details on the U.S. federal income tax
consequences of the Reorganization, please refer to the proxy statement/prospectus dated January 29, 2020 filed by
Seaspan Corporation pursuant to Rule 424(b)(3) of the Securities Exchange Act of 1933.
U.S. Federal Income Taxation of U.S. Holders
As used herein, the term “U.S. Holder” means a beneficial owner of our shares that is for U.S. federal income tax
purposes: (a) a U.S. citizen or U.S. resident alien (or a U.S. Individual Holder); (b) a corporation, or other entity taxable as
a corporation that was created or organized under the laws of the United States, any state thereof, or the District of
Columbia; (c) an estate whose income is subject to U.S. federal income taxation regardless of its source or (d) a trust that
either is subject to the supervision of a court within the United States and has one or more U.S. persons with authority to
control all of its substantial decisions or has a valid election in effect under applicable Treasury Regulations to be treated as
a U.S. person.
Distributions
Subject to the discussion of passive foreign investment companies (“PFICs”), below, any distributions made by us to
a U.S. Holder generally will constitute dividends, which may be taxable as ordinary income or “qualified dividend income”
as described in more detail below, to the extent of our current and accumulated earnings and profits allocated to the U.S.
Holder’s shares, as determined under U.S. federal income tax principles. Distributions in excess of our current and
accumulated earnings and profits allocated to the U.S. Holder’s shares will be treated first as a nontaxable return of capital
to the extent of the U.S. Holder’s tax basis in our shares and thereafter as capital gain, which will be either long-term or
short-term capital gain depending upon whether the U.S. Holder has held the shares for more than one year. U.S. Holders
that are corporations generally will not be entitled to claim a dividends received deduction with respect to any distributions
they receive from us. However, U.S. Holders that are corporations owning at least 10% in vote or value of our stock may
be able to deduct a “foreign-source portion” (that is, an amount which bears the same ratio to the dividend as our
undistributed foreign-earnings bear to our total undistributed earnings) of the dividend received from us. For purposes of
computing allowable foreign tax credits for U.S. federal income tax purposes, dividends received with respect to our shares
should be treated as foreign source income.
Under current law, subject to holding-period requirements and certain other limitations, dividends received with
respect to our publicly traded shares by a U.S. Holder who is an individual, trust or estate, or a Non-Corporate U.S. Holder,
generally will be treated as qualified dividend income that is taxable to such Non-Corporate U.S. Holder at preferential
capital gain tax rates (provided we are not classified as a PFIC for the taxable year during which the dividend is paid or the
immediately preceding taxable year). Any dividends received with respect to our publicly traded shares not eligible for
these preferential rates will be taxed as ordinary income to a Non-Corporate U.S. Holder.
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Special rules may apply to any “extraordinary dividend” paid by us. Generally, an extraordinary dividend is a
dividend with respect to a share of stock if the amount of the dividend is equal to or in excess of 10% of a common
shareholder’s, or 5% of a preferred shareholder’s, adjusted tax basis (or fair market value in certain circumstances) in such
share. In addition, extraordinary dividends include dividends received within a one year period that, in the aggregate,
exceed 20% of a shareholder’s adjusted tax basis (or fair market value in certain circumstances). If we pay an extraordinary
dividend on our shares that is treated as qualified dividend income, then any loss recognized by a Non-Corporate U.S.
Holder from the sale or exchange of such shares will be treated as long-term capital loss to the extent of the amount of such
dividend.
Sale, Exchange or Other Disposition of Our Shares
Subject to the discussion of PFICs below, a U.S. Holder who is not a CFC Shareholder, as discussed below,
generally will recognize capital gain or loss upon a sale, exchange or other disposition of our shares in an amount equal to
the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S.
Holder’s tax basis in such shares.
Subject to the discussion of extraordinary dividends above, such gain or loss generally will be treated as (a) long-
term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or
other disposition, or short-term capital gain or loss otherwise, and (b) U.S. source income or loss, as applicable, for foreign
tax credit purposes. Non-Corporate U.S. Holders may be eligible for preferential rates of U.S. federal income tax in respect
of long-term capital gains. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.
Consequences of CFC Classification
If CFC Shareholders (generally, U.S. Holders who each own, directly, indirectly or constructively, 10% or more of
our shares by vote or value) own directly, indirectly or constructively more than 50% of either the total combined voting
power of all classes of our outstanding shares entitled to vote or the total value of all of our outstanding shares, we
generally would be treated as a controlled foreign corporation, or a CFC. We believe that we and our non-U.S. corporate
subsidiaries will be treated as CFCs in 2021 as a result of the total direct, indirect, and constructive ownership of us by
10% CFC Shareholders. It is unclear whether we would be treated as a CFC in future years.
CFC Shareholders are subject to certain burdensome U.S. federal income tax and administrative requirements but
generally are not also subject to the requirements generally applicable to shareholders of a PFIC (as discussed below). U.S.
persons who own or may obtain a substantial interest in us should consult their tax advisors with respect to the implications
of being treated as a CFC Shareholder and the effect of changes to the rules governing CFC Shareholders made by the
legislation commonly known as the “Tax Cuts and Jobs Act.”
The U.S. federal income tax consequences to U.S. Holders who are not CFC Shareholders would not change if we
are a CFC.
PFIC Status and Significant Tax Consequences
Special and adverse U.S. federal income tax rules apply to a U.S. Holder that holds stock in a non-U.S. corporation
classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC for any taxable year in
which either (a) at least 75% of our gross income (including the gross income of certain of our subsidiaries) consists of
passive income or (b) at least 50% of the average value of our assets (including the assets of certain of our subsidiaries) is
attributable to assets that produce, or are held for the production of, passive income. For purposes of these tests, passive
income includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties (other
than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business)
but does not include income derived from the performance of services.
There are legal uncertainties involved in determining whether the income derived from our time chartering activities
constitutes rental income or income derived from the performance of services, including legal uncertainties arising from the
decision in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), which held that income derived from certain time
chartering activities should be treated as rental income rather than services income for purposes of a foreign sales
corporation provision of the Code. However, the IRS stated in an Action on Decision (AOD 2010-01) that it disagrees
with, and will not acquiesce to, the way that the rental versus services framework was applied to the facts in the Tidewater
decision, and in its discussion stated that the time charters at issue in Tidewater would be treated as producing services
income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or otherwise cited as
precedent by taxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory
provisions governing PFICs, there can be no assurance that the IRS or a court would not follow the Tidewater decision in
interpreting the PFIC provisions of the Code. Nevertheless, based on the current composition of our assets and operations
(and that of our subsidiaries), we intend to take the position that we are not now and have never been a PFIC. Further,
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although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year,
there can be no assurance that the nature of our operations, and therefore the composition of our income and assets, will
remain the same in the future. Moreover, the market value of our stock may be treated as reflecting the value of our assets
at any given time. Therefore, a decline in the market value of our stock (which is not within our control) may impact the
determination of whether we are a PFIC. Because our status as a PFIC for any taxable year will not be determinable until
after the end of the taxable year, there can be no assurance that we will not be considered a PFIC for the current or any
future taxable year.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder generally
would be subject to one of three different U.S. income tax regimes, depending on whether the U.S. Holder makes certain
elections.
Taxation of U.S. Holders Making a Timely QEF Election
If we were classified as a PFIC for a taxable year, a U.S. Holder making a timely election to treat us as a “Qualified
Electing Fund” for U.S. tax purposes (a “QEF Election”) would be required to report its pro rata share of our ordinary
earnings and our net capital gain, if any, for our taxable year that ends with or within the U.S. Holder’s taxable year
regardless of whether the U.S. Holder received distributions from us in that year. Such income inclusions would not be
eligible for the preferential tax rates applicable to qualified dividend income. The U.S. Holder’s adjusted tax basis in our
shares would be increased to reflect taxed but undistributed earnings and profits, and distributions of earnings and profits
that had previously been taxed would not be taxed again when distributed but would result in a corresponding reduction in
the U.S. Holder’s adjusted tax basis in our shares. The U.S. Holder generally would recognize capital gain or loss on the
sale, exchange or other disposition of our shares. A U.S. Holder would not, however, be entitled to a deduction for its pro-
rata share of any losses that we incurred with respect to any year.
A U.S. Holder would make a QEF Election with respect to any year that we are a PFIC by filing IRS Form 8621
with its U.S. federal income tax return and complying with all other applicable filing requirements. However, a U.S.
Holder’s QEF Election will not be effective unless we annually provide the U.S. Holder with certain information
concerning our income and gain, calculated in accordance with the Code, to be included with the U.S. Holder’s U.S.
federal income tax return. We have not provided our U.S. Holders with such information in prior taxable years and do not
intend to provide such information in the current taxable year. Accordingly, you will not be able to make an effective QEF
Election at this time. If, contrary to our expectations, we determine that we are or expect to be a PFIC for any taxable year,
we will provide U.S. Holders with the information necessary to make an effective QEF Election with respect to our shares.
Taxation of U.S. Holders Making a “Mark-to-Market” Election
Alternatively, if we were to be treated as a PFIC for any taxable year and, as we believe, our shares are treated as
“marketable stock,” then a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our shares,
provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions. If that election is
made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair
market value of our shares at the end of the taxable year over the U.S. Holder’s adjusted tax basis in our shares. The U.S.
Holder also would be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in
our shares over the fair market value thereof at the end of the taxable year (but only to the extent of the net amount
previously included in income as a result of the mark-to-market election). The U.S. Holder’s tax basis in our shares would
be adjusted to reflect any such income or loss recognized. Gain recognized on the sale, exchange or other disposition of our
shares would be treated as ordinary income, and any loss recognized on the sale, exchange or other disposition of our
shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains
previously included in income by the U.S. Holder. Because the mark-to-market election only applies to marketable stock,
however, it would not apply to a U.S. Holder’s indirect interest in any of our subsidiaries that were also determined to be
PFICs.
Taxation of U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election
Finally, if we were to be treated as a PFIC for any taxable year and if a U.S. Holder did not make either a QEF
Election or a mark-to-market election for that year, the U.S. Holder would be subject to special rules resulting in increased
tax liability with respect to (a) any excess distribution (i.e., the portion of any distributions received by the U.S. Holder on
our shares in a taxable year in excess of 125% of the average annual distributions received by the U.S. Holder in the three
preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our shares) and (b) any gain realized on the
sale, exchange or other disposition of our shares. Under these special rules:
•
the excess distribution or gain would be allocated ratably over the U.S. Holder’s aggregate holding period for
our shares;
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•
•
•
the amount allocated to the current taxable year and any taxable year prior to the taxable year we were first
treated as a PFIC with respect to the U.S. Holder would be taxed as ordinary income in the current taxable year;
the amount allocated to each of the other taxable years would be subject to U.S. federal income tax at the
highest rate of tax in effect for the applicable class of taxpayers for that year, and
an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable
to each such other taxable year.
Additionally, for each year during which (a) a U.S. Holder owns shares, (b) we are a PFIC and (c) the total value of
all PFIC stock that such U.S. Holder directly or indirectly owns exceeds certain thresholds, such U.S. Holder will be
required to file IRS Form 8621 with its annual U.S. federal income tax return to report its ownership of our shares. In
addition, if a U.S. Individual Holder dies while owning our shares, such U.S. Individual Holder’s successor generally
would not receive a step-up in tax basis with respect to such shares.
U.S. Holders are urged to consult their own tax advisors regarding the PFIC rules, including the PFIC annual
reporting requirements, as well as the applicability, availability and advisability of, and procedure for, making QEF Mark-
to-Market Elections and other available elections with respect to us, and the U.S. federal income tax consequences of
making such elections.
Medicare Tax on Unearned Income
Certain Non-Corporate U.S. Holders are subject to a 3.8% tax on certain investment income, including dividends
and gain from the sale or other disposition of our shares. Non-Corporate U.S. Holders should consult their advisors
regarding the effect, if any, of this tax on their ownership and disposition of our shares.
U.S. Return Disclosure Requirements for U.S. Individual Holders
Generally, U.S. Individual Holders who hold certain specified foreign financial assets, including stock in a foreign
corporation that is not held in an account maintained by a financial institution, with an aggregate value in excess of $50,000
on the last day of a taxable year, or $75,000 at any time during that taxable year, may be required to report such assets on
IRS Form 8938 with their U.S federal income tax return for that taxable year. This reporting requirement does not apply to
U.S. Individual Holders who report their ownership of our shares under the PFIC annual reporting rules described above.
Penalties apply for failure to properly complete and file IRS Form 8938. Investors are encouraged to consult with their tax
advisors regarding the possible application of this disclosure requirement to their investment in our shares.
U.S. Federal Income Taxation of Non-U.S. Holders
A beneficial owner of our shares (other than a partnership or an entity or arrangement treated as a partnership for
U.S. federal income tax purposes) that is not a U.S. Holder is a non-U.S. Holder.
Distributions
In general, a non-U.S. Holder is not subject to U.S. federal income tax on distributions received from us with respect
to our shares unless the distributions are effectively connected with the non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment
that the non- U.S. Holder maintains in the United States). If a non-U.S. Holder is engaged in a trade or business within the
United States and the distributions are deemed to be effectively connected to that trade or business, the non-U.S. Holder
generally will be subject to U.S. federal income tax on those distributions in the same manner as if it were a U.S. Holder.
Sale, Exchange or Other Disposition of Our Shares
In general, a non-U.S. Holder is not subject to U.S. federal income tax on any gain resulting from the disposition of
our shares unless (a) such gain is effectively connected with the non-U.S. Holder’s conduct of a trade or business within
the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the
non-U.S. Holder maintains in the United States) or (b) the non-U.S. Holder is an individual who is present in the United
States for 183 days or more during the taxable year in which those shares are disposed of (and certain other requirements
are met). If a non-U.S. Holder is engaged in a trade or business within the United States and the disposition of shares is
deemed to be effectively connected to that trade or business, the non-U.S. Holder generally will be subject to U.S. federal
income tax on the resulting gain in the same manner as if it were a U.S. Holder.
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Information Reporting and Backup Withholding
In general, payments of distributions with respect to, or the proceeds of a disposition of our shares to a Non-
Corporate U.S. Holder will be subject to information reporting requirements. These payments to a Non-Corporate U.S.
Holder also may be subject to backup withholding if the Non-Corporate U.S. Holder:
•
•
•
fails to timely provide an accurate taxpayer identification number;
is notified by the IRS that it has failed to report all interest or distributions required to be shown on its U.S.
federal income tax returns; or
in certain circumstances, fails to comply with applicable certification requirements.
Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding
on payments made to them within the United States, or through a U.S. payor, by certifying their status on an IRS Form
W-8BEN, W-8BEN-E, W-8ECI, W-8EXP or W-8IMY, as applicable.
Backup withholding is not an additional tax. Rather, a shareholder generally may obtain a credit for any amount
withheld against its liability for U.S. federal income tax (and obtain a refund of any amounts withheld in excess of such
liability) by accurately completing and timely filing a U.S. federal income tax return with the IRS.
Material Marshall Islands Tax Considerations
Because we do not, and we do not expect that we will, conduct business or operations in the Republic of the
Marshall Islands, under current Marshall Islands law our shareholders will not be subject to Marshall Islands taxation or
withholding on distributions, including upon a return of capital, we make to our shareholders. In addition, our shareholders
will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of
shares, and our shareholders will not be required by the Republic of the Marshall Islands to file a tax return relating to the
shares.
Each prospective shareholder is urged to consult its tax counsel or other advisor with regard to the legal and tax
consequences, under the laws of pertinent jurisdictions, including the Marshall Islands, of its investment in us. Further, it is
the responsibility of each shareholder to file all state, local and non-U.S., as well as U.S. federal tax returns that may be
required of it.
Material U.K. tax Considerations
The following discussion is a summary of the material U.K. tax considerations under current U.K. tax law and HM
Revenue & Customs (“HMRC”) published practice applying as at the date of this Annual report (both of which are subject
to change at any time, possibly with retrospective effect) relating to the holding of Atlas shares by non-U.K. tax resident
holders of Atlas shares. It does not constitute legal or tax advice to any particular shareholder and does not purport to be a
complete analysis of all U.K. tax considerations relating to the holding of shares, or all of the circumstances in which
holders of Atlas shares may benefit from an exemption or relief from U.K. taxation. It is understood that Atlas does not
(and will not) derive 75% or more of its qualifying asset value from U.K. land, and that, Atlas is solely resident in the U.K.
for tax purposes and will therefore be subject to the U.K. corporation tax regime.
This guide may not relate to certain classes of shareholders, such as (but not limited to):
•
•
•
•
•
•
persons who are connected with the company;
financial institutions;
insurance companies;
charities or tax-exempt organizations;
collective investment schemes;
pension schemes;
• market makers, intermediaries, brokers or dealers in securities;
•
•
persons who have (or are deemed to have) acquired their shares by virtue of an office or employment or who are
or have been officers or employees of the company or any of its affiliates; and
individuals who are subject to U.K. taxation on a remittance basis.
THESE PARAGRAPHS ARE A SUMMARY OF MATERIAL U.K. TAX CONSIDERATIONS RELATING TO THE
HOLDING OF ATLAS SHARES AND ARE INTENDED AS A GENERAL GUIDE ONLY. IT IS RECOMMENDED
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THAT ALL HOLDERS OF ATLAS SHARES OBTAIN ADVICE AS TO THE CONSEQUENCES OF OWNERSHIP
AND DISPOSAL OF ATLAS SHARES IN THEIR OWN SPECIFIC CIRCUMSTANCES FROM THEIR OWN TAX
ADVISORS. IN PARTICULAR, NON-U.K. RESIDENT OR DOMICILED PERSONS ARE ADVISED TO CONSIDER
THE POTENTIAL IMPACT OF ANY RELEVANT DOUBLE TAXATION AGREEMENTS.
Dividends; Withholding Tax
Dividends paid by Atlas will not be subject to any withholding or deduction for or on account of U.K. tax.
Income Tax
An individual holder of Atlas shares who is not resident for tax purposes in the U.K. will not be chargeable to U.K.
income tax on dividends received from Atlas unless he or she carries on (whether solely or in partnership) a trade,
profession or vocation in the U.K. through a branch or agency to which the shares are attributable. There are certain
exceptions for trading in the U.K. through independent agents, such as some brokers and investment managers.
Corporation Tax
A corporate holder of shares who is not resident for tax purposes in the U.K. will not be chargeable to U.K.
corporation tax on dividends received from Atlas unless it carries on (whether solely or in partnership) a trade in the U.K.
through a permanent establishment to which the shares are attributable.
Chargeable Gains
A holder of Atlas shares who is not resident for tax purposes in the U.K. will not generally be liable to U.K. capital
gains tax or corporation tax on chargeable gains on a disposal (or deemed disposal) of Atlas shares unless the person is
carrying on (whether solely or in partnership) a trade, profession or vocation in the U.K. through a branch, agency or
permanent establishment to which the shares are attributable. However, an individual holder of Atlas shares who has
ceased to be resident for tax purposes in the U.K. for a period of less than five years and who disposes of Atlas shares
during that period may be liable, on his or her return to the U.K., to U.K. tax on any capital gain realized (subject to any
available exemption or relief).
Stamp duty and stamp duty reserve tax (SDRT)
No U.K. stamp duty or stamp duty reserve tax (“SDRT”) will be payable on the issuance of Atlas shares. U.K. stamp
duty will generally not need to be paid on a transfer of Atlas shares, and no U.K. SDRT will be payable in respect of any
agreement to transfer Atlas shares unless they are registered in a register kept in the U.K. by or on behalf of Atlas. It is not
intended that such a register will be kept in the U.K. The statements in this paragraph summarize the current position on
stamp duty and SDRT and are intended as a general guide only. Special rules apply to agreements made by, amongst
others, intermediaries and certain categories of person may be liable to stamp duty or SDRT at higher rates. In particular,
this paragraph does not consider where shares are issued or transferred to clearance services or depository receipt issuers.
F.
Dividends and Paying Agents
Not applicable.
G.
Statements by Experts
Not applicable.
H.
Documents on Display
Documents concerning us that are referred to herein may be inspected at the offices of Seaspan Ship Management
Ltd. at 2600-200 Granville Street, Vancouver, British Columbia. Those documents electronically filed with the SEC may
be obtained from the SEC’s website at www.sec.gov or from the SEC public reference room at 100 F Street, N.E., Room
1580, Washington, D.C. 20549. Further information on the operation of the public reference rooms may be obtained by
calling the SEC at 1-800-SEC-0330.
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates and foreign currency fluctuations. We use interest rate
swaps to manage interest rate price risks. We enter into capped call transactions to manage exposures to changes in the
price of our common shares. We do not use these financial instruments for trading or speculative purposes.
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Interest Rate Risk
As of December 31, 2021, our variable-rate credit facilities totaled $2.2 billion, of which we had entered into interest
rate swap agreements to fix the rates on a notional principal amount of $0.9 billion. These interest rate swaps have a fair
value of $22.4 million in the counterparties’ favor.
The tables below provide information about our financial instruments at December 31, 2021 that are sensitive to
changes in interest rates. Please see note 13 – “Long term debt”, note 14 – “Operating lease liabilities” and note 15 –
“Other financing arrangements” to our consolidated financial statements included in this Annual Report, which provides
additional information with respect to our existing credit and lease facilities.
In Millions of USD
Credit facilities(1)
Vessel Operating Leases(2)
Sale-Leaseback Facilities(3)
_________________________
(1)
$
Principal Payment Dates
2022
2023
2024
2025
2026
Thereafter
539.0 $
350.7 $
136.1 $
136.1 $
778.7 $
141.4
101.0
145.1
101.4
149.2
102.6
126.4
97.4
111.5
94.2
263.3
107.1
866.5
Represents principal payments on amounts drawn on our credit facilities that bear interest at variable rates. We have entered into interest rate
swap agreements under certain of our credit facilities to swap the variable interest rates for fixed interest rates. For the purposes of this table,
principal payments are determined based on contractual repayments in commitment reduction schedules for each related facility.
(2)
(3)
Represents payments under our operating leases. Payments under the operating leases have a variable component based on underlying interest
rates.
Represents payments, excluding amounts representing interest payments, on amounts drawn on our sale-leaseback facilities where the vessels
remain on our balance sheet and that bear interest at variable rates.
As of December 31, 2021, we had the following interest rate swaps outstanding:
Fixed Per Annum
Rate Swapped
for LIBOR
Notional Amount as of
December 31, 2021
(in millions of US dollars)
Maximum
Notional Amount(1)
(in millions of US
dollars)
Effective Date
Ending Date
5.4200%
1.6490%
0.7270%
1.6850%
0.6300%
0.6600%
1.4900%
$
269.6 $
269.6
September 06, 2007
160.0
125.0
110.0
92.0
92.0
26.9
160.0
125.0
110.0
92.0
92.0
26.9
May 31, 2024
May 14, 2024
September 27, 2019
March 26, 2020
March 26, 2025
November 14, 2019
May 15, 2024
January 21, 2021
October 14, 2026
February 04, 2021
October 14, 2026
February 04, 2020
December 30, 2025
(1)
Over the term of the interest rate swaps, the notional amounts increase and decrease. These amounts represent the peak notional amount over the
remaining term of the swap.
Counterparties to these financial instruments may expose us to credit-related losses in the event of non-performance.
As of December 31, 2021, these financial instruments are in the counterparties’ favor. We have considered and reflected
the risk of non-performance by us in the fair value of our financial instruments as of December 31, 2021. As part of our
consideration of non-performance risk, we perform evaluations of our counterparties for credit risk through ongoing
monitoring of their financial health and risk profiles to identify funding risk or changes in their credit ratings.
Counterparties to these agreements are major financial institutions, and we consider the risk of loss due to non-
performance to be minimal. We do not require collateral from these institutions. We do not hold and will not issue interest
rate swaps for trading purposes.
Item 12.
Description of Securities Other than Equity Securities
Not applicable.
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Item 13.
Defaults, Dividend Arrearages and Delinquencies
None.
PART II
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the U.S. Securities Exchange Act of 1934, as amended (the
“Exchange Act”), management of Atlas has evaluated, with the participation of each of Atlas’s chief executive officer and
chief financial officer, the effectiveness of Atlas’s disclosure controls and procedures as of the end of the period covered by
this Annual Report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that
information required to be disclosed in the reports we file or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed
by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management,
including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required
disclosure. In designing and evaluating disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and the management of each Atlas was required to apply its judgment in evaluating and implementing
possible controls and procedures.
Based on the foregoing, the chief executive officer and chief financial officer of each of Atlas have concluded that,
as of December 31, 2021, the end of the period covered by this Annual Report, Atlas’s disclosure controls and procedures
were effective.
Management’s Report on Internal Control Over Financial Reporting
The management of Atlas is responsible for establishing and maintaining adequate internal control over financial
reporting.
Internal control over financial reporting refers to a process designed by, or under the supervision of, the chief
executive officer and chief financial officer of each of Atlas and effected by their respective board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures are
being made only in accordance with authorizations of management and members of the board of directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of assets that could have a material effect on our financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is
possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management evaluated the effectiveness of Atlas’s internal control over financial reporting as of December 31, 2021
using the framework set forth in the 2013 report of the Treadway Commission’s Committee of Sponsoring Organizations.
Based on the foregoing, management has concluded that Atlas’s internal control over financial reporting was
effective as of December 31, 2021.
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The effectiveness of Atlas’s internal controls over financial reporting as of December 31, 2021 has been audited by
KPMG LLP, the independent registered public accounting firm that audited Atlas’s December 31, 2021 consolidated
annual financial statements, as stated in their report which is included in this Annual Report on Form 20-F.
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of the chief executive officer and chief financial officer of Atlas,
whether any changes in Atlas’s internal control over financial reporting that occurred during our last fiscal year have
materially affected, or are reasonably likely to materially affect, Atlas’s internal control over financial reporting.
There was no change to Atlas’s internal control over financial reporting that occurred during the last fiscal year that
has materially affected, or is reasonably likely to materially affect, Atlas’s control over financial reporting.
Item 16A. Audit Committee Financial Expert
The board of directors has determined that Nicholas Pitts-Tucker qualifies as an audit committee financial expert
and is independent under applicable NYSE and SEC standards.
Item 16B. Code of Ethics
We have adopted a Standards of Business Conduct and Ethics for all employees and directors. This document is
available under “Corporate Governance” in the Investor Relations section of our website (www.atlascorporation.com). We
also intend to disclose any waivers to or amendments of our Code of Business Conduct and Ethics for the benefit of our
directors and executive officers on our website. We will provide a hard copy of our Code of Business Conduct and Ethics
free of charge upon written request of a shareholder. Please contact our Chief Financial Officer for any such request at 23
Berkeley Square, London, Fax Line: +44 843 320 5270.
Item 16C. Principal Accountant Fees and Services
Our principal accountant for 2021 was KPMG LLP, Chartered Professional Accountants, Vancouver, BC, Canada,
Auditor Firm ID:85.
In 2021 and 2020, the fees billed and accrued to us by the accountants for services rendered were as follows:
Audit Fees
Tax Fees
Audit Fees
2021
2020
$
$
3.3 $
1.3
4.6 $
3.4
2.4
5.8
Audit fees for 2021 include fees related to our annual audit, quarterly reviews, and accounting consultations. The
2021 fees also include audit related fees for various registration statements, securities offerings and limited assurance
reports related to our sustainability linked financings. The fees for 2021 include the audits of certain wholly owned
subsidiaries and quarterly reviews for Seaspan Corporation.
Audit fees for 2020 include fees related to our annual audits, quarterly reviews, and accounting consultations. The
2020 fees also include audit related fees for various registration statements and securities offerings. The fees for 2020
include the audit of Seaspan Corporation, audits for various APR Energy subsidiaries and the audit of the purchase price
allocation for the acquisition of APR Energy.
Tax Fees
Tax fees for 2021 and 2020 were primarily for tax consultation services related to general tax consultation services
and tax compliance, including preparation of corporate income tax returns.
The audit committee has the authority to pre-approve permissible audit-related and non-audit services not prohibited
by law to be performed by our independent auditors and associated fees. Engagements for proposed services either may be
separately pre-approved by the audit committee or entered into pursuant to detailed pre-approval policies and procedures
established by the audit committee, as long as the audit committee is informed on a timely basis of any engagement entered
into on that basis. The audit committee separately pre-approved all engagements and fees paid to our principal accountant
in 2021 and 2020.
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Other Fees
None.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrants’ Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
The following are the significant ways in which our corporate governance practices differ from those followed by
domestic companies:
• We are not required to obtain shareholder approval prior to the adoption of equity compensation plans or certain
equity issuances, including, among others, issuing 20% or more of our outstanding common shares or voting
power in a transaction.
•
Our board of directors, rather than a nominating committee of independent directors, evaluates and approves
director nominees.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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Item 17.
Financial Statements
Not applicable.
Item 18.
Financial Statements
PART III
The following financial statements, together with the reports of KPMG LLP, Chartered Professional Accountants
thereon, are filed as part of this Annual Report:
ATLAS CORP.
Report of Independent Registered Public Accounting Firm 85
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Preferred Shares and Shareholders’ Equity for the Years Ended December 31,
2021, 2020 and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Notes to the Consolidated Financial Statements
F-1
F-1
F-4
F-5
F-6
F-7
F-10
F-11
All other schedules for which provision is made in the applicable accounting regulations of the SEC are not
required, are inapplicable or have been disclosed in the notes to the consolidated financial statements and therefore have
been omitted.
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Item 19.
Exhibits
The following exhibits are filed as part of this Annual Report:
Exhibit
Number
Description
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
Amended and Restated Articles of Incorporation of Atlas Corp. (incorporated herein by reference to Exhibit 3.1 to Atlas
Corp.’s Form 6-K (File No. 001-39237), furnished to the SEC on February 27, 2020).
Second Amended and Restated Bylaws of Atlas Corp. (incorporated herein by reference to Exhibit 1.2 to Atlas Corp.’s
Form 20-F (File No. 333-229312), filed with the SEC on March 19, 2021).
Statement of Designation of the 7.95% Cumulative Redeemable Perpetual Preferred Shares—Series D of Atlas Corp.,
dated February 27, 2020 (incorporated herein by reference to Exhibit 3.3 to Atlas Corp’s Form 6-K (File No. 001-39237),
furnished to the SEC on February 27, 2020).
Statement of Designation of the 7.875% Cumulative Redeemable Perpetual Preferred Shares—Series H of Atlas Corp.,
dated February 27, 2020 (incorporated herein by reference to Exhibit 3.6 to Atlas Corp’s Form 6-K (File No. 001-39237),
furnished to the SEC on February 27, 2020).
Statement of Designation of the Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Shares—Series I of
Atlas Corp, dated February 27, 2020 (incorporated herein by reference to Exhibit 3.7 to Atlas Corp’s Form 6-K (File No.
001-39237), furnished to the SEC on February 27, 2020).
Statement of Designation of the 7.00% Cumulative Redeemable Perpetual Preferred Shares—Series J of Atlas Corp.,
dated June 11, 2021 (incorporated herein by reference to Exhibit 1.1 to Atlas Corp's Form 6-K (File No. 001-39237),
furnished to the SEC on June 14, 2021).
Specimen of Share Certificate of Atlas Corp. (incorporated herein by reference to Exhibit 4.1 to Atlas Corp’s Form 6-K
(File No. 001-39237), furnished to the SEC on February 27, 2020).
Specimen of Share Certificate of 7.95% Cumulative Redeemable Perpetual Preferred Shares—Series D of Atlas Corp.
(incorporated herein by reference to Exhibit 4.2 to Atlas Corp’s Form 6-K (File No. 001-39237), furnished to the SEC on
February 27, 2020).
Specimen of Share Certificate of 7.875% Cumulative Redeemable Perpetual Preferred Shares—Series H of Atlas Corp.
(incorporated herein by reference to Exhibit 4.5 to Atlas Corp’s Form 6-K (File No. 001-39237), furnished to the SEC on
February 27, 2020).
Specimen of Share Certificate of Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Shares—Series I of
Atlas Corp (incorporated herein by reference to Exhibit 4.6 to Atlas Corp’s Form 6-K (File No. 001-39237), furnished to
the SEC on February 27, 2020).
Specimen of Share Certificate of 7.00% Cumulative Redeemable Perpetual Preferred Shares—Series J of Atlas Corp.
(incorporated herein by reference to Exhibit 1.2 to Atlas Corp's Form 6-K (File No. 001-39237), furnished to the SEC on
June 14, 2021).
2.2*
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.1
4.2
4.3
Form of Indemnification Agreement between Atlas Corp. and its directors and officers (incorporated herein by reference
to Exhibit 4.1 to Atlas Corp.’s Form 20-F, filed with the SEC on April 13, 2020).
Registration Rights Agreement by and among Seaspan Corporation and the investors named therein dated August 8, 2005
(incorporated herein by reference to Exhibit 10.1 to Seaspan Corporation’s Amendment No. 2 to Form F-1 (File No.
333-126762), filed with the SEC on August 4, 2005).
Registration Rights Agreement by and among Seaspan Corporation and the investors named therein dated January 30,
2009 (incorporated herein by reference to Exhibit 10.3 to Seaspan Corporation’s Form 6-K (File No. 001-32591),
furnished to the SEC on February 2, 2009).
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4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
Amended and Restated Management Agreement among Seaspan Corporation, Seaspan Management Services Limited,
Seaspan Advisory Services Limited, Seaspan Ship Management Ltd. and Seaspan Crew Management Ltd. dated as of
May 4, 2007 (incorporated herein by reference to Exhibit 99.1 to Seaspan Corporation’s Form 6-K/A (File No.
001-32591), furnished to the SEC on October 10, 2007).
Amendment to Amended and Restated Management Agreement among Seaspan Corporation, Seaspan Management
Services Limited, Seaspan Advisory Services Limited, Seaspan Ship Management Ltd. and Seaspan Crew Management
Ltd. dated as of August 5, 2008 (incorporated herein by reference to Exhibit 4.9 to Seaspan Corporation’s Form 20-F (File
No. 001-32591), filed with the SEC on March 30, 2011).
Registration Rights Agreement, dated January 27, 2012, by and among Seaspan Corporation and certain shareholders
named therein (incorporated herein by reference to Exhibit 4.5 to Seaspan Corporation’s Form 6-K (File No. 001-32591),
furnished to the SEC on January 30, 2012).
Registration Rights Agreement, dated August 17, 2017, by and between Seaspan Corporation and David Sokol
(incorporated herein by reference to Exhibit 10.1 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to
the SEC on August 23, 2017).
Registration Rights Agreement, dated February 14, 2018 among Seaspan Corporation, the Guarantors specified therein
and the investors specified therein (incorporated herein by reference to Exhibit 4.4 to Seaspan Corporation’s Form 6-K
(File No. 001-32591) furnished to the SEC on February 15, 2018).
Registration Rights Agreement Joinder, dated as of February 14, 2018, by and among Seaspan Corporation, the subsidiary
guarantors and the investors specified therein, dated as of March 26, 2018, by Seaspan Investment I Ltd (incorporated by
reference to Exhibit 4.9 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to the SEC on March 30,
2018).
Agreement and plan of merger, dated as of March 13, 2018, by and among Seaspan Corporation, Seaspan Investments III
LLC, Greater China Intermodal Investments LLC and Greater China Industrial Investments LLC (incorporated by
reference to Exhibit 4.1 to Seaspan Corporation’s Report of Foreign Private Issuer on Form 6-K (File No. 001-32591),
furnished to the SEC on March 14, 2018).
Registration Rights Agreement, dated as of March 13, 2018, by and among Seaspan Corporation, Greater China Industrial
Investments LLC, Tiger Management Limited and Blue Water Commerce, LLC (incorporated by reference to Exhibit 4.2
to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to the SEC on March 14, 2018).
Registration Rights Agreement, dated as of March 13, 2018, by and among Seaspan Corporation and Deep Water
Holdings, LLC (incorporated by reference to Exhibit 4.7 to Seaspan Corporation’s Form 6-K (File No. 001-32591),
furnished to the SEC on March 14, 2018).
Warrant Agreement, dated July 16, 2018, by and among Seaspan Corporation and the Investors specified therein
(incorporated by reference to Exhibit 4.9 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to the SEC
on July 16, 2018).
Registration Rights Agreement, dated July 16, 2018, by and between Seaspan Corporation and the Investors specified
therein (incorporated by reference to Exhibit 4.10 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to
the SEC on July 16, 2018).
Registration Rights Agreement, dated January 14, 2019, by and between Seaspan Corporation and the Investors specified
therein (incorporated by reference to Exhibit 4.1 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to
the SEC on January 14, 2019).
Registration Rights Agreement, dated January 15, 2019, by and among Seaspan Corporation, the guarantors specified
therein and the investors specified therein (incorporated by reference to Exhibit 4.12 to Seaspan Corporation’s Form 6-K
(File No. 001-32591), furnished to the SEC on January 17, 2019).
Acquisition Agreement, dated as of November 20, 2019, among Seaspan Corporation, Atlas Corp., Fairfax Financial
Holdings Limited and certain affiliated companies, Albright Capital Management LLC, certain other shareholders of
Apple Bidco Limited, Apple Bidco Limited, Atlas Corp. and Fairfax Financial Holdings Limited, as representative of
sellers (incorporated by reference to Exhibit 4.2 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished to
the SEC on November 22, 2019).
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4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
Assignment and Assumption Agreement, dated as of February 5, 2020, by and among Seaspan Corporation, Atlas Corp.,
the guarantors specified therein and the investors specified therein (incorporated by reference to Exhibit 4.1 to Seaspan
Corporation’s Form 6-K (File No. 001-32591), furnished to the SEC on February 10, 2020).
Amendment and Waiver to the Acquisition Agreement, dated February 21, 2020, by and among Apple Bidco Limited,
Atlas Corp., the entities listed on Exhibit A thereto, including Fairfax Financial Holdings Limited in its capacity as the
Seller Representative, ACM Energy Holdings I Ltd., ACM Apple Holdings I, LP, JCLA Cayman Limited and Seaspan
Corporation (incorporated by reference to Exhibit 4.1 to Seaspan Corporation’s Form 6-K (File No. 001-32591), furnished
to the SEC on February 26, 2020).
Atlas Corp. Stock Incentive Plan, as amended and restated on February 27, 2020 (incorporated herein by reference to
Exhibit 4.7 to Atlas Corp’s Form 6-K (File No. 001-39237), furnished to the SEC on February 27, 2020).
Credit Agreement, dated as of February 28, 2020, by and among APR Energy, LLC, as Borrower, Citibank, N.A., as
Administrative Agent, Citigroup Global Markets Inc., as Sole Structuring Agent, Citibank N.A., Export Development
Canada, Bank of Montreal, Chicago Branch and Toronto-Dominion Bank, as Mandated Lead Arrangers, and the several
lenders from time to time party thereto (incorporated herein by reference to Exhibit 4.44 to Atlas Corp.’s Form 20-F (File
No. 333-229312), filed with the SEC on April 13, 2020).
Intercreditor and Proceeds Agreement, dated as of February 28, 2020, by and among APR Energy, LLC, as Borrower,
certain affiliates of APR Energy, LLC from time to time party thereto, the other secured parties from time to time party
thereto, UMB Bank, National Association, as Security Trustee, and Citibank, N.A., as Administrative Agent (incorporated
herein by reference to Exhibit 4.45 to Atlas Corp.’s Form 20-F (File No. 333-229312), filed with the SEC on April 13,
2020).
APR Guaranty, dated February 28, 2020, by and between Atlas Corp. and UMB Bank, National Association, in its
capacity as security trustee (incorporated herein by reference to Exhibit 4.46 to Atlas Corp.’s Form 20-F (File No.
333-229312), filed with the SEC on April 13, 2020).
Registration Rights Agreement, dated February 28, 2020, by and among Atlas Corp. and the investors specified therein
(incorporated herein by reference to Exhibit 4.47 to Atlas Corp.’s Form 20-F (File No. 333-229312), filed with the SEC
on April 13, 2020).
Credit Agreement, dated as of March 6, 2020, by and among APR Energy, LLC, as Borrower, Citibank, N.A., as
Administrative Agent, Citigroup Global Markets Inc., as Sole Structuring Agent, Citibank N.A., as Mandated Lead
Arrangers, and the several lenders from time to time party thereto (incorporated herein by reference to Exhibit 4.48 to
Atlas Corp.’s Form 20-F (File No. 333-229312), filed with the SEC on April 13, 2020).
APR Guaranty, dated March 6, 2020, by and between Atlas Corp. and UMB Bank, National Association, in its capacity as
security trustee (incorporated herein by reference to Exhibit 4.49 to Atlas Corp.’s Form 20-F (File No. 333-229312), filed
with the SEC on April 13, 2020).
Amendment Side Letter to Credit Agreement, dated as of March 19, 2020, by and among APR Energy, LLC, as Borrower,
Atlas Corp., as Parent Guarantor, and Citibank, N.A., as Administrative Agent (incorporated herein by reference to
Exhibit 4.50 to Atlas Corp.’s Form 20-F (File No. 333-229312), filed with the SEC on April 13, 2020).
Agreement and Amendment No. 2 to Acquisition Agreement, dated June 30, 2020, by and among Apple Bidco Limited,
Atlas Corp., each shareholder listed on the signature pages thereto, and Fairfax Financial Holdings Limited, in its capacity
as the Seller Representative (incorporated herein by reference to Exhibit Exhibit 10.1 to Atlas Corp.’s Form 6-K (File No.
333-229312), furnished to the SEC on August 13, 2020).
Indenture, dated as of December 21, 2020, by and among Atlas Corp., Seaspan Corporation and The Bank of New York
Mellon, as Trustee (including form of 3.75% Exchangeable Senior Notes due 2025) (incorporated herein by reference to
Exhibit 4.1 to Atlas Corp.’s Form 6-K (File No. 333-229312), furnished to the SEC on December 23, 2020).
Registration Rights Agreement, dated December 21, 2020, by and among Atlas Corp., Seaspan Corporation and BofA
Securities, Inc. and BMO Capital Markets Corp., as representatives of the Initial Purchasers (incorporated herein by
reference to Exhibit 4.2 to Atlas Corp.’s Form 6-K (File No. 333-229312), furnished to the SEC on December 23, 2020).
Indenture, dated March 19, 2021, between Atlas Corp. and The Bank of New York Mellon, as trustee (incorporated herein
by reference to Exhibit 4.1 to Atlas Corp.’s Form F-4 (File No. 333-254537), filed with the SEC on March 19, 2021).
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4.32
4.33
4.34
Agreement and Amendment No. 3 to Acquisition Agreement, dated as of April 30, 2021, among Atlas Corp., Apple Bidco
Limited and Fairfax Financial Holdings Limited, in its individual capacity and in its capacity as Seller Representative
(incorporated herein by reference to Exhibit 4.1 to Atlas Corp.’s Form 6-K (File No. 333-229312), furnished to the SEC
on May 4, 2021).
Warrant Agreement, dated as of April 30, 2021, among Atlas Corp. and the investors named therein (incorporated herein
by reference to Exhibit 4.2 to Atlas Corp.’s Form 6-K (File No. 333-229312), furnished to the SEC on May 4, 2021).
Registration Rights Agreement, dated as of April 30, 2021, among Atlas Corp. and the investors named therein
(incorporated herein by reference to Exhibit 4.3 to Atlas Corp.’s Form 6-K (File No. 333-229312), furnished to the SEC
on May 4, 2021).
4.35*
First Supplemental Indenture, dated May 17, 2021, between Atlas Corp. and The Bank of New York Mellon, as trustee.
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain Credit
Agreement dated as of May 15, 2019, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan Corporation, as
guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and Société
Générale, Hong Kong Branch, as lead sustainability coordinator (incorporated by reference to Exhibit 4.1 to Atlas Corp.’s
Form 6-K (File No. 001-39237), furnished to the SEC on May 27, 2021).
First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain Credit
Agreement dated as of December 30, 2019, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan
Corporation, as guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and
Société Générale, Hong Kong Branch, as lead sustainability coordinator (incorporated by reference to Exhibit 4.2 to Atlas
Corp.’s Form 6-K (File No. 001-39237), furnished to the SEC on May 27, 2021).
First Amended and Restated Credit Agreement, dated as of May 19, 2021, amending and restating that certain Credit
Agreement dated as of October 14, 2020, among (inter alios) Seaspan Holdco III Ltd., as borrower, Seaspan Corporation,
as guarantor, the several lenders from time to time party thereto, Citibank, N.A., as administrative agent, and Société
Générale, Hong Kong Branch, as lead sustainability coordinator (incorporated by reference to Exhibit 4.3 to Atlas Corp.’s
Form 6-K (File No. 001-39237), furnished to the SEC on May 27, 2021).
First Amended and Restated Intercreditor and Proceeds Agreement, dated as of May 19, 2021, amending and restating that
certain Intercreditor and Proceeds Agreement dated as of May 15, 2019, among Seaspan Holdco III Ltd., Seaspan
Corporation, certain subsidiaries of Seaspan Holdco III Ltd. from time to time party thereto, as subsidiary guarantors, the
other secured parties from time to time party thereto, UMB Bank, National Association, as security trustee, and Citibank,
N.A., as administrative agent (incorporated by reference to Exhibit 4.4 to Atlas Corp.’s Form 6-K (File No. 001-39237),
furnished to the SEC on May 27, 2021).
Note Purchase Agreement, dated as of May 21, 2021, among Seaspan Holdco III Ltd., Seaspan Corporation, a group of
institutional investors, Citibank N.A. as Note Administrative Agent, Registrar and Paying Agent, and Société Générale,
Hong Kong Branch, as lead sustainability coordinator (incorporated by reference to Exhibit 4.5 to Atlas Corp.’s Form 6-K
(File No. 001-39237), furnished to the SEC on May 27, 2021).
Subscription and Exchange Agreement, among Atlas Corp., Seaspan Corporation and the other signatory parties thereto,
dated June 11, 2021 (incorporated herein by reference to Exhibit 4.1 to Atlas Corp.’s Form 6-K (File No. 001-39237),
furnished to the SEC on June 14, 2021).
Warrant Agreement, among Atlas Corp. and the other signatory parties thereto, dated June 11, 2021 (incorporated herein
by reference to Exhibit 4.2 to Atlas Corp.’s Form 6-K (File No. 001-39237), furnished to the SEC on June 14, 2021).
Registration Rights Agreement, among Atlas Corp. and the other signatory parties thereto, dated June 11, 2021
(incorporated herein by reference to Exhibit 4.3 to Atlas Corp.’s Form 6-K (File No. 001-39237), furnished to the SEC on
June 14, 2021).
Indenture, dated as of July 14, 2021, by and between Seaspan Corporation and The Bank of New York Mellon, as trustee
(including form of 5.50% Blue Transition Senior Notes due 2029) (incorporated herein by reference to Exhibit 4.1 to
Atlas Corp.’s Form 6-K (File No. 001-39237), furnished to the SEC on July 14, 2021).
8.1*
Subsidiaries of Atlas Corp.
12.1*
Rule 13a-14(a)/15d-14(a) Certification of Atlas Corp.’s Chief Executive Officer.
12.2*
Rule 13a-14(a)/15d-14(a) Certification of Atlas Corp.’s Chief Financial Officer.
13.1*
Atlas Corp. Certification of Bing Chen, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
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13.2*
Atlas Corp. Certification of Graham Talbot, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1*
Consent of KPMG LLP, relating to the Company Financial Statements
101
The following financial information from Atlas Corp.’s Report on Form 20-F for the year ended December 31, 2021,
formatted in Extensible Business Reporting Language (XBRL):
(a) Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020;
(b) Consolidated Statements of Operations for each of the years in the three-year period ended December 31, 2021;
(c) Consolidated Statements of Shareholder’s Equity for each of the years in the two-year ended December 31, 2021;
(d) Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 2021;
(e) Notes to the Consolidated Financial Statements
_______________________________________
*
Filed herewith
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Atlas Corp.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Atlas Corp. (the Company) as of December 31, 2021
and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cumulative
redeemable preferred shares, and cash flows for each of the years in the three-year period ended December 31, 2021, and
the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated March 24, 2022 expressed an unqualified opinion on the effectiveness of
the Company’s internal control over financial reporting.
Changes in Accounting Principles
As discussed in Note 2 to the consolidated financial statements, effective January 1, 2020, the Company adopted
Accounting Standards Update (ASU) 2017-04, “Simplifying the Test for Goodwill Impairment”, which eliminates the need
to determine the fair value of individual assets and liabilities of a reporting unit to measure the implied goodwill
impairment. Our opinion is not modified with respect to this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of indicators of impairment for vessels
As discussed in Note 2(f) to the consolidated financial statements, property, plant and equipment that are held for use are
evaluated for impairment when events or circumstances indicate that their carrying amounts may not be recoverable from
future undiscounted cash flows. Examples of such events or changes in circumstances for vessels (“impairment indicators”)
include, among others, a significant adverse change in the extent or manner in which the asset is being used or in its
physical condition; a significant adverse change in legal factors or in the business climate that could affect the asset’s
value, including an adverse action or assessment by a foreign government that impacts the use of the asset; or a current-
period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that
demonstrates continuing losses associated with the asset’s use. The determination of whether impairment indicators exist
requires significant judgment in evaluating underlying significant assumptions including charter rates, utilization rates,
operating costs and current vessel market values. The Company did not identify any indicators of impairment related to the
vessels for the year ended December 31, 2021. As discussed in Note 8 and Note 10, the total carrying value of the
Company’s vessels, including right-of-use vessels, was $7,297.1 million as of December 31, 2021.
F-1
Table of Contents
We identified the assessment of indicators of impairment for vessels as a critical audit matter. A higher degree of subjective
auditor judgment was required to assess the Company’s determination of whether an indicator of impairment existed, based
on the Company’s evaluation of the significant assumptions. Changes in these significant assumptions could have changed
the Company’s conclusion that no indicators of impairment were identified.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls over the Company’s impairment indicator assessment process.
This included controls related to the identification and evaluation of indicators of impairment and underlying significant
assumptions. We evaluated significant assumptions used in the Company’s evaluation by comparing current charter rates to
existing customer contracts and estimates of future charter rates to third-party industry publications for vessels with similar
characteristics. We evaluated the Company’s anticipated future utilization rates and operating costs assumptions by
comparing to the Company’s historical utilization rates and operating costs. For utilization rates, we also compared
anticipated supply and demand conditions that would impact utilization to third party industry publications. We evaluated
the Company’s assessment of current market values of vessels by comparing to recent vessel purchases and third-party
industry publications.
/s/ KPMG LLP
Chartered Professional Accountants
We have served as the Company’s auditor since 2000.
Vancouver, Canada
March 24, 2022
F-2
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Atlas Corp.:
Opinion on Internal Control Over Financial Reporting
We have audited Atlas Corp.’s (the Company) internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related
consolidated statements of operations, comprehensive income, shareholders’ equity and cumulative redeemable preferred
shares, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes
(collectively, the consolidated financial statements), and our report dated March 24, 2022 expressed an unqualified opinion
on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Annual Report
on Form 20-F Item 15 under the heading “Management’s Report on Internal Control over Financial Reporting”. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Chartered Professional Accountants
Vancouver, Canada
March 24, 2022
F-3
Table of Contents
ATLAS CORP.
Consolidated Balance Sheets
(Expressed in millions of United States dollars, except number of shares and par value amounts)
December 31, 2021 and 2020
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses and other
Net investment in lease (note 7)
Acquisition related assets
Property, plant and equipment (note 8)
Vessels under construction (note 9)
Right-of-use assets (note 10)
Net investment in lease (note 7)
Goodwill (note 11)
Deferred tax assets (note 17)
Derivative instruments (note 23(c))
Other assets (note 12)
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities (note 21)
Deferred revenue
Income tax payable
Long-term debt - current (note 13)
Operating lease liabilities - current (note 14)
Other financing arrangements - current (note 15)
Other liabilities - current (note 16)
Long-term debt (note 13)
Operating lease liabilities (note 14)
Other financing arrangements (note 15)
Derivative instruments (note 23(c))
Other liabilities (note 16)
Total liabilities
2021
2020
$
288.6 $
304.3
56.2
46.4
35.7
16.8
104.0
547.7
6,952.2
1,095.6
724.9
741.5
75.3
1.9
6.1
424.4
$
$
10,569.6 $
183.4 $
46.6
96.9
551.0
155.1
100.5
42.0
1,175.5
3,731.8
562.3
1,239.3
28.5
17.7
6,755.1
75.9
60.2
33.9
10.7
99.3
584.3
6,974.7
42.0
841.2
418.6
75.3
19.3
—
333.7
9,289.1
134.1
28.2
110.4
332.1
160.9
64.1
24.8
854.6
3,234.0
669.3
801.7
63.0
40.9
5,663.5
Cumulative redeemable preferred shares, $0.01 par value; 12,000,000 issued and outstanding (2020 – nil) (note 18 (e))
296.9
—
Shareholders’ equity:
Share capital (note 18):
Preferred shares; $0.01 par value; 150,000,000 shares authorized (2020 – 150,000,000); 20,118,833 shares
issued and outstanding (2020 – 33,335,570)
Common shares; $0.01 par value; 400,000,000 shares authorized (2020 - 400,000,000); 247,024,699 shares
issued and outstanding (2020 - 246,277,338); 727,351 shares held in treasury (2020 – 727,351)
Additional paid in capital
Retained earnings / (Deficit)
Accumulated other comprehensive loss
Commitments and contingencies (note 22)
Subsequent events (note 24)
See accompanying notes to consolidated financial statements.
F-4
2.4
3,526.8
7.5
(19.1)
3,517.6
$
10,569.6 $
2.4
3,842.7
(199.2)
(20.3)
3,625.6
9,289.1
Table of Contents
ATLAS CORP.
Consolidated Statements of Operations
(Expressed in millions of United States dollars, except per share amounts)
Years ended December 31, 2021, 2020 and 2019
Revenue (note 5)
Operating expenses:
Operating expenses
Depreciation and amortization
General and administrative
Indemnity claim under acquisition agreement
Operating leases (note 14)
Goodwill impairment (note 11)
Income related to modification of time charters
(Gain) Loss on sale (note 8)
Operating earnings
Other expenses (income):
Interest expense
Interest income
Loss on debt extinguishment (note 13(e))
(Gain) Loss on derivative instruments (note 23(c))
Other expenses
Net earnings before income tax
Income tax expense (note 17)
Net earnings
Earnings per share (note 19):
Common share, basic
Common share, diluted
2021
2020
2019
$
1,646.6 $
1,421.1 $
1,131.5
339.6
366.7
90.6
(42.4)
146.3
—
—
(16.4)
884.4
762.2
197.1
(3.1)
127.0
(14.1)
21.8
328.7
433.5
33.0
274.6
353.9
65.4
—
150.5
117.9
—
0.2
962.5
458.6
191.6
(5.0)
—
35.5
27.3
249.4
209.2
16.6
$
$
$
400.5 $
192.6 $
1.36 $
1.26 $
0.52 $
0.50 $
229.8
254.3
33.1
—
154.3
—
(227.0)
—
444.5
687.0
218.9
(9.3)
—
35.1
2.0
246.7
440.3
1.2
439.1
1.72
1.67
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
ATLAS CORP.
Consolidated Statements of Comprehensive Income
(Expressed in millions of United States dollars)
Years ended December 31, 2021, 2020 and 2019
Net earnings
Other comprehensive income:
Amounts reclassified to net earnings during the period
relating to cash flow hedging instruments (note 23(c))
Comprehensive income
2021
2020
2019
400.5 $
192.6 $
439.1
1.2
1.3
401.7 $
193.9 $
1.0
440.1
$
$
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
ATLAS CORP.
Consolidated Statements of Shareholders’ Equity and Cumulative Redeemable Preferred Shares
(Expressed in millions of United States dollars, except number of shares and per share amounts)
Years ended December 31, 2021, 2020 and 2019
Balance, December 31,
2018
Impact of accounting policy
change
Adjusted balance, December
31, 2018
Net earnings
Other comprehensive
income
Exercise of puttable
preferred shares
Cancellation of put option
on puttable preferred shares
Exercise of warrants
Fees and expenses in
connection with issuance of
Fairfax warrants
Dividends on Class A
common shares
($0.50 per share)
Dividends on preferred
shares
(Series D - $1.99 per share;
Series E - $2.06 per share;
Series G - $2.05 per share;
Series H - $1.97 per share;
Series I - $2.00 per share)
Accretion of preferred
shares with holder put
option
Shares issued through
dividend reinvestment
program
Share-based compensation
expense
Treasury shares
Balance, December 31,
2019
Series D puttable
preferred shares
Shares
Amount
Number of
common
shares
Number of
preferred
shares
Common
shares
Preferred
shares
Additional
paid-in
capital
Deficit
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
1,986,449 $
48.1
176,835,837
33,272,706 $
1.4 $
0.3 $
3,126.5 $
(645.6) $
(22.6) $
2,460.0
—
—
—
—
1,986,449
48.1
176,835,837
33,272,706
—
—
—
—
(1,923,585)
(47.7)
(62,864)
—
—
—
—
—
—
—
—
(1.6)
—
—
—
—
1.2
—
—
—
—
—
—
—
38,461,539
—
—
—
—
122,148
257,799
(1,724)
—
—
—
62,864
—
—
—
—
—
—
—
—
—
1.4
—
—
—
—
0.4
—
—
—
—
—
—
—
—
0.3
—
—
—
—
—
—
—
—
—
—
—
—
—
181.1
—
181.1
3,126.5
—
—
—
1.6
321.2
(0.2)
(464.5)
439.1
—
—
—
—
—
—
(103.0)
—
—
1.2
2.6
—
(70.4)
(1.2)
—
(0.7)
—
(22.6)
—
1.0
—
—
—
—
—
—
—
—
—
—
2,641.1
439.1
1.0
—
1.6
321.6
(0.2)
(103.0)
(70.4)
(1.2)
1.2
1.9
—
— $
—
215,675,599
33,335,570 $
1.8 $
0.3 $
3,452.9 $
(200.7) $
(21.6) $
3,232.7
F-7
Table of Contents
ATLAS CORP.
Consolidated Statements of Shareholders’ Equity and Cumulative Redeemable Preferred Shares (Continued)
(Expressed in millions of United States dollars, except number of shares and per share amounts)
Years ended December 31, 2021, 2020 and 2019
Balance, December 31, 2019, carried forward
215,675,599
33,335,570 $
1.8 $
0.3 $
3,452.9 $
(200.7) $
(21.6) $
3,232.7
Number of
common
shares
Number of
preferred
shares
Common
shares
Preferred
shares
Additional
paid-in
capital
Deficit
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
Impact of accounting policy change (note 2(u))
—
—
Adjusted balance, December 31, 2019
215,675,599
33,335,570
Net earnings
Other comprehensive income
—
—
Common shares issued on acquisition (note 3)
29,891,266
Unissued acquisition related equity consideration (note 3)
Cancellation of unissued acquisition related equity
consideration (note 3)
Issuance of common shares from unissued acquisition related
equity consideration (note 3)
Return of common shares to unissued acquisition related equity
consideration (note 3)
Cancellation of common shares issued on acquisition (note 3)
Common shares issued on loan settlement
Dividends on Class A common shares
($0.50 per share)
Dividends on preferred shares
(Series D - $1.99 per share;
Series E - $2.06 per share;
Series G - $2.05 per share;
Series H - $1.97 per share;
Series I - $2.00 per share)
Shares issued through dividend reinvestment program
Share-based compensation expense
Treasury shares
Equity component on issuance of Exchangeable Notes, net of
issuance costs (note 13(f))
Premium paid on capped call (note 13(f))
Balance, December 31, 2020
—
—
318,637
(727,351)
(1,122,290)
775,139
—
—
30,007
1,398,553
37,778
—
—
—
1.8
—
—
0.2
—
—
—
—
—
0.1
—
—
—
—
—
—
—
—
0.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,452.9
—
—
316.6
80.8
(1.3)
—
—
(12.5)
8.2
—
—
0.3
7.1
—
6.1
(15.5)
(2.3)
(203.0)
192.6
—
—
—
—
—
—
—
—
(120.7)
(67.1)
(0.3)
(0.7)
—
—
—
—
(21.6)
—
1.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2.3)
3,230.4
192.6
1.3
316.8
80.8
(1.3)
—
—
(12.5)
8.3
(120.7)
(67.1)
—
6.4
—
6.1
(15.5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
246,277,338
33,335,570 $
2.1 $
0.3 $
3,842.7 $
(199.2) $
(20.3) $
3,625.6
See accompanying notes to consolidated financial statements.
F-8
Table of Contents
ATLAS CORP.
Consolidated Statements of Shareholders’ Equity and Cumulative Redeemable Preferred Shares (Continued)
(Expressed in millions of United States dollars, except number of shares and per share amounts)
Years ended December 31, 2021, 2020 and 2019
Series J
cumulative redeemable
Shares
Amount
Number of
common
shares
Number of
preferred
shares
Commo
n
shares
Preferred
shares
Additional
paid-in
capital
Retained
earnings /
(Deficit)
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
Balance, December 31, 2020
carried forward
Net earnings
Other comprehensive income
Issuance of common shares from unissued
acquisition related equity consideration (note
3)
Series J preferred shares issued (note 13(e)
and 18(e))
Redemption of preferred shares (note 18(b))
Warrants for Fairfax Notes
Dividends on common shares
($0.375 per share)
Dividends on preferred shares
(Series D - $1.99 per share;
Series E - $1.38 per share;
Series G - $1.37 per share;
Series H - $1.97 per share;
Series I - $2.00 per share;
Series J - $0.68 per share;)
Shares issued through dividend reinvestment
program
Share-based compensation expense
— $
—
—
—
—
—
—
—
12,000,000
296.9
—
—
—
—
—
—
—
—
—
—
—
—
246,277,338
33,335,570 $
2.1 $
0.3 $ 3,842.7 $
(199.2) $
(20.3) $
3,625.6
—
—
350,138
—
—
—
—
—
24,803
372,420
—
—
—
—
(13,216,737)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(330.4)
3.0
—
—
0.3
11.2
400.5
—
—
—
—
(126.3)
(66.2)
(0.3)
(1.0)
—
1.2
—
—
—
—
—
—
—
400.5
1.2
—
—
(330.4)
3.0
(126.3)
(66.2)
—
10.2
Balance, December 31, 2021
12,000,000 $
296.9
247,024,699
20,118,833 $
2.1 $
0.3 $ 3,526.8 $
7.5 $
(19.1) $
3,517.6
See accompanying notes to consolidated financial statement.
F-9
Table of Contents
ATLAS CORP.
Consolidated Statements of Cash Flows
(Expressed in millions of United States dollars)
Years ended December 31, 2021, 2020 and 2019
Cash from (used in):
Operating activities:
Net earnings
Items not involving cash:
Depreciation and amortization
Goodwill impairment
Change in right-of-use asset
Non-cash interest expense and accretion
Unrealized change in derivative instruments
Amortization of acquired revenue contracts
Loss on debt extinguishment
(Gain) Loss on sale
Other
Change in other operating assets and liabilities (note 21)
Cash from operating activities
Investing activities:
2021
2020
2019
$
400.5 $
192.6 $
439.1
366.7
—
125.8
38.2
(40.6)
15.0
127.0
(16.4)
26.2
(98.4)
944.0
353.9
117.9
120.1
40.5
12.9
16.9
—
0.2
5.9
(166.7)
694.2
Expenditures for property, plant and equipment and vessels under construction
(1,577.0)
(783.5)
Short-term investments
Prepayment on vessel purchase
Payment on settlement of interest swap agreements
Cash and restricted cash acquired from APR Energy acquisition
Loss on foreign currency repatriation
Receipt from contingent consideration asset
Other assets and liabilities
Capitalized interest relating to newbuilds
Cash used in investing activities
Financing activities:
Repayments of long-term debt and other financing arrangements
Issuance of long-term debt and other financing arrangements
Issuance of Exchangeable Notes
Purchase of capped call
Redemption of Fairfax Notes
Issuance of Fairfax Notes
Proceeds from exercise of warrants
Redemption of preferred shares
Financing fees
Share issuance cost
Dividends on common shares
Dividends on preferred shares
Cash from (used in) financing activities
(Decrease) Increase in cash and cash equivalents
Cash and cash equivalents and restricted cash, beginning of year
—
(132.3)
(26.8)
—
(13.9)
30.5
41.3
(15.7)
—
(82.2)
(21.8)
50.6
(18.7)
11.1
(15.4)
—
(1,693.9)
(859.9)
(1,474.9)
3,152.6
—
—
(300.0)
—
—
(330.4)
(122.2)
(0.1)
(124.6)
(66.2)
734.2
(15.7)
342.5
(1,122.2)
1,383.5
201.3
(15.5)
—
100.0
—
(49.1)
—
(120.0)
(67.1)
310.9
145.2
197.3
Cash and cash equivalents and restricted cash, end of year
$
326.8 $
342.5 $
Supplemental cash flow information (note 21(b))
See accompanying notes to consolidated financial statements.
F-10
254.3
—
111.8
38.4
(20.0)
13.8
—
—
1.5
(55.9)
783.0
(332.5)
2.5
(13.0)
(126.8)
—
—
—
(5.8)
—
(475.6)
(1,961.9)
1,227.3
—
—
—
250.0
250.0
(47.7)
(27.0)
—
(101.8)
(70.4)
(481.5)
(174.1)
371.4
197.3
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
1.
General:
Atlas Corp. (the “Company” or “Atlas”) owns, leases and operates a fleet of containerships and power generation
assets through its containership leasing and mobile power generation segments, respectively. It is a Republic of the
Marshall Islands corporation incorporated on October 1, 2019 for the purpose of facilitating the Reorganization (as
defined below).
On November 20, 2019, Seaspan Corporation (“Seaspan”) entered into an Agreement and Plan of Merger with the
Company, then a wholly owned subsidiary of Seaspan, and Seaspan Holdco V Ltd., a wholly owned subsidiary of
Atlas, in order to implement a reorganization of Seaspan’s corporate structure into a holding company structure,
pursuant to which Seaspan would become a direct, wholly owned subsidiary of Atlas (the “Reorganization”).
On February 27, 2020, the Reorganization was completed. Common and preferred shareholders of Seaspan (the
predecessor publicly held parent company) became common and preferred shareholders of Atlas, as applicable, on a
one-for-one basis, maintaining the same number of shares and ownership percentage held in Seaspan immediately
prior to the Reorganization. Atlas assumed all of Seaspan’s share purchase warrants and equity plans and will
perform all relevant obligations.
Atlas common shares trade on the New York Stock Exchange under the ticker symbol “ATCO”.
On February 28, 2020, after the Reorganization, Atlas completed the acquisition of all the issued and outstanding
common shares of Apple Bidco Limited, which owns 100% of APR Energy Limited (collectively “APR Energy”)
(see note 3).
2.
Significant accounting policies:
(a)
Basis of preparation:
The Reorganization was accounted for as a transaction among entities under common control under the
pooling of interest method and represented a change in reporting entity whereby the financial information of
Seaspan prior to the Reorganization was assumed by Atlas on a carry-over basis. Accordingly, the
accompanying consolidated financial statements represent the consolidated historical operations and changes
in consolidated financial position of Seaspan, which included the Company as a consolidated subsidiary from
its incorporation on October 1, 2019 to February 27, 2020 and those of the Company thereafter, following the
Reorganization.
These consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America and the following accounting policies have been
consistently applied in the preparation of the consolidated financial statements.
(b)
Principles of consolidation :
The accompanying consolidated financial statements include the accounts of Atlas Corp. and its wholly-
owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon
consolidation.
The Company also consolidates any variable interest entities (“VIEs”) of which it is the primary beneficiary.
The primary beneficiary is the enterprise that has both the power to make decisions that most significantly
affect the economic performance of the VIE and has the right to receive benefits or the obligation to absorb
losses that in either case could potentially be significant to the VIE. The impact of the consolidation of these
VIEs is described in note 15.
The Company accounts for its investment in companies in which it has significant influence by the equity
method. The Company’s proportionate share of earnings is included in earnings and added to or deducted
from the cost of the investment.
F-11
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(c)
Foreign currency translation:
The functional and reporting currency of the Company is the United States dollar. Transactions involving
other currencies are converted into United States dollars using the exchange rates in effect at the time of the
transactions. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other
than the United States dollar are translated into United States dollars using exchange rates at that date.
Exchange gains and losses are included in net earnings.
(d)
Cash equivalents:
Cash equivalents include highly liquid securities with terms to maturity of three months or less when
acquired.
(e)
Inventories:
Inventories consist primarily of spare parts and consumables. Inventories are stated at the lower of cost or net
realizable value. Inventory cost is primarily determined using average or weighted average cost method,
depending on the nature of the inventory.
Net realizable value is the estimated selling price in the ordinary course of business less costs to complete,
disposal and transportation.
(f)
Property, plant and equipment:
Vessels
Except as described below, vessels are recorded at their cost, which consists of the purchase price, acquisition
and delivery costs, less accumulated depreciation.
Vessels purchased from Seaspan’s predecessor upon completion of Seaspan’s initial public offering in 2005
were initially recorded at the predecessor’s carrying value.
Depreciation is calculated on a straight-line basis over the estimated useful life of each vessel, which is 30
years from the date of completion. The Company calculates depreciation based on the estimated remaining
useful life and the expected salvage value of the vessel.
Vessels under construction
Vessels under construction include deposits, installment payments, interest, financing costs, transaction fees,
construction design, supervision costs, and other pre-delivery costs incurred during the construction period.
Power generating equipment
Power generating equipment are recorded at their cost, which represent their original cost at the time of
purchase, less accumulated depreciation. Costs incurred to mobilize and install power-generating equipment
pursuant to a contract for the provision of power generation services are recorded in property, plant and
equipment and are depreciated on a straight-line basis over the non-cancellable lease term to which the power
generating equipment relates.
A summary of the useful lives used for calculating depreciation and amortization is as follows:
Turbines
Generators
Transformers
25 years
15 years
15 years
F-12
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(f)
Property, plant and equipment (continued):
Property, plant and equipment that are held for use are evaluated for impairment when events or
circumstances indicate that their carrying amounts may not be recoverable from future undiscounted cash
flows. Such evaluations include the comparison of current and anticipated operating cash flows, assessment
of future operations and other relevant factors. If the carrying amount of the property, plant and equipment
exceeds the estimated net undiscounted future cash flows expected to be generated over the asset’s remaining
useful life, the carrying amount of the asset is reduced to its estimated fair value.
(g)
Vessel dry-dock activities:
Classification society rules require that vessels be dry-docked for inspection including planned major
maintenance and overhaul activities for ongoing certification. The Company generally dry-docks its vessels
once every five years. Dry-docking activities include the inspection, refurbishment and replacement of steel,
engine components, electrical, pipes and valves, and other parts of the vessel. The Company uses the deferral
method of accounting for dry-dock activities whereby capital costs incurred are deferred and amortized on a
straight-line basis over the period until the next scheduled dry-dock activity.
(h)
Business combinations:
Business combinations are accounted for under the acquisition method. The acquired identifiable net assets
are measured at fair value at the date of acquisition. Deferred taxes are recognized for any differences
between the fair value of net assets acquired and the related tax basis. Any excess of the purchase price over
the fair value of net assets acquired is recognized as goodwill. Associated transaction costs are expensed as
incurred.
(i)
Goodwill:
Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to
assets acquired and liabilities assumed in a business combination. Goodwill is not amortized, but reviewed for
impairment annually or more frequently if impairment indicators arise. When goodwill is reviewed for
impairment, the Company may elect to assess qualitative factors to determine whether it is more likely than
not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively,
the Company may bypass this step and use a fair value approach to identify potential goodwill impairment
and, when necessary, measure the amount of impairment. The Company uses a discounted cash flow model to
determine the fair value of reporting units, unless there is a readily determinable fair market value.
(j)
Asset retirement obligations:
The Company records a provision and a corresponding long-lived asset for asset retirement obligations
(“ARO”) when there is a legal obligation associated with the retirement of long-lived assets and the fair value
of the liability can be reasonably estimated. The fair value of the ARO is measured using expected future cash
flows discounted at the Company’s credit-adjusted risk-free interest rate. The liability is accreted up to the
cost of retirement through interest expense over the non-cancellable lease term. The long-lived asset is
depreciated straight-line over the same period. Changes in the amount or timing of the estimated ARO are
recorded as an adjustment to the related asset and liability or to depreciation expense if the asset is fully
depreciated.
(k)
Deferred financing fees:
Deferred financing fees represent the unamortized costs incurred on issuance of the Company’s credit
facilities and other financing arrangements and are presented as a direct deduction from the related debt
liability when available. Amortization of deferred financing fees on credit facilities is provided on the
effective interest rate method over the term of the facility based on amounts available under the facilities.
Amortization of deferred financing fees on other financing arrangements is provided on the effective interest
rate method over the term of the underlying obligation. Amortization of deferred financing fees is recorded as
interest expense.
F-13
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(l)
Revenue:
Containership leasing revenue
The Company derives revenue from the charter of its containership vessels. Each charter agreement is
evaluated and classified as an operating lease or financing lease based on the lease term, fair value associated
with the lease and any purchase options or obligations. The assessment is done at lease commencement and
reassessed only when a modification occurs that is not considered a separate contract.
Charters classified as operating leases include a lease component associated with the use of the vessel and a
non-lease component related to vessel management. Total consideration in the lease agreement is allocated
between the lease and non-lease components based on their relative standalone selling prices. For
arrangements where the timing and pattern of transfer to the lessee is consistent between the lease and non-
lease components and the lease component, if accounted for separately, would be classified as an operating
lease, the Company has elected to treat the lease and non-lease components as a single lease component.
Revenue is recognized each day the vessels are on-hire, managed and performance obligations are satisfied.
For charters that are classified as direct financing leases and sales-type leases, the present value of minimum
lease payments and any unguaranteed residual value are recognized as net investment in lease. The discount
rate used in determining the present values is the interest rate implicit in the lease. The lower of the fair value
of the vessel based on information available at lease commencement date and the present value of the
minimum lease payments computed using the interest rate implicit specific to each lease, represents the price,
from which the carrying value of the vessel and any initial direct costs are deducted in order to determine the
selling profit or loss.
For financing leases that are classified as direct financing leases, the unearned lease interest income including
any selling profit and initial direct costs are deferred and amortized to income over the period of the lease so
as to produce a constant periodic rate of return on the net investment in lease. Any selling loss is recognized
at lease commencement date.
For financing leases that are classified as sales-type leases, any selling profit or loss is recognized at lease
commencement date. Initial direct costs are expensed at lease commencement date if the fair value of the
vessel is different from its carrying amount. If the fair value of the vessel is equal to its carrying amount,
initial direct costs are deferred and amortized to income over the term of the lease.
Power generation revenue
The Company also derives revenue from lease and service contracts that provide customers with
comprehensive power generation services that include leasing of the power generation equipment, installation
and dismantling services, operations and maintenance of the power generating equipment (“O&M”),
operations monitoring and logistical support.
The Company earns a fixed portion of revenue on these contracts by providing megawatt capacity to its
customers. Each power equipment lease contract may, depending on its terms, contain a lease component, a
non-lease component or both. Lease classification is determined on a contract-specific basis. Total
consideration in contracts that include a lease component associated with the use of the power-generation
equipment and a non-lease component related to O&M is allocated between the lease and non-lease
components based on their relative standalone selling prices. For arrangements where the timing and pattern
of transfer to the lessee is consistent between the lease and non-lease components and the lease component, if
accounted for separately, would be classified as an operating lease, the Company has elected to treat the
components as a single lease component. Revenue is recognized over the period in which the equipment is
available to the customer for use and service is provided to the customer.
Certain contracts provide for mobilization and decommissioning payments. Mobilization revenue received up
front is deferred and recognized as revenue on a straight-line basis over the term of the contract.
Decommissioning revenue is recognized ratably over the term of the contract, as it is earned.
F-14
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(m)
Leases:
Leases classified as operating leases, where the Company is the lessee, are recorded as lease liabilities based
on the present value of minimum lease payments over the lease term, discounted using the lessor’s rate
implicit in the lease for each individual lease arrangement or the Company’s incremental borrowing rate, if
the lessor’s implicit rate is not readily determinable. The lease term includes all periods covered by renewal
and termination options where the Company is reasonably certain to exercise the renewal options or not to
exercise the termination options. Corresponding right-of-use assets are recognized consisting of the lease
liabilities, initial direct costs and any lease incentive payments.
Lease liabilities are drawn down as lease payments are made and right-of-use assets are depreciated over the
term of the lease. Operating lease expenses are recognized on a straight-line basis over the term of the lease,
consisting of interest accrued on the lease liability and depreciation of the right-of-use asset, adjusted for
changes in index-based variable lease payments in the period of change.
Lease payments on short-term operating leases with lease terms of twelve months or less are expensed as
incurred.
Transactions are accounted for as sale-leaseback transactions when control of the asset is transferred. For
sale-leaseback transactions, where the Company is the seller-lessee, any gains or losses on sale are recognized
upon transfer.
(n)
Derivative financial instruments:
From time to time, the Company utilizes derivative financial instruments. All of the Company’s derivatives
are measured at their fair value at the end of each period. Derivatives that mature within one year are
classified as current. For derivatives not designated as accounting hedges, changes in their fair value are
recorded in earnings.
The Company’s hedging policies permit the use of various derivative financial instruments to manage interest
rate risk.
The Company had previously designated certain of its interest rate swaps as accounting hedges and applied
hedge accounting to those instruments. By September 30, 2008, the Company de-designated all of the interest
rate swaps it had accounted for as hedges to that date. Subsequent to their de-designation dates, changes in
their fair value are recorded in earnings.
The Company evaluates whether the occurrence of any of the previously hedged interest payments are
considered to be remote. When the previously hedged interest payments are not considered remote of
occurring, unrealized gains or losses in accumulated other comprehensive income associated with the
previously designated interest rate swaps are recognized in earnings when and where the interest payments
are recognized. If such interest payments are identified as being remote, the accumulated other
comprehensive income balance pertaining to these amounts is reversed through earnings immediately.
(o)
Income taxes:
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax
assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the
accounting basis and the tax basis of the Company’s assets and liabilities using the applicable jurisdictional
tax rates. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some
or all of the benefit from the deferred tax asset will not be realized. The Company recognizes the tax benefits
of uncertain tax positions only if it is more-likely-than-not that a tax position taken or expected to be taken in
a tax return will be sustained upon examination by the taxing authorities, including resolution of any related
appeals or litigation processes, based on the technical merits of the position. The Company recognizes interest
and penalties related to uncertain tax positions in income tax expense in the Company's consolidated
statements of operations.
F-15
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(p)
Share-based compensation:
The Company grants phantom share units, restricted shares, restricted stock units and stock options to certain
of its officers, members of management and directors as compensation. Compensation cost is measured at the
grant date fair values as follows:
•
•
Restricted shares, phantom share units and restricted stock units are measured based on the quoted
market price of the Company’s common shares on the date of the grant.
Stock options are measured at fair value using the Black-Scholes model.
The fair value of each grant is recognized on a straight-line basis over the requisite service period. The
Company accounts for forfeitures in share-based compensation expense as they occur.
(q)
Fair value measurement:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the
“exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is
broken down into three levels based on the observability of inputs as follows:
•
•
•
Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the
Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1
instruments. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these products does not entail a significant degree of judgment.
Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all
significant inputs are observable, either directly or indirectly.
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value
measurement.
(r)
Earnings per share:
The treasury stock method is used to compute the dilutive effect of the Company’s share-based compensation
awards, warrants and convertible instruments, where the presumption of share settlement has been overcome.
Under this method, the incremental number of shares used in computing diluted earnings per share (“EPS”) is
the difference between the number of shares assumed issued and purchased using assumed proceeds.
The if-converted method is used to compute the dilutive effect of the Company’s convertible instruments
where the presumption of share settlement has not been overcome. Under the if-converted method, the
instruments are assumed to have been converted at the share price applicable at the end of the period, if
dilutive.
Contingently issuable shares are included in diluted EPS as of the beginning of the period, if contingencies
are satisfied by the end of the period. If contingencies have not been satisfied by the end of the period, the
number of contingently issuable shares included in diluted EPS is based on the number of shares, if any, that
would be issuable if the end of the reporting period were the end of the contingency period, if the result is
dilutive.
The cumulative dividends applicable to the Series D, E, G, H, I and J preferred shares reduce the earnings
available to common shareholders, even if not declared.
F-16
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(s)
Use of estimates:
The preparation of consolidated financial statements requires management to make estimates and assumptions
that affect the:
•
•
•
reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the balance sheet dates; and
reported amounts of revenue and expenses during the reporting fiscal periods.
Areas where accounting judgments and estimates are significant to the Company and where actual results
could differ from those estimates, include, but are not limited to the:
•
•
•
•
•
•
•
•
assessment of going concern;
assessment of property, plant and equipment useful lives;
expected salvage values;
recoverability of the carrying value of property, plant and equipment and intangible assets with finite
lives which are subject to future market events;
recoverable value of goodwill;
fair values of assets acquired and liabilities assumed from business combination;
fair value of asset retirement obligations; and
fair value of interest rate swaps, other derivative financial instruments and contingent consideration asset.
(t)
Comparative information:
Certain information has been reclassified to conform to the financial statement presentation adopted for the
current year.
(u)
Recently adopted and future accounting pronouncements:
Measurement of credit loss
Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13,
“Measurement of Credit Loss on Financial Instruments”. ASU 2016-13 replaces the current incurred loss
impairment methodology with the expected credit loss impairment model (“CECL”), which requires
consideration of a broader range of reasonable and supportable information to estimate expected credit losses
over the life of the instrument instead of only when losses are incurred. This standard applies to financial
assets measured at amortized cost basis and net investments in leases recognized by the lessor. Upon
adoption, a cumulative effect adjustment of $2,293,000 was made to deficit as part of the modified
retrospective transition approach.
Simplifying test for goodwill impairment
Effective January 1, 2020, the Company adopted ASU 2017-04, “Simplifying the Test for Goodwill
Impairment.” ASU 2017-04 eliminates the need to determine the fair value of individual assets and liabilities
of a reporting unit to measure the implied goodwill impairment. As a result of the adoption, the Company
now calculates goodwill impairment as the amount by which the carrying value exceeds fair value of a
reporting unit, not to exceed the carrying amount of goodwill.
F-17
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
2.
Significant accounting policies (continued):
(u)
Recently adopted and future accounting pronouncements:
Discontinuation of LIBOR
The Company adopted ASU 2020-04, “Reference Rate Reform (Topic 848)”, prospectively to contract
modifications. The guidance provides optional relief for the discontinuation of LIBOR resulting from rate
reform. Contract terms that are modified due to the replacement of a reference rate are not required to be
remeasured or reassessed under FASB’s relevant U.S. GAAP Topic. The election is available by Topic. The
Company has elected to apply the optional relief for contracts under ASC 470, “Debt”, ASC 840 and 842,
“Leases”, and ASC 815, “Derivatives and Hedging”. There was no impact to the Company's financial
statements upon initial adoption. The LIBOR replacement modifications for Debt contracts will be accounted
for by prospectively adjusting the effective interest rate in the agreements. Existing lease and derivative
contracts will require no reassessments. Transition activities are focused on the conversion of existing LIBOR
based contracts to the Secured Overnight Financing Rate.
Debt with conversion and other options
Effective January 1, 2022, the Company adopted ASU 2020-06, “Debt – Debt with Conversion and Other
Options (Subtopic 470-20)”, using the modified retrospective method, whereby the accounting for convertible
debt instruments is simplified by reducing the number of accounting models and circumstances when
embedded conversion features are separately recognized. This update also revises the method in which diluted
earnings per share is calculated related to certain instruments with conversion features, among other
clarifications. As a result of the adoption, the Company recognizes the maximum potential dilutive effect of
our exchangeable notes in diluted EPS using the if-converted method.
3.
Acquisition of Apple Bidco Limited
On February 28, 2020, the Company acquired 100.0% of the share capital of APR Energy from Fairfax Financial
Holdings Ltd. and its affiliates (“Fairfax”) and certain other minority shareholders (collectively, the “Sellers”).
Fairfax held 67.8% of APR Energy’s common shares. APR Energy owns and operates a fleet of capital-intensive
assets, including gas turbines and other power generation equipment, and provides power solutions to customers
through various contracts.
At closing, Atlas issued 29,891,266 common shares and reserved 6,664,270 common shares for future issuance (the
“Holdback Shares”). The Holdback Shares are issuable over a period of 90 days to five years after the date of
acquisition and are subject to settlement of purchase price adjustments, indemnification arrangements and other
future compensable events. These arrangements may be settled, at the Sellers’ option, by either cancellation of
Holdback Shares or cash. In the case of purchase price adjustments, and certain inventory mechanisms, if Holdback
Shares are insufficient, Sellers may choose to compensate the Company in cash or cancel previously issued common
shares. Any Holdback Shares that are not cancelled after the expiry of their respective holdback periods, will be
issued to the Sellers, plus any accrued distributions or dividends.
The net purchase price of $287,700,000 comprises of the following. Adjustments have been made from what was
originally reported as a result of settlement of purchase price adjustments:
F-18
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
3.
Acquisition of Apple Bidco Limited (continued):
As originally reported
Adjustments
As adjusted
29,891,266 common shares issued (1)
6,664,270 Holdback Shares (1)
Less: Contingent consideration asset (2)
Less: Purchase price adjustment (3)
Net purchase price
$
$
316.8
$
— $
70.6
(41.5)
(52.5)
—
(53.7)
48.0
293.4
$
(5.7) $
316.8
70.6
(95.2)
(4.5)
287.7
(1)
(2)
(3)
The fair value was determined based on the closing market price of common shares on February 28, 2020, the acquisition date.
Pursuant to the acquisition agreement, the Sellers are required to compensate the Company for losses on cash repatriation from a foreign
jurisdiction related to specified contracts. Losses on cash repatriation is recognized in other expenses in the period incurred. Subsequently,
Fairfax had agreed, subject to definitive documentation, to compensate the Company for future losses realized on sale or disposal of certain
property, plant and equipment and inventory items (note 12(d)).
During the year ended December 31, 2020, the Sellers forfeited their rights to receive 577,139 Holdback Shares and returned 1,849,641
previously issued common shares to the Company. Of this number, 1,122,290 shares were permanently forfeited as part of post-closing
purchase price adjustments. The remaining 727,351 shares are held in reserve as treasury shares. The shares held in reserve will be issuable
to the Sellers at a future date, subject to settlement of potential indemnified events. In addition, the Company agreed to issue 5-year
warrants to purchase 5,000,000 common shares at an exercise price of $13.00 per share to Fairfax, subject to definitive documentation. The
warrants were issued in April 2021. During the year ended December 31, 2021 and December 31, 2020, 350,138 and 318,637 common
shares were released from holdback and issued to the Sellers.
The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.
As originally reported
Adjustments
As adjusted
Cash and cash equivalents
Inventory
Acquisition related assets (1)
Accounts receivable (2)
Other current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Goodwill
Total assets acquired
Accounts payable and accrued liabilities
Income tax payable
Other current liabilities
Long-term debt (including current and non-current
portions) (3)
Deferred tax liabilities
Other long-term liabilities
Net assets acquired
$
36.7 $
54.4
65.0
41.4
7.9
597.3
35.4
23.5
13.9
—
875.5
91.3
104.0
17.2
311.6
7.0
51.0
$
293.4 $
— $
(13.5)
31.4
7.7
1.2
(150.1)
(8.0)
(6.9)
—
117.9
(20.3)
1.2
2.5
—
—
(6.0)
(12.3)
(5.7) $
36.7
40.9
96.4
49.1
9.1
447.2
27.4
16.6
13.9
117.9
855.2
92.5
106.5
17.2
311.6
1.0
38.7
287.7
(1)
(2)
(3)
Consists of indemnification assets recognized on acquisition. The Sellers are required to indemnify the Company for certain legal and tax matters through
cancellation of the Holdback Shares or in cash, at the Sellers’ option. For certain of these arrangements, if the Holdback Shares are insufficient, Fairfax may be
required to compensate the Company in cash. The amount to be indemnified is subject to the aggregate losses incurred at settlement of these legal and tax
matters. The amount recognized is equal to the liabilities accrued for such legal and tax matters, based on the Company’s best estimates. For certain other
indemnification arrangements, Fairfax is required to compensate the Company in cash, without minority shareholders.
The gross contractual accounts receivables acquired is $57.0 million. The amount not expected to be collected is $7.9 million.
Concurrent with the acquisition, the Company refinanced the debt facilities acquired (note 13).
F-19
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
3.
Acquisition of Apple Bidco Limited (continued):
The carrying amounts of cash and cash equivalents, accounts receivable and other current assets (consisting of
prepaid expenses), accounts payable and accrued liabilities, income taxes payable and other current liabilities
approximate their fair values due to the short-term maturity of the instruments. The fair value of long-term debt and
other assets are categorized within Level 2 of the fair value hierarchy and determined based on expected payments.
The fair values of contingent consideration assets, inventory, property, plant and equipment, intangible assets and
asset retirement obligation included in other long-term liabilities were categorized within Level 3 of the fair value
hierarchy and were determined using relevant market assumptions, including comparable sales and cost data,
discount rates and future cash flows.
As part of the acquisition, the Company recorded $117,900,000 of goodwill resulting from expected synergies in
congruence with APR’s unique position in the power generation market, which is not deductible for tax purposes
and has been assigned to the power generation segment.
During the year ended December 31, 2021 and December 31, 2020, the Company recognized $130,000 and
$1,498,000 of acquisition related costs that were included in general and administrative expense. Cost recognized in
the fourth quarter of 2019 was $2,294,000.
Pro forma financial information
The following table presents unaudited pro forma results for the year ended December 31, 2020. The unaudited pro
forma financial information combines the results of operations of the Company and APR Energy as though the
acquisition had occurred as of January 1, 2020. The pro forma results contain adjustments that are directly
attributable to the transaction, including depreciation of the fair value of property, plant and equipment, amortization
of acquired intangible assets, and refinancing of debt. Additionally, pro forma net earnings were adjusted to exclude
acquisition-related costs incurred.
Pro forma information
Revenue
Net earnings
4.
Segment reporting:
Year ended December 31, 2020
$
1,464.6
179.3
For management purposes, the Company is organized based on its two leasing businesses and has two reportable
segments, containership leasing and mobile power generation. The Company’s containership leasing segment owns
and operates a fleet of containerships which are chartered primarily pursuant to long-term, fixed-rate charters. The
Company’s mobile power generation segment owns and operates a fleet of power generation assets, including gas
turbines and other equipment, and provides power solutions to customers.
The Company’s chief operating decision makers monitor the operating results of the leasing businesses separately
for the purpose of making decisions about resource allocation and performance assessment based on adjusted
EBITDA, which is computed as net earnings before interest expense, income tax expense, depreciation and
amortization expense, impairments, write-down and gains/losses on sale, gains/losses on derivative instruments, loss
on foreign currency repatriation, change in contingent consideration asset, loss on debt extinguishment, other
expenses and certain other items that the Company believes are not representative of its operating performance.
F-20
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
4.
Segment reporting:
The following table includes the Company’s selected financial information by segment:
Year ended December 31, 2021
Revenue
Operating expense
Depreciation and amortization expense
General and administrative expense
Indemnity claim (income) under acquisition
agreement
Operating lease expense
Gain on sale
Interest income
Interest expense
Income tax expense
Year ended December 31, 2020
Revenue
Operating expense
Depreciation and amortization expense
General and administrative expense
Operating lease expense
Loss on sale
Goodwill impairment
Interest income
Interest expense
Income tax expense
Containership
Leasing
Mobile Power
Generation
Elimination
and Other
Total
$
1,460.4 $
186.2 $
— $
1,646.6
289.3
307.9
49.9
—
143.0
(15.9)
(0.3)
178.8
0.8
50.3
58.8
37.1
(42.4)
3.3
(0.5)
(2.8)
20.2
32.2
—
—
3.6
—
—
—
—
(1.9)
—
339.6
366.7
90.6
(42.4)
146.3
(16.4)
(3.1)
197.1
33.0
Containership
Leasing
Mobile Power
Generation
Elimination
and Other
Total
$
1,222.8 $
198.3 $
— $
1,421.1
243.4
288.1
36.6
147.3
—
—
(1.4)
176.0
1.0
31.2
65.8
36.9
3.2
0.2
117.9
(3.6)
19.5
15.6
—
—
(8.1)
—
—
—
—
(3.9)
—
274.6
353.9
65.4
150.5
0.2
117.9
(5.0)
191.6
16.6
F-21
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
4.
Segment reporting (continued):
Year ended December 31, 2021 Year ended December 31, 2020
Containership leasing adjusted EBITDA
Mobile power generation adjusted EBITDA(1)
Total segment adjusted EBITDA
$
Eliminations and other
Depreciation and amortization expense
Interest income
Interest expense
(Gain) Loss on derivative instruments
Loss on debt extinguishment
Other expenses
Loss (Gain) on contingent consideration asset
Loss on foreign currency repatriation
(Gain) Loss on sale
Goodwill impairment
Consolidated net earnings before taxes
$
978.4 $
136.4
1,114.8
(1.4)
366.7
(3.1)
197.1
(14.1)
127.0
6.5
5.1
13.9
(16.4)
—
433.5 $
795.5
127.0
922.5
(1.3)
353.9
(5.0)
191.6
35.5
—
8.6
(6.8)
18.7
0.2
117.9
209.2
(1)
The calculation of adjusted EBITDA does not include the Indemnity claim under acquisition agreement as an adjustment for the mobile
power generation segment. Although the revenue reported for this segment is lower due to an injunction at one of the sites, the losses are
recoverable through an indemnification agreement (note 3).
Total Assets
Containership Leasing
Mobile Power Generation
Elimination and Other
Total
December 31, 2021
December 31, 2020
$
$
9,777.6 $
842.7
(50.7)
10,569.6 $
8,475.4
829.9
(16.2)
9,289.1
Capital expenditures by segment
Year ended December 31, 2021 Year ended December 31, 2020
Containership leasing
Mobile power generation
$
1,679.4 $
29.9
848.1
17.6
5.
Revenue:
The Company generates revenue by leasing and operating its fleet of containerships and power generation assets,
largely through operating leases, direct financing leases and sales-type leases. Revenue disaggregated by segment
and by type for the year ended December 31, 2021 and December 31, 2020 is as follows:
Operating lease revenue
Interest income from leasing
Other
Year ended December 31, 2021
Containership Leasing (1) Mobile Power Generation
$
1,409.9 $
46.1
4.4
1,460.4 $
$
179.7 $
—
6.5
186.2 $
Total
1,589.6
46.1
10.9
1,646.6
F-22
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
5.
Revenue (continued):
Year ended December 31, 2020
Operating lease revenue
Interest income from leasing
Other
Containership Leasing (1) Mobile Power Generation
$
1,180.0 $
187.4 $
40.5
2.3
—
10.9
$
1,222.8 $
198.3 $
Total
1,367.4
40.5
13.2
1,421.1
(1)
Operating lease revenue includes both bareboat charter and time charter revenue.
As at December 31, 2021, the minimum future revenues to be received on committed operating leases, interest
income to be earned from direct financing leases and other revenue are as follows:
2022
2023
2024
2025
2026
Thereafter
Operating lease revenue (1) Direct financing leases (2)
$
1,604.1 $
63.5 $
1,470.5
1,180.0
806.8
463.3
344.7
$
5,869.4 $
61.0
58.2
55.2
53.1
393.1
684.1 $
Other
4.1 $
0.7
—
—
—
—
4.8 $
Total committed
revenue
1,671.7
1,532.2
1,238.2
862.0
516.4
737.8
6,558.3
(1)
(2)
Minimum future operating lease revenue includes payments from signed charter agreements that have not yet commenced.
Minimum future interest income includes direct financing leases currently in effect.
As at December 31, 2021, the minimum future revenues to be received based on each segment are as follows:
2022
2023
2024
2025
2026
Thereafter
Containership Leasing (1) (2) Mobile Power Generation
$
1,537.8 $
133.9 $
1,467.1
1,238.2
862.0
516.4
737.8
65.1
—
—
—
—
$
6,359.3 $
199.0 $
Total committed revenue
1,671.7
1,532.2
1,238.2
862.0
516.4
737.8
6,558.3
(1)
(2)
Minimum future operating lease revenue includes payments from signed charter agreements that have not yet commenced.
Minimum future interest income includes direct financing leases currently in effect.
Minimum future revenues assume 100% utilization, extensions only at the Company’s unilateral option and no
renewals. It does not include signed charter agreements on undelivered vessels.
The Company’s revenue during the years was derived from the following customers:
COSCO
Yang Ming Marine
ONE
Other
2021
2020
2019
$
492.2 $
401.1 $
249.9
255.2
649.3
255.7
237.3
527.0
407.4
257.5
199.4
267.2
$
1,646.6 $
1,421.1 $
1,131.5
F-23
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
6.
Related party transactions:
(a) The income or expenses with related parties relate to amounts paid to or received from individuals or entities
that are associated with the Company or with the Company’s directors or officers and these transactions are
governed by pre-arranged contracts.
(b) On each of February 14, 2018 and January 15, 2019, the Company issued to Fairfax $250,000,000 aggregate
principal of 5.50% senior notes due on February 14, 2025 (“2025 Fairfax Notes”) and January 15, 2026 (“2026
Fairfax Notes”), respectively, and a tranche of warrants to purchase 38,461,539 common shares of Seaspan at
an exercise price of $6.50 per share, on each date. On February 28, 2020, Seaspan issued to Fairfax, in a private
placement, $100,000,000 aggregate principal amount of 5.50% senior notes due on March 1, 2027 (the “2027
Fairfax Notes” and together with the 2025 Fairfax Notes and the 2026 Fairfax Notes, the “Fairfax Notes”) (note
13(e)).
In June 2021, the Company and Seaspan exchanged and amended the Fairfax Notes. Pursuant to this
transaction, the Company exchanged $200,000,000 aggregate principal amount of the 2026 Fairfax Notes and
all $100,000,000 aggregate principal amount of the 2027 Fairfax Notes for (i) 12,000,000 Series J 7.00%
Cumulative Redeemable Perpetual Preferred Shares of the Company (the “Series J Preferred Shares”),
representing total liquidation value of $300,000,000, and (ii) 1,000,000 five year warrants to purchase an equal
number of Atlas common shares at an exercise price of $13.71 per share (the “Fairfax Exchange”) (note 18(e)).
The exchanged 2026 Fairfax Notes and 2027 Fairfax Notes were subsequently cancelled. For the year ended
December 31, 2021, the dividends paid for Series J Preferred Shares were $8,108,000 (December 31, 2020 –
$nil).
In connection with the Fairfax Exchange, the Fairfax Holders also agreed to amend the terms of the
$300,000,000 aggregate principal amount of the Fairfax Notes that remain outstanding following the Fairfax
Exchange (the “Amendment”), which includes all $250,000,000 aggregate principal amount of the 2025 Fairfax
Notes and $50,000,000 aggregate principal amount of the 2026 Fairfax Notes. The Amendment, among other
things, eliminated the Fairfax Holders’ mandatory redemption and put rights and released and discharged all
outstanding guarantees and liens on collateral thereunder. The Fairfax Holders also agreed to terminate
Seaspan’s Amended and Restated Pledge and Collateral Agent Agreement and to release and discharge all liens
on collateral thereof (note 13(e)). During the year ended December 31, 2021, the Company redeemed for cash
the remaining 2025 Fairfax Notes and 2026 Fairfax Notes at a redemption price equal to 100% of the principal
amount plus any accrued and unpaid interest.
(c) On February 28, 2020, in connection with the acquisition of APR Energy, Fairfax received common shares of
Atlas as consideration for its equity interests in APR Energy and as settlement of indebtedness owing to Fairfax
by APR Energy. In addition, Atlas reserved for issuance Holdback Shares for Fairfax. Fairfax remains a
counterparty to certain indemnification and compensation arrangements related to the acquisition of APR
Energy (note 3).
During the year ended December 31, 2021, 350,138 common shares were issued out of Holdback Shares. These
Holdback Shares were released from the holdback of the minority sellers and purchased by Fairfax. Fairfax also
paid $12,229,000 to the Company for settlement of an indemnification related to the cash repatriation from a
foreign jurisdiction. In addition, the Company received $12,468,000 for the year ended December 31, 2021
(December 31, 2020 – $nil) from Fairfax for the settlement of an indemnification related to losses realized on
sale or disposal of certain property, plant and equipment and inventory items (note 3). For the year ended
December 31, 2021, interest expense related to Seaspan’s notes held by certain affiliates of Fairfax (the “Fairfax
Holders”), including the Fairfax Notes, excluding amortization of the debt discount, was $19,204,000 (2020 –
$32,114,000; 2019 – $26,927,000). For the year ended December 31, 2021, amortization of debt discount was
$14,188,000 (2020 – $19,963,000; 2019 – $17,347,000).
(d) As at December 31, 2021, Fairfax held approximately 40.5% of the Company’s issued and outstanding common
shares and has designated two members to the Company’s board of directors.
F-24
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
6.
Related party transactions (continued):
(e)
In March 2021, the Company entered into a joint venture with Zhejiang Energy Group (“ZE”) and executed a
shareholders agreement with ZE to form the joint venture (“ZE JV”). The Company owns 50% of the ZE JV.
The purpose of the joint venture is to develop business in relation to container vessels, LNG vessels,
environmental protection equipment and power equipment supply. In October 2021, through as series of
transactions with a wholly owned subsidiary of the ZE JV as the ultimate purchaser, the Company sold one
4,250 TEU vessel for an aggregate purchase price of $38,280,000 (note 8). The Company continues to manage
the ship operations of the vessel. During the year ended December 31, 2021, the Company earned revenue of
$325,000 (2020 – $nil) and incurred expenses of $285,000 (2020 – $nil) in connection with the ship
management of the vessel. As at December 31, 2021, the Company has invested $1,000,000 (December 31,
2020 – $nil) in the ZE JV.
7.
Net investment in lease:
Undiscounted lease receivable
Unearned interest income
Net investment in lease
Lease receivables
Unguaranteed residual value
Net investment in lease
Current portion of net investment in lease
Long-term portion of net investment in lease
2021
2020
1,448.2 $
(689.9)
758.3 $
773.2
(343.9)
429.3
2021
2020
751.4 $
6.9
758.3
(16.8)
741.5 $
429.3
—
429.3
(10.7)
418.6
$
$
$
$
In February 2020, the bareboat charters for the six vessels acquired in November 2019 were modified to extend the
terms of the leases by six years, with similar purchase options. As a result of the modification, it was determined that
the customer is no longer reasonably certain to exercise the purchase options and these leases were reclassified as
operating leases.
In February 2021, the Company commenced a fixed rate bareboat charter with a term of 18 years on a 12,000 TEU
vessel, which has been classified as a sales-type lease. No gain or loss was recognized on commencement date.
In September and November 2021, the Company commenced one and two 18-year fixed rate bareboat charters,
respectively, each for a 12,200 TEU vessel. The bareboat charters have been classified as a sales-type lease and no
gain or loss was recognized on the commencement dates.
At December 31, 2021, the minimum lease receivable from direct financing leases are as follows:
2022
2023
2024
2025
2026
Thereafter
$
$
79.3
79.3
79.5
79.3
79.3
1,051.5
1,448.2
F-25
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
8.
Property, plant and equipment:
December 31, 2021
Vessels
Equipment and other
Property, plant and equipment
December 31, 2020
Vessels
Equipment and other
Property, plant and equipment
Cost
Cost
9,410.9 $
557.3
9,968.2 $
9,148.9 $
543.1
9,692.0 $
Accumulated
depreciation
Net book value
(2,830.4) $
(185.6)
(3,016.0) $
6,580.5
371.7
6,952.2
Accumulated
depreciation
Net book value
(2,571.3) $
(146.0)
(2,717.3) $
6,577.6
397.1
6,974.7
$
$
$
$
During the year ended December 31, 2021, depreciation and amortization expense relating to property, plant and
equipment was $345,164,000 (2020 - $324,597,000; 2019 – $233,729,000).
In February 2020, the Company acquired gas turbines and other equipment of $447,166,000 as part of the
acquisition of APR Energy (note 3).
In February 2020, sales-type leases related to six bareboat charters were re-assessed to be operating leases at lease
modification. Accordingly, vessels of $377,393,000 were reclassified to property, plant and equipment and recorded
at a value equal to the net investment in leases derecognized (note 7).
Upon commencement of a fixed rate bareboat charter in February 2021, $88,060,575 was reclassified to net
investment in lease from property, plant and equipment (note 7).
During the year ended December 31, 2020 the Company took delivery of ten secondhand vessels, with an aggregate
purchase price of $785,033,000, including one vessel that was reclassified to property, plant and equipment from net
investment in leases at lease modification, subsequent to initial acquisition during the year.
During the year ended December 31, 2021, the Company took delivery of four vessels, with an aggregate purchase
price of $358,500,000.
During the year ended December 31, 2021, the Company sold one 4,250 TEU vessel to a wholly owned subsidiary
of the ZE JV for $38,280,000 (note 6(e)), resulting in a gain on sale of $15,884,000.
9.
Vessels under construction
As at December 31, 2021, the vessels under construction balance includes $18,870,000 of capitalized interest for the
year ended December 31, 2021 (December 31, 2020 – $nil).
As at December 31, 2021, the vessels under construction balance includes $1,284,512,000 of installment payments
for the year ended December 31, 2021 (December 31, 2020 – $41,983,000).
During the year ended December 31, 2021, the Company took delivery of three 12,200 TEU vessels that were
previously under construction for an aggregate purchase price of $251,895,000. The vessels commenced 18-year
bareboat charters upon delivery and are classified as a sales-type lease (note 7).
F-26
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
10.
Right-of-use assets:
December 31, 2021
Vessel operating leases
Other operating leases
Right-of-use assets
December 31, 2020
Vessel operating leases
Office operating leases
Right-of-use assets
Cost
Accumulated amortization
Net book value
1,066.6 $
15.8
1,082.4 $
(350.0) $
(7.5)
(357.5) $
716.6
8.3
724.9
Cost
Accumulated amortization
Net book value
1,060.9 $
13.6
1,074.5 $
(228.0) $
(5.3)
(233.3) $
832.9
8.3
841.2
$
$
$
$
During the year ended December 31, 2021, the amortization in right-of-use assets were $125,800,000 (2020 –
$120,140,000; 2019 – $111,810,000, respectively).
11.
Goodwill:
Balance, December 31, 2019
Goodwill arising from acquisition of APR Energy (note 3)
Impairment loss recognized during the period
Balance, December 31, 2020 and 2021
$
$
75.3 $
—
—
75.3 $
—
117.9
(117.9)
—
Containership leasing Mobile power generation
Upon the acquisition of APR Energy, the Company recognized $117,900,000 of goodwill. As part of the Company’s
annual goodwill impairment test, it was determined that the carrying value of the mobile power generation reporting
unit exceeded its fair value, as a result of potential strategic repositioning contemplated subsequent to acquisition.
Fair value was determined using a discounted cash flow approach. As a result, an impairment loss of $117,900,000
equal to the balance of goodwill related to the mobile power generation reporting unit, was recognized in 2020.
12.
Other assets:
Intangible assets (a)
Deferred dry-dock (b)
Restricted cash (c)
Contingent consideration asset (d)
Indemnity claim under acquisition agreement (e)
Deferred financing fees on undrawn financings (f)
Other
Other assets
(a)
Intangible assets:
December 31, 2021
Customer contracts
Trademark
Other
$
$
2021
2020
$
90.1 $
104.8
79.4
38.2
49.2
42.5
77.0
48.0
63.8
38.2
84.0
—
—
42.9
$
424.4 $
333.7
Cost
Accumulated Amortization
Net book value
(76.2) $
(2.5)
(5.0)
(83.7) $
53.7
24.9
11.5
90.1
129.9 $
27.4
16.5
173.8 $
F-27
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
12.
Other assets (continued):
(a)
Intangible assets (continued):
December 31, 2020
Customer contracts
Trademark
Other
$
$
Cost
Accumulated Amortization
Net book value
129.9 $
27.4
11.5
168.8 $
(58.6) $
(1.1)
(4.3)
(64.0) $
71.3
26.3
7.2
104.8
As part of the acquisition of APR Energy on February 28, 2020, the Company recorded $27,400,000 related to
the fair value of a trademark. The trademark is amortized on a straight-line basis over its estimated useful life of
20 years.
Acquired customer contracts are amortized on a straight-line basis over their remaining useful lives. As of
December 31, 2021, the weighted average remaining useful lives of acquired customer contracts was 3.9 years
(2020 – 4.6 years; 2019 – 5.3 years).
During the year ended December 31, 2021, the Company recorded $20,910,000 of amortization related to
intangible assets (2020 – $21,396,000; 2019 – $20,729,000).
Future amortization of intangible assets is as follows:
2022
2023
2024
2025
2026
Thereafter
$
$
(b)
Deferred dry-dock:
During the years ended December 31, 2021 and 2020, changes in deferred dry-dock were as follows:
December 31, 2019
Costs incurred
Amortization expensed (1)
December 31, 2020
Costs incurred
Amortization expensed (1)
December 31, 2021
$
$
18.4
14.7
11.9
8.0
4.4
32.7
90.1
41.3
45.2
(22.7)
63.8
40.0
(24.4)
79.4
(1)
Amortization of dry-docking costs is included in depreciation and amortization
(c)
Restricted cash:
Restricted cash consists primarily of amounts held in reserve accounts related to the Company’s debt facilities.
F-28
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
12.
Other assets (continued):
(d)
Contingent consideration asset:
As a part of the acquisition of APR Energy on February 28, 2020, the Company is compensated by the Sellers
for certain losses that may be incurred on future cash repatriation from a foreign jurisdiction until the earlier of
(1) reaching the maximum cash flows subject to compensation, (2) termination of specified contracts, (3)
sustaining the ability to repatriate cash without losses and (4) April 30, 2022. The amount of compensation
depends on the Company’s ability to generate cash flows on specific contracts in the foreign jurisdiction and the
magnitude of losses incurred on repatriation. The maximum amount of cash flows subject to compensation is
$110,000,000. The Company is also compensated for future losses realized on sale or disposal of certain
property, plant and equipment and inventory items calculated as the difference between the proceeds on sale or
disposal and the book value of the respective assets at February 28, 2020, prior to acquisition. The maximum
amount of losses subject to compensation is $64,000,000.
Contingent consideration asset, December 31, 2020
Change in fair value
Compensation received
Contingent consideration asset
Current portion included in prepaid expenses and other
Contingent consideration asset, December 31, 2021
(e)
Indemnity claim under acquisition agreement
$
$
90.9
(5.1)
(30.5)
55.3
(6.1)
49.2
As a part of the acquisition of APR Energy on February 28, 2020, the Company is compensated by the Sellers
for losses resulting from an ongoing injunction on certain sites in Argentina. The losses will be settled through
a combination of the cancellation of holdback shares and cash at the (i) lifting of the injunction or (ii) end of
the contract in May 2022.
(f)
Deferred financing fees on undrawn financings
The Company has entered into financing arrangements for certain of its vessels under construction. As the
financing arrangements are undrawn as at December 31, 2021, the amounts incurred have been capitalized and
recorded as long-term asset. As the financing is drawn, the amounts will be reclassified and presented as a
direct deduction from the related debt liability.
F-29
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt:
Long-term debt:
Revolving credit facilities (a) (c)
Term loan credit facilities (b) (c)
Senior Unsecured Notes (d)
Fairfax Notes (e)
Senior Unsecured Exchangeable Notes (f)
Senior Secured Notes (g)
Fair value adjustment on term loan credit facilities
Debt discount on Fairfax Notes
Debt discount on Senior Unsecured Exchangeable Notes
Deferred financing fees
Long-term debt
Current portion of long-term debt
Long-term debt
(a)
Revolving credit facilities
2021
2020
$
— $
2,341.8
1,302.4
—
201.3
500.0
4,345.5
—
—
(5.1)
(57.6)
4,282.8
(551.0)
3,731.8 $
$
283.0
2,583.8
80.0
600.0
201.3
—
3,748.1
(0.1)
(130.9)
(6.1)
(44.9)
3,566.1
(332.1)
3,234.0
As at December 31, 2021, the Company had three revolving credit facilities available (December 31, 2020 –
four revolving credit facilities) which provided for aggregate borrowings of up to $600,000,000 (December 31,
2020 – $500,000,000), of which $600,000,000 (December 31, 2020 – $217,000,000) was undrawn.
On February 28, 2020, the Company acquired the outstanding debt of APR Energy. Concurrently, the Company
entered into a credit facility of up to $185,000,000 (the “Bank Facility”) comprised of a revolving loan facility
of $50,000,000 and a term loan facility of $135,000,000, the proceeds of which were used to refinance the APR
Energy’s outstanding debt. The Bank Facility matures on February 28, 2023 and is secured by the Company’s
power generation assets.
On July 2, 2020, the Company entered into a $150,000,000 revolving credit facility, refinancing a $150,000,000
revolving credit facility due to mature in August 2020. The new facility matures on July 2, 2022 and can
increase to a maximum capacity of $200,000,000, subject to additional commitments (note 24(f)).
In May 2021, the Company refinanced one revolving credit facility which increased the aggregate commitments
by $100,000,000 and extended the maturity by two years.
Revolving credit facilities and Term loan credit facilities balances as at December 31, 2020 have been
reclassified to conform to the financial statement presentation adopted for the current year.
As at December 31, 2021, the Company has no drawn revolving credit facilities. As at December 31, 2020, the
one month, three month and six month average LIBOR on the Company’s revolving credit facilities is 0.2%,
0.2% and 0.3%, respectively and the margin is 0.5% and 2.25%. The weighted average rate of interest,
including the margin, for the Company’s revolving credit facilities is 1.4% as at December 31, 2020. Interest
payments were made monthly, quarterly and semi-annually.
The Company is subject to commitment fees ranging between 0.5% and 0.6% (December 31, 2020 – 0.2% and
0.6%) calculated on the undrawn amounts under the various facilities.
F-30
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt (continued):
(b)
Term loan credit facilities
As at December 31, 2021, the Company has entered into $4,052,103,000 (December 31, 2020 –
$2,833,850,000) of term loan credit facilities, of which $1,710,224,000 (December 31, 2020 - $250,000,000)
was undrawn.
On February 28, 2020, the Company entered into the Bank Facility which includes a $135,000,000 term loan
facility (note 13(a)).
On March 6, 2020, the Company entered into a $100,000,000 term loan credit facility, which bears a fixed
interest rate of 7.7% per annum and matures on March 6, 2025. This facility is secured by the Company’s
power generation assets.
In February 2020 and March 2020, the Company increased the aggregate commitment under an existing term
loan credit facility (the “December 2019 Term Loan”), which matures on December 30, 2025, by $100,000,000.
On October 15, 2020, the Company entered into a sustainability-linked term loan facility (the “October 2020
Term Loan”) with an aggregate principal of $200,000,000, which was subsequently upsized to $250,000,000 on
December 14, 2020. The facility matures on October 14, 2026 and bears an initial interest rate of three month
LIBOR plus 2.25% margin. The margin may be subsequently adjusted if the Company meets certain
sustainability metrics during the term of the loan.
The December 2019 Term Loan and the October 2020 Term Loan are secured by a portfolio of vessels, which
also secured some of the Company’s other credit facilities.
In May 2021, the Company amended and restated three term loan credit facilities which increased the aggregate
commitments by $79,540,000 and extended maturities by two years.
In June 2021, the Company made early prepayment of $59,961,000 on one term loan that matures on July 6,
2025.
In May 2021, the Company entered into a $6,500,000 term loan credit facility, which bears a fixed interest rate
of 3.8% per annum and matures on May 30, 2024.
In July 2021, the Company entered into a $6,500,000 term loan credit facility, which bears a fixed interest rate
of 3.8% per annum and matures on July 2, 2024.
In October 2021, the Company entered into a $633,088,000 term loan credit facility, which bears an initial
interest rate of three month LIBOR plus 1.4% margin. No amounts have been drawn under the facility as of
December 31, 2021.
In December 2021, the Company entered into a $1,077,137,000 term loan credit facility, which bears an initial
interest rate of three month LIBOR plus 3.39% margin. No amounts have been drawn under the facility as of
December 31, 2021.
Term loan credit facilities drawn mature between December 31, 2022 and January 21, 2030.
For all of the Company’s term loan credit facilities, except for one, interest is calculated based on three month
or six month LIBOR plus a margin per annum, dependent on the interest period selected by the Company. The
three month and six month average LIBOR was 0.2% and 0.2%, respectively (December 31, 2020 – 0.2% and
0.3%) and the margins ranged between 0.4% and 3.5% as at December 31, 2021 (December 31, 2020 – 0.4%
and 4.3%).
For one of the term loan credit facilities with a total principal amount outstanding of $27,198,000 (December
31, 2020 – $39,970,000), interest is calculated based on the Export-Import Bank of Korea (“KEXIM”) rate plus
0.7% per annum.
F-31
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt (continued):
(b)
Term loan credit facilities (continued):
For two of the term loan credit facilities with a total principal amount outstanding of $921,000,000
(December 31, 2020 – $nil), interest is calculated based on a fixed rate of 3.8% per annum for both.
The weighted average rate of interest, including the applicable margin, was 1.9% as at December 31, 2021
(December 31, 2020 – 2.3%) for the Company’s term loan credit facilities. One of the Company’s term loan
credit facilities bears interest at a fixed rate of 7.7%. Interest payments are made in monthly, quarterly or semi-
annual payments.
Repayments under term loan credit facilities are made in quarterly or semi-annual payments. For those related
to newbuilding containerships, payments commence three, six or thirty-six months after delivery of the
associated newbuilding containership, utilization date or the inception date of the term loan credit facilities.
The following is a schedule of future minimum repayments under the Company’s term loan credit facilities as
of December 31, 2021:
2022
2023
2024
2025
2026
Thereafter
$
555.5
376.4
148.9
146.1
851.6
263.3
$
2,341.8
(c)
Credit facilities – other:
As at December 31, 2021, the Company’s credit facilities were secured by first-priority mortgages granted on
most of its power generation assets and 65 of its vessels together with other related security. The security for
each of the Company’s current secured credit facilities includes:
•
•
•
•
•
•
A first priority mortgage on collateral assets;
An assignment of the Company’s lease agreements and earnings related to the related collateral assets;
An assignment of the insurance policies covering each of the collateral assets that are subject to a related
mortgage and/or security interest;
An assignment of the Company’s related shipbuilding contracts and the corresponding refund guarantees;
A pledge over shares of various subsidiaries; and
A pledge over the related retention accounts.
As at December 31, 2021, $1,511,365,000 principal amount of indebtedness under the Company’s term loan
and revolving credit facilities was secured by a portfolio of 52 vessels, the composition of which can be
changed, and is subject to a borrowing base and portfolio concentration requirements, as well as compliance
with financial covenants and certain negative covenants.
F-32
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt (continued):
(c)
Credit facilities – other (continued):
The Company may prepay certain amounts outstanding without penalty, other than breakage costs in certain
circumstances, with the exception of one term loan credit facility, where the Company may prepay borrowings
up to March 6, 2023 with penalties and thereafter without penalty. A prepayment may be required as a result of
certain events, including change of control and, where applicable, the sale or loss of assets or a termination or
expiration of certain lease agreements (and the inability to enter into a lease replacing the terminated or expired
lease suitable to lenders within a specified period of time). The amount that must be prepaid may be calculated
based on the loan to market value. In these circumstances, valuations of the Company’s assets are conducted on
a “without lease” and/or “orderly liquidation” basis as required under the credit facility agreement.
Each credit facility contains a mix of financial covenants requiring the borrower and/or guarantor of the facility
to maintain minimum liquidity, tangible net worth, interest and principal coverage ratios, and debt-to-assets
ratios, as defined. Each of Atlas and Seaspan are guarantors under certain facilities.
Some of the facilities also have an interest and principal coverage ratio, debt service coverage and vessel value
requirement for the subsidiary borrower. The Company was in compliance with these covenants as at
December 31, 2021.
(d)
Senior unsecured notes:
In February 2021, the Company issued $200,000,000 of 6.5% senior unsecured sustainability-linked bonds in
the Nordic bond market (“2024 Bonds”). In April 2021, the Company issued a further $300,000,000 of senior
unsecured sustainability-linked bonds in the Nordic bond market (the “2026 Bonds” and together with the 2024
Bonds, the “Bonds”). The Bonds mature in February 2024 and April 2026, respectively, and bear interest at
6.5% per annum. If the sustainability performance targets are not met during the term of the Bonds, the Bonds
will be settled at maturity at 100.5% of the initial principal. The Bonds are listed on the Oslo Stock Exchange.
In May 2021, the Company exchanged an aggregate principal amount of $52,198,825 7.125% senior notes due
2027 of its wholly owned subsidiary, Seaspan Corporation (the “Seaspan Notes”), for an equivalent amount of
its 7.125% senior notes due 2027 (the “Atlas Notes”), registered under the Securities Act of 1933, as amended,
and listed on the Nasdaq Global Market. In July 2021, the Company exchanged an additional $151,000 of
Seaspan Notes for Atlas Notes, and redeemed all remaining Seaspan Notes.
On July 14, 2021, the Company issued $750,000,000 of senior unsecured notes. These notes mature in 2029 and
accrue interest at 5.5% per annum, payable semi-annually beginning on February 1, 2022. The notes are a blue
transition bond developed to further the Company’s sustainability efforts.
(e)
Fairfax Notes:
Pursuant to the Fairfax Exchange as described in note 6(b), the Company exchanged $200,000,000 aggregate
principal amount of the 2026 Fairfax Notes and all $100,000,000 aggregate principal amount of the 2027
Fairfax Notes for (i) 12,000,000 Series J 7.00% Cumulative Redeemable Perpetual Preferred Shares, and (ii)
1,000,000 five year warrants to purchase an equal number of Atlas common shares at an exercise price of
$13.71 per share. The exchanged 2026 Fairfax Notes and 2027 Fairfax Notes were subsequently cancelled.
In connection with the Fairfax Exchange, the Fairfax Holders also agreed to amend the terms of the
$300,000,000 aggregate principal amount of the Fairfax Notes that remain outstanding following the Fairfax
Exchange, which includes all 2025 Fairfax Notes and 2026 Fairfax Notes. The Amendment, among other
things, eliminated the Fairfax Holders’ mandatory redemption and put rights and released and discharged all
outstanding guarantees and liens on collateral thereunder. The Fairfax Holders also agreed to terminate
Seaspan’s Amended and Restated Pledge and Collateral Agent Agreement and to release and discharge all liens
on collateral thereof. The Company had the option to redeem the amended notes, in whole or in part, at any time
at a redemption price equal to 100% of the principal amount plus any accrued and unpaid interest.
F-33
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt (continued):
(e)
Fairfax Notes (continued):
In August 2021, the remaining 2025 Fairfax Notes and 2026 Fairfax Notes were redeemed for cash at a
redemption price equal to 100% of the principal amount plus accrued and unpaid interest. As a result of the
Fairfax Exchange and subsequent redemption of the 2025 Fairfax Notes and 2026 Fairfax Notes, the Company
recorded a loss on debt extinguishment of $121,715,000 for the year ended December 31, 2021, respectively
(2020 – $nil; 2019 – $nil), representing the write-off of the existing associated debt discount and deferred
financing fees.
(f)
Senior Unsecured Exchangeable Notes:
On December 21, 2020, the Company, through its wholly-owned subsidiary, Seaspan Corporation issued
$201,250,000 aggregate principal amount of 3.75% exchangeable senior unsecured notes due 2025 (the
“Exchangeable Notes”) in a private placement. The Exchangeable Notes are exchangeable at the holders’ option
into an aggregate of 15,474,817 Atlas common shares at an initial exchange price of $13.005 per share, in
equivalent cash or a combination of Atlas common shares and cash, as elected by the Company, on or after
September 15, 2020, or earlier in the following circumstances:
•
•
•
After December 31, 2020, if the last reported price of an Atlas common share is at least 130% of the
exchange price then in effect over a specified measurement period;
If the trading price per $1,000 principal amount of Exchangeable Notes during a specified measurement
period is less than 98% of the last reported sale price on Atlas common shares multiplied by the applicable
exchange rate; and
Upon the occurrence of certain significant corporate events, or in response to early redemption elected by
the Company.
The exchange price is subject to anti-dilution and make-whole clauses.
The holders may require the Company to redeem the Exchangeable Notes held by them upon the occurrence of
certain corporate events qualifying as a fundamental change in the business. The Company may redeem the
Exchangeable Notes in connection with certain tax-related events or on any business day on or after December
20, 2023 and prior to September 15, 2025, if the last reported sale price of an Atlas common share is at least
130% of the exchange price during a specified measurement period. A redemption of the Exchangeable Notes is
made at 100% of the principal amount, plus accrued and unpaid interest. The Exchangeable Notes mature on
December 15, 2025, unless earlier exchanged, repurchased or redeemed.
Upon issuance, the proceeds from the Exchangeable Notes were allocated between debt, measured at fair value
of $195,000,000 and equity of $6,250,000 representing the residual value related to the conversion feature. The
difference between the face value and carrying value of the debt reflects the debt discount, which is amortized
through interest expense using an effective interest rate of 4.5%, over the remaining life of the debt. Interest
payment is semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2021.
Capped Call Transactions
In connection with the issuance of the Exchangeable Notes, the Company entered into capped call transactions
with affiliates of certain of the initial purchasers of the Exchangeable Notes and other financial institutions,
using $15,536,000 in proceeds from the issuance, to reduce the potential dilution to Atlas common shares upon
any exchange of notes and/or offset any cash payments the Company is required to make upon exchange of the
Exchangeable Notes, in excess of the principal amount. They may be settled in cash, shares, or a combination of
cash and shares as determined by the settlement method of the Exchangeable Notes, at a strike price with
underlying shares equal to that of the Exchangeable Notes and subject to anti-dilution adjustments substantially
similar to those applicable to the Exchangeable Notes. The capped calls are exercisable up to a maximum price
of $17.85 per share, subject to certain adjustments. The instruments expire on December 15, 2025.
F-34
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
13.
Long term debt (continued):
(g)
Senior Secured Notes:
In May 2021, the Company entered into a note purchase agreement to issue $500,000,000 of sustainability-
linked, senior secured notes (the “Senior Secured Notes”) in a US private placement. The Senior Secured Notes
comprise four series, each ranking pari passu with the Company’s existing and future debt financing program.
The Series A, Series C and Series D Senior Secured Notes were issued in May 2021, with interest rates ranging
from 3.91% to 4.26% and maturities from June 2031 to June 2036. The Series B Senior Secured Notes, which
bear interest at 3.91% per annum and mature in 2031, were issued in August 2021. The Senior Secured Notes
contain certain sustainability features, and are subject to adjustment based on Seaspan’s achievements relative
to certain key performance indicators.
14.
Operating lease liabilities:
Operating lease commitments
Impact of discounting
Impact of changes in variable rates
Operating lease liabilities
Current portion of operating lease liabilities
Operating lease liabilities
December 31, 2021
December 31, 2020
$
$
791.2 $
(104.6)
30.8
717.4
(155.1)
562.3 $
927.0
(141.5)
44.7
830.2
(160.9)
669.3
Operating lease liabilities relate to vessel sale-leaseback transactions and other operating leases. Vessel sale-
leaseback transactions under operating lease arrangements are in part, indexed to three month LIBOR, reset on a
quarterly basis. For one of the Company’s vessel operating leases, an option to repurchase the vessel exists at the
end of its lease term. For all other arrangements, the lease may be terminated prior to the end of the lease term, at the
option of the Company, by repurchasing the respective vessels on a specified repurchase date at a pre-determined
fair value amount. For one of these arrangements, if the Company elects not to repurchase the vessel, the lessor may
choose not to continue the lease until the end of its term. Each sale-leaseback transaction contains financial
covenants requiring the Company to maintain certain tangible net worth, interest coverage ratios and debt-to-assets
ratios, as defined. These vessels are leased to customers under time charter arrangements.
Operating lease costs related to vessel sale-leaseback transactions and other leases are summarized as follows:
Year ended December 31, 2021 Year ended December 31, 2020
Lease costs:
Operating lease costs
Variable lease adjustments
Other information:
$
Operating cash outflow used for operating leases
Weighted average discount rate
Weighted average remaining lease term
160.2
$
(13.7)
143.2
4.8 %
6 years
166.5
(12.4)
147.8
4.8 %
7 years
In September 2021, the Company amended an operating lease for one vessel to extend the term for an additional five
years. The amendment resulted in the continuation of its treatment as an operating lease. The reassessment due to the
modification resulted in an increase of $5,753,000 to lease liabilities and a corresponding increase to right-of-use
assets.
F-35
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
15.
Other financing arrangements:
Other financing arrangements
Deferred financing fees
Other financing arrangements
Current portion of other financing arrangements
Other financing arrangements
2021
2020
$
1,363.1 $
(23.3)
1,339.8
(100.5)
$
1,239.3 $
879.5
(13.7)
865.8
(64.1)
801.7
The Company, through certain of its wholly-owned subsidiaries, has entered into non-recourse or limited recourse
sale-leaseback arrangements with financial institutions to fund the acquisition of vessels.
Under these arrangements, the Company has agreed to transfer the vessels to the counterparties and lease the vessels
back from the counterparties over the applicable lease term as a financing lease arrangement. In the arrangements
where the shipbuilding contracts are novated to the counterparties, the counterparties assume responsibility for the
remaining payments under the shipbuilding contracts.
In certain of the arrangements, the counterparties are companies whose only assets and operations are to hold the
Company’s leases and vessels. The Company operates the vessels during the lease term, supervises the vessels’
construction before the lease term begins, if applicable, and/or is required to purchase the vessels from the
counterparties at the end of the lease term. As a result, in most cases, the Company is considered to be the primary
beneficiary of the counterparties and consolidates the counterparties for financial reporting purposes. In all cases,
these arrangements are considered failed-sales. The vessels are recorded as an asset and the obligations under these
arrangements are recorded as a liability. The terms of the leases are as follows:
(i)
COSCO Faith - 13100 TEU vessel:
Under this arrangement, the counterparty has provided financing of $109,000,000. The 12-year lease term
began in March 2012, which was the vessel’s delivery date. Lease payments include an interest component
based on three month LIBOR plus a 3.0% margin. At the end of the lease, the Company will have the option to
purchase the vessel from the lessor for $1. In January 2020, the Company made a prepayment of $48,316,000
on the remaining balance of the arrangement.
(ii)
Leases for three 4500 TEU vessels:
Under these arrangements, the counterparty has provided refinancing of $150,000,000. The five year lease
terms began in March 2015. At delivery, the Company sold and leased the vessels back over the terms of the
sale-leaseback transactions. At the end of the lease terms, the Company is obligated to purchase the vessels at a
pre-determined purchase price. The remaining balance was paid in March 2020.
(iii) Leases for five 11000 TEU vessels:
Under these arrangements, the counterparty has provided financing of $420,750,000. The 17-year lease terms
began between August 2017 and January 2018, which were the vessels’ delivery dates. Lease payments include
interest components based on three month LIBOR plus a 3.3% margin. At delivery, the Company sold and
leased the vessels back over the term of the sale-leaseback transactions. At the end of the lease terms, the
Company is obligated to purchase the vessels at a pre-determined purchase price. In October 2020, the
Company made a prepayment of $71,084,000 on the remaining principal balance of one of the 11000 TEU
vessels under sales-leaseback financing arrangement. In January 2021, the Company made a payment of
$69,166,000 to early terminate a sale-leaseback financing arrangement secured by one 11,000 TEU vessel. In
March 2021, the Company entered into a new sale-leaseback financing arrangement of $83,700,000, secured by
the same 11,000 TEU vessel as described in note 15 (vii).
F-36
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
15.
Other financing arrangements (continued):
(iv)
Leases for four 12000 TEU vessels:
Under these arrangements, the counterparty has provided financing of $337,732,000. The 10-year lease terms
began in March and April 2020, which were the vessels’ delivery dates. Lease payments include interest
components based on one month LIBOR plus a 2.75% margin. At delivery, the Company sold and leased the
vessels back over the term of the sale-leaseback transactions. At the end of the lease terms, the Company is
obligated to purchase the vessels at a pre-determined purchase price.
(v)
Leases for two 13000 TEU vessels:
Under these arrangements, the counterparty has provided financing of $138,225,000. The 10-year lease terms
began in August and September 2020, which were the vessels’ delivery dates. Lease payments include interest
components based on three month LIBOR plus a 2.75% margin. At delivery, the Company sold and leased the
vessels back over the term of the sale-leaseback transactions. At the end of the lease terms, the Company is
obligated to purchase the vessels at a pre-determined purchase price.
(vi)
Leases for two 12000 TEU vessels:
Under these arrangements, the counterparty has provided financing of $158,400,000. The 10-year and 12-year
lease terms began in October and November 2020, respectively, which were the vessels’ delivery dates. Lease
payments include interest components based on three month LIBOR plus a 2.75% margin. At delivery, the
Company sold and leased the vessels back over the term of the sale-leaseback transactions. The Company has
the option to purchase the vessels throughout their respective lease terms at a pre-determined purchase price.
(vii) Leases for three vessels:
In April 2021, the counterparty provided refinancing of $235,000,000 in sale-leaseback financing for three
vessels ranging in size between 10,000 TEU and 13,100 TEU. The lease terms, ranging between 96 and 162
months, began in April 2021. Lease payments include interest components based on one three LIBOR plus a
2.75% margin. The Company sold and leased the vessels back over the term of the sale-leaseback transactions.
At the end of the lease term, the Company is obligated to purchase the vessels at a pre-determined purchase
price. The Company has the option to purchase the vessels after the second anniversary date of delivery through
their respective lease terms at a pre-determined purchase price.
(viii) Leases for three 12200 TEU vessels
In April 2021, the counterparty provided sale-leaseback financing of $243,000,000. The 12-year lease term for
one of the vessels began in November 2021, which was the vessel’s delivery date. The amounts drawn on this
facility for the other two vessels relate to installments on vessel under construction. Lease payments include
interest components based on one month LIBOR plus a 2.95% margin. At delivery, the Company sells and
leases the vessels back over the term of the sale-leaseback transactions. At the end of the lease term, the
Company is obligated to purchase the vessels at a pre-determined purchase price. The Company has the option
to purchase the vessels after the second anniversary date of delivery through their respective lease terms at a
pre-determined purchase price.
(ix)
Leases for two 12200 TEU vessels
In May 2021, the counterparty provided sale-leaseback financing of $162,000,000. The 10-year lease terms
began in September and November 2021, which were the vessels’ delivery dates. Lease payments include
interest components based on three month LIBOR plus a 2.95% margin. At delivery, the Company sold and
leased the vessels back over the term of the sale-leaseback transactions. The Company has the option to
purchase the vessels after the first anniversary date of delivery through their respective lease terms at a pre-
determined purchase price.
F-37
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
15.
Other financing arrangements (continued):
(x)
Leases for six 7000 TEU vessels
In October 2021, the counterparty provided sale-leaseback financing of $445,000,000. Lease payments include
interest components based on three month LIBOR plus a 2.45% margin. At delivery, the Company will sell and
lease the vessels back over the term of the sale-leaseback transactions. At the end of the lease term, the
Company is obligated to purchase four of the vessels at a pre-determined purchase price. For all six vessels, the
Company has the option to purchase the vessels after the first anniversary date of delivery through their
respective lease terms at a pre-determined purchase price. At December 31, 2021, the amounts drawn on this
facility relate to the first advance.
(xi)
Leases for eight vessels
In June 2021, the counterparty provided sale-leaseback financing of $895,320,000 for eight vessels ranging in
size from 160000 TEU to 24000 TEU. Lease payments include interest components based on three month
LIBOR plus a 2.80% margin. At delivery, the Company will sell and lease the vessels back over the term of the
sale-leaseback transactions. The Company has the option to purchase the vessels after the second anniversary
date of delivery through their respective lease terms at a pre-determined purchase price. At December 31, 2021,
no amounts have been drawn under this facility.
(xii) Leases for six 15500 TEU vessels
In August 2021, the counterparty provided sale-leaseback financing of $661,826,000. Lease payments include
interest components based on one month LIBOR plus a 2.50% margin. At delivery, the Company will sell and
lease the vessels back over the term of the sale-leaseback transactions. The Company has the option to purchase
the vessels after the second anniversary date of delivery through their respective lease terms at a pre-determined
purchase price. At December 31, 2021, no amounts have been drawn under this facility.
(xiii) Leases for six 15000 TEU and four 7000 TEU vessels
In November 2021, the counterparty provided sale-leaseback financing of $889,141,000. Lease payments
include interest components based on three month LIBOR plus a 2.45% margin. At delivery, the Company will
sell and lease the vessels back over the term of the sale-leaseback transactions. The Company has the option to
purchase the vessels after the first anniversary date of delivery through their respective lease terms at a pre-
determined purchase price. At December 31, 2021, no amounts have been drawn under this facility.
(xiv) Leases for two 12000 TEU vessels
In December 2021, the Company entered into a $169,500,000 financing arrangement to finance two vessels
upon delivery. Lease payments include interest components based on a secured overnight financing rate plus a
credit spread and a 1.8% margin. No amounts have been drawn under the financing as of December 31, 2021.
In May 2021, the Company repaid $59,300,000 upon early termination of a sale-leaseback financing arrangement
secured by a 13,100 TEU vessel.
The weighted average rate of interest, including the margin, was 3.08% at December 31, 2021 (December 31, 2020
– 3.12%).
Based on amounts funded for other financing arrangements, payments due to lessors would be as follows:
2022
2023
2024
2025
2026
Thereafter
$
$
101.0
101.4
102.6
97.4
94.2
866.5
1,363.1
F-38
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
16.
Other liabilities:
Asset retirement obligations(a)
Other
Other long-term liabilities
Current portion of other long-term liabilities
Other long-term liabilities
(a)
Asset retirement obligations:
2021
2020
37.4 $
22.3
59.7
(42.0)
17.7 $
42.3
23.4
65.7
(24.8)
40.9
$
$
Asset retirement obligations were assumed as part of the APR Energy acquisition and consist of the contractual
requirement to demobilize the Company’s mobile power generation sites when there is a legal obligation
associated with the demobilization and the fair value of the liability can be reasonably estimated.
Asset retirement obligations, December 31, 2019
Liabilities acquired
Liabilities incurred
Liabilities settled
Provision reassessment
Accretion expense
Asset retirement obligations, December 31, 2020
Liabilities acquired
Liabilities incurred
Provision reassessment
Accretion expense
Asset retirement obligations, December 31, 2021
17.
Income tax:
$
$
—
45.9
5.3
(6.6)
(2.9)
0.6
42.3
7.8
(5.0)
(7.9)
0.2
37.4
The Company is tax resident in the United Kingdom and consists of its containership leasing and mobile power
generation segments. The effective tax rate for its containership segment is nominal, primarily due to
international shipping reciprocal exemptions. Its mobile power generation segment, acquired on February 28,
2020 through APR Energy, is subject to income taxes in multiple jurisdictions.
Net earnings before income taxes for the year ended December 31, 2021 relates only to the foreign jurisdictions.
Similarly, the Company’s income tax expense for the year ended December 31, 2021 related only to foreign
jurisdictions and consists of the following:
Current tax
Current tax expense
Deferred tax
Deferred tax expense
Total tax expense
Domestic
2021
Foreign
Total
— $
13.0 $
13.0
—
20.0
20.0
— $
33.0 $
33.0
$
$
F-39
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
17.
Income tax (continued):
Current tax
Current tax expense
Deferred tax
Deferred tax expense
Total tax expense
Domestic
2020
Foreign
Total
— $
20.2 $
20.2
—
(3.6)
(3.6)
— $
16.6 $
16.6
$
$
As a result of the acquisition of APR Energy, the Company operates in countries that have differing tax laws
and rates. Therefore, a consolidated weighted average tax rate will vary from year to year according to the
source of earnings or losses by country and the change in applicable tax rates. Prior to the APR Energy
acquisition, the Company was subject to nominal income taxes primarily due to international shipping
reciprocal exemptions for the containership segment. For the year ended December 31, 2021 and December 31,
2020, the reconciliation between the effective tax rate of 7.61% and 7.94%, respectively, and the statutory UK
income tax rate of 19.0% is as follows:
$
Computed "Expected" tax expense:
Computed tax expense on income from continuing operations
Increase (reduction) in income taxes resulting from:
Certain income from containership leasing segment that is exempt from tax
Goodwill impairment not deductible for tax
Change in valuation allowance
Change in current year uncertain tax positions
Change in tax law
Foreign rate differential
Withholding taxes
Other, net
$
2021
2020
82.4 $
39.7
(73.2)
—
73.5
3.5
(32.0)
(22.0)
6.8
(6.0)
33.0 $
(58.0)
22.4
25.4
1.2
(0.1)
(26.8)
7.8
5.0
16.6
F-40
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
17.
Income tax (continued):
The deferred tax assets and liabilities were as follows for the year ended December 31, 2021 and December 31,
2020:
Deferred tax assets
Decommission provisions
Property, plant and equipment
Reserves and accrued expenses
Tax losses carried forward
Interest allowance
Deferred revenue
Valuation allowance
Deferred tax liabilities
Deferred job costs
Accelerated asset costs
Inflation adjustment
Other timing differences
Net deferred tax asset
2021
2020
$
15.3 $
10.1
86.0
82.3
29.0
0.4
16.6
25.9
63.9
40.4
16.8
0.4
(213.5)
9.6 $
(129.3)
34.7
2021
2020
— $
(2.0)
(6.4)
(1.4)
(3.8)
(2.7)
(5.2)
(3.7)
(9.8) $
(15.4)
(0.2) $
19.3
$
$
$
$
The increase in the valuation allowances during the year ended December 31, 2021, primarily relates to an
increase in net operating losses related to APR Energy and valuation allowances taken on deferred tax assets in
APR Energy’s operations in Argentina.
As at December 31, 2021, the Company has foreign tax losses carried forward of $331,024,000 (2020 –
207,800,000), of which $1,498,000 is recognized as a deferred tax asset. No deferred tax asset is recognised on
the remaining balance of $329,526,000 on the basis that no tax benefit is expected to arise in the jurisdictions
where the tax losses occurred. The material tax losses carried forward generally have no expiry date. The
Company’s ability to utilize the net operating loss and tax credit carry forward may be subject to restriction in
the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and
similar tax law.
Tax years that remain open to examination by some of the major jurisdictions in which the Company is subject
to tax range from two to four years.
As at December 31, 2021, the Company had income tax payable of $96,900,000 (2020 – 110,400,000). This
balance includes cash taxes payable and a reserve for global uncertain tax positions.
The Company’s uncertain tax positions relate primarily to items that were acquired as part of the APR Energy
acquisition. Substantially all of these items are indemnified and a corresponding indemnification asset has been
recorded (note 3). The Company does not presently anticipate that its provisions for these uncertain tax
positions will significantly increase in the next 12 months. The Company reviews its tax obligations regularly
and may update its assessment of its tax positions based on available information at the time.
F-41
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
17.
Income tax (continued):
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
Opening balance as at January 31,
Acquired as part of APR Energy Acquisition
Increase in unrecognized tax benefit
Ending balance as at December 31,
$
$
92.9
$
—
3.5
96.4
$
—
91.7
1.2
92.9
2021
2020
The unrecognized tax benefit balance as at December 31, 2020, includes a reclass of $16,325,000 from the
current tax payable balance to the unrecognized tax benefit balance.
The Company recognizes interest expense and penalties related to unrecognized tax benefits as income tax
expense. The Company had interest or penalties accrued in the consolidated balance sheet at December 31, 2021
and December 31, 2020.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in
response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss (“NOL”)
carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2022. In
addition, the CARES Act allows NOLs incurred in 2019, 2020, and 2021 to be carried back to each of the five
preceding taxable years to generate a refund of previously paid income taxes. The Company evaluated the
impact of the CARES Act, and the NOL carryback provision of the CARES Act does not result in a material
cash benefit to it.
18.
Preferred shares and share capital:
(a)
Common shares:
On February 27, 2020, upon completion of the Reorganization, the common shares of Seaspan, the predecessor
of Atlas, was exchanged for Atlas common shares on a one-for-one basis. The Company has 400,000,000 Class
A common shares authorized at December 31, 2021 and December 31, 2020, with a par value of $0.01 per
share.
On February 28, 2020, the Company issued 29,891,266 common shares and reserved 6,664,270 common shares
for holdback as part of the consideration paid for the acquisition of the shares of APR Energy (note 3).
Concurrent with the acquisition, the Company issued 775,139 common shares to Fairfax to settle APR Energy’s
indebtedness to Fairfax at closing.
During the year ended December 31, 2020, the Sellers returned 1,849,641 previously issued common shares to
the Company and 557,139 Holdback Shares were cancelled. Of the common shares returned, 1,122,290 shares
were permanently forfeited as part of post-closing purchase price adjustments. The remaining 727,351 shares
are held in reserve as treasury shares. These shares may be issuable to the Sellers at a future date, subject to
settlement of potential indemnified events. As of December 31, 2021, 6,145,707 common shares are issuable as
Holdback Shares, including 727,351 shares held in treasury. During the year ended December 31, 2021,
350,138 (December 31, 2020 – 318,637) shares were released from holdback and issued to the Sellers.
The Company has a dividend reinvestment program (“DRIP”) that allows interested shareholders to reinvest all
or a portion of cash dividends received in the Company’s common shares. If new common shares are issued by
the Company, the reinvestment price is equal to the average price of the Company’s common shares for the five
days immediately prior to the reinvestment, less a discount. The discount rate is set by the Board of Directors
and is currently 3%. If common shares are purchased in the open market, the reinvestment price is equal to the
average price per share paid.
F-42
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
18.
Preferred shares and share capital (continued):
(b)
Preferred shares:
As at December 31, 2021, the Company had the following preferred shares outstanding:
Series
Authorized
Issued
Shares
Dividend rate
per annum
Redemption by Company
permitted on or after(1)
December 31,
2021
December 31,
2020
Liquidation preference
D
E(2)
G(2)
H
I
J(3)
(1)
(2)
(3)
20,000,000
15,000,000
15,000,000
15,000,000
6,000,000
5,093,728
—
—
9,025,105
6,000,000
12,000,000
12,000,000
7.95 %
8.25 %
8.20 %
7.875 %
8.00 %
7.00 %
January 30, 2018
February 13, 2019
June 16, 2021
August 11, 2021
October 30, 2023
June 11, 2021
127.3
—
—
225.6
150.0
300.0
127.3
135.4
195.0
225.6
150.0
—
Redeemable by the Company, in whole or in part, at a redemption price of $25.00 per share plus unpaid dividends. The preferred shares are
not convertible into common shares and are not redeemable by the holder.
On July 1, 2021, the Company redeemed all of its outstanding 8.25% Series E Cumulative Redeemable Preferred Shares and outstanding
8.20% Series G Cumulative Redeemable Perpetual Preferred shares for cash at $25.00 per share plus all accrued and unpaid dividends.
Dividends will be payable on the Series J Cumulative Redeemable Preferred Shares at a rate of 7.0% for the first five years after the issue
date, with 1.5% increases annually thereafter to a maximum of 11.5%.
The preferred shares are subject to certain financial covenants. The Company is in compliance with these
covenants on December 31, 2021.
(c) Restricted shares:
During the year ended December 31, 2021, the Company granted 75,910 restricted shares, to its board of
directors, of which 11,984 restricted shares were forfeited.
(d) Restricted stock units:
During the year ended December 31, 2021, the Company granted 819,381 restricted stock units, to certain
members of senior management.
(e) Cumulative redeemable preferred shares:
Pursuant to the Fairfax Exchange as described in note 6(b), the Company exchanged $200,000,000 aggregate
principal amount of the 2026 Fairfax Notes and all $100,000,000 aggregate principal amount of the 2027
Fairfax Notes for (i) 12,000,000 Series J 7.00% Cumulative Redeemable Perpetual Preferred Shares,
representing total liquidation value of $300,000,000, and (ii) 1,000,000 five year warrants to purchase an equal
number of shares of Atlas common stock at an exercise price of $13.71 per share. The exchanged 2026 Fairfax
Notes and 2027 Fairfax Notes were subsequently cancelled.
Dividends are payable on the Series J Preferred Shares at a rate of 7.0% for the first five years after the issue,
with 1.5% increases annually thereafter to a maximum of 11.5%. These warrants may be exercised within a 5-
year period. The Company can also elect to require early exercise of the warrants, at any time after June 11,
2025, if the “Fair Market Value” (being defined as the volume-weighted average of the sale prices of common
shares over the 20 trading days immediately prior to the day as of which Fair Market Value is being determined)
of a common share equals or exceeds two times the exercise price on the third trading day prior to the date on
which the Company delivers the forced exercise notice.
F-43
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
19.
Earnings per share (“EPS”):
For the year ended December 31, 2021
Net earnings
Less preferred share dividends:
Series D
Series E
Series G
Series H
Series I
Series J
Basic EPS:
Year ended December 31, 2021
Shares
(denominator)
Per share
amount
Earnings
(numerator)
400.5
(10.1)
(5.5)
(8.0)
(17.8)
(12.0)
(11.7)
Net earnings attributable to common shareholders
$
335.4
246,300,000 $
1.36
Effect of dilutive securities:
Share-based compensation
Fairfax warrants
Holdback shares
Senior Unsecured Exchangeable Notes
Diluted EPS:
—
—
—
—
2,433,000
10,647,000
5,572,000
902,000
Net earnings attributable to common shareholders
$
335.4
265,854,000 $
1.26
For the year ended December 31, 2020
Net earnings
Less preferred share dividends:
Series D
Series E
Series G
Series H
Series I
Basic EPS:
Year ended December 31, 2020
Shares
(denominator)
Per share
amount
Earnings
(numerator)
$
192.6
(10.1)
(11.2)
(16.0)
(17.8)
(12.0)
Net earnings attributable to common shareholders
$
125.5
241,502,000 $
0.52
Effect of dilutive securities:
Share-based compensation
Fairfax warrants
Holdback shares
Diluted EPS:
—
—
—
541,000
3,096,000
5,375,000
Net earnings attributable to common shareholders
$
125.5
250,514,000 $
0.50
F-44
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
19.
Earnings per share (“EPS”) (continued):
For the year ended December 31, 2019
Net earnings
Less preferred share dividends:
Series D
Series E
Series G
Series H
Series I
Basic EPS:
Year ended December 31, 2019
Shares
(denominator)
Per share
amount
Earnings
(numerator)
$
439.1
(14.1)
(11.2)
(16.0)
(17.8)
(12.0)
Net earnings attributable to common shareholders
$
368.1
214,499,000 $
1.72
Effect of dilutive securities:
Share-based compensation
Fairfax warrants
Diluted EPS:
—
—
471,000
4,902,000
Net earnings attributable to common shareholders
$
368.1
219,872,000 $
1.67
F-45
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
20.
Share-based compensation:
In December 2005, Seaspan’s board of directors adopted the Seaspan Corporation Stock Incentive Plan, which was
administered by Seaspan’s board of directors and, under which its officers, employees and directors could be granted
options, restricted shares, phantom share units and other stock-based awards as determined by the Seaspan board of
directors. Upon consummation of the Reorganization, Atlas assumed Seaspan’s equity-based compensation plans,
including the Seaspan Corporation Stock Incentive Plan. Awards previously granted under the Seaspan Corporation
Stock Incentive Plan are now exercisable for Atlas common shares instead of Seaspan common shares.
In connection with the Reorganization, the Seaspan Plan was amended and restated as the Atlas Corp. Stock
Incentive Plan (the “Atlas Plan”). In June 2020, the Atlas Plan was amended and restated to increase the number of
common shares issuable under the Atlas Plan from 5,000,000 to 10,000,000.
At December 31, 2021, there are 1,149,008 (December 31, 2020 – 1,993,398) remaining shares left for issuance
under this Plan.
A summary of the Company’s outstanding restricted shares, phantom share units, and restricted stock units as of and
for the twelve months ended December 31, 2021, 2020, and 2019 are presented below:
Restricted shares
Phantom share units
Restricted stock units
Stock options
Number of
shares
W.A. grant
date FV
Number of
units
W.A. grant
date FV
Number of
units
W.A. grant
date FV
Number of
options
W.A. grant
date FV
December 31, 2018
85,742
$
Granted
Vested and exercised
Cancelled
67,400
(85,742)
—
December 31, 2019
67,400
$
Granted
Vested and exercised
Cancelled
1,051,492
(67,400)
—
December 31, 2020
1,051,492
$
Granted
75,910
Vested and exercised
(1,051,492)
Cancelled
December 31, 2021
Vested and exercisable,
December 31, 2021
(11,984)
63,926
$
7.28
8.15
7.28
—
8.15
7.84
8.15
—
7.84
10.79
7.84
10.62
10.82
567,002
$
12.97
584,771
$
—
—
249,732
(60,001)
16.68
(224,073)
—
—
(33,466)
507,001
$
12.53
576,964
$
—
(20,000)
—
— 1,824,786
6.85
—
(313,231)
(79,635)
7.91
8.90
8.59
9.05
8.01
7.83
9.32
9.84
500,000
$
2.45
—
—
—
500,000
$
1,500,000
—
—
—
—
—
2.45
2.57
—
—
487,001
$
12.76
2,008,884
$
7.57
2,000,000
$
2.54
—
—
—
—
819,381
— (326,135)
—
(35,402)
13.44
10.26
12.45
—
—
—
—
—
—
487,001
$
12.76
2,466,728
$
9.10
2,000,000
$
2.54
— $
—
487,001
$
12.76
— $
—
600,000
$
2.55
During the year ended December 31, 2021, the Company amortized $11,203,000 (2020 – $7,068,000; 2019 -
$3,310,000) in share-based compensation expense related to the above share-based compensation awards.
At December 31, 2021, there was $22,392,000 (2020 – $22,334,000) of total unamortized compensation costs
relating to unvested share-based compensation awards, which are expected to be recognized over a weighted-
average period of 26 months.
(a)
Restricted shares and phantom share units:
Common shares are issued on a one-for-one basis in exchange for the cancellation of vested and exchanged
phantom share units. The restricted shares generally vest over one year and the phantom share units generally
vest over three years.
During the year ended December 31, 2021, the Company granted 75,910 restricted shares to its board of
directors and the restricted shares vest on January 1, 2022.
During the year ended December 31, 2020, the Company granted 1,051,492 restricted shares to its board of
directors. 1,000,000 restricted shares have requisite service periods ending on December 31, 2022. The
remaining 51,492 restricted shares vested on January 1, 2021.
F-46
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
20.
Share-based compensation (continued):
(b)
Restricted stock units:
The restricted stock units generally vest over two or five years, in equal tranches. Upon vesting of the restricted
stock units, the participant will receive common shares.
In August 2021, the Company granted certain executive officers 550,000 restricted stock units. The restricted
stock units vest in five tranches annually beginning on January 3, 2022 and have a grant date fair value of
$13.44 per unit.
In June 2020, the Company granted the Chief Executive Officer (“CEO”) 1,500,000 restricted stock units. The
restricted stock units vest in five tranches annually over five years beginning December 31, 2021 and have a
grant date fair value of $7.25 per unit.
(c)
Stock options:
In June 2020, the Company granted the CEO stock options to acquire 1,500,000 common shares at an exercise
price of $7.80 per share. The stock options vest in five tranches annually over five years beginning December
31, 2021 and expire on June 24, 2030.
21.
Other information:
(a)
Accounts payable and accrued liabilities:
The principal components of accounts payable and accrued liabilities are:
Accrued interest
Accounts payable and other accrued liabilities
(b)
Supplemental cash flow information:
2021
2020
$
$
43.3 $
140.1
183.4 $
17.2
116.9
134.1
Interest paid
Interest received
Undrawn credit facility fee paid
Income taxes paid
2021
2020
2019
$
149.5 $
156.2 $
183.1
3.1
1.9
25.7
5.0
0.8
16.8
8.9
1.7
—
F-47
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
21.
Other information (continued):
2021
2020
2019
Non-cash financing and investing transactions:
APR Energy loans settled in shares
$
— $
8.3 $
—
—
—
9.6
343.9
—
—
—
—
18.9
—
180.0
—
12.7
—
5.3
2.9
12.5
1.2
57.0
316.8
95.2
0.3
70.6
—
287.7
—
4.5
46.8
377.4
—
—
—
—
0.7
316.7
—
—
1.2
—
—
—
—
—
—
—
—
—
302.7
$
565.1 $ 1,286.5 $
621.3
2021
2020
2019
35.2
0.2
(54.1)
14.9
16.6
(17.1)
(5.9)
(10.3)
13.3
(16.4)
(6.0)
(5.9)
18.1
(13.5)
8.4
3.9
(2.3)
6.3
(0.9)
9.3
11.5
—
(0.6)
—
(38.7)
(54.6)
(22.3)
18.9
(8.6)
—
(122.6)
(114.7)
(111.9)
26.5
6.1
22.5
18.7
$
(98.4)
(166.7)
55.0
—
(55.9)
Asset retirement obligations liabilities incurred
Asset retirement obligations provision re-assessment
Cancellation of common shares issued on acquisition
Change in right-of-use assets and operating lease liabilities
Commencement of sales-type lease
Common shares issued on APR Energy acquisition
Contingent consideration asset related to APR Energy acquisition
Dividend reinvestment
Holdback Shares reserved on APR Energy acquisition
Interest capitalized on vessels under construction
Net assets acquired on acquisition
Payments to shipyard by financing company
Purchase price adjustment related to APR Energy acquisition
Prepayments transferred to vessels upon vessel delivery
Reclassification on lease modification
Refinancing of existing term loan credit facilities with draws made
on new debt
Changes in operating assets and liabilities
Accounts receivable
Inventories
Prepaids expenses and other, and other assets
Net investment in lease
Accounts payable and accrued liabilities
Settlement of decommissioning provisions
Deferred revenue
Income tax payable
Major maintenance
Other liabilities
Operating lease liabilities
Derivative instruments
Contingent consideration asset
F-48
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
21.
Other information (continued):
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the
consolidated balance sheets that sum to the amounts shown in the consolidated statements of cash flows:
Cash and cash equivalents
$
288.6 $
304.3 $
195.0
Restricted cash included in prepaid and other
Restricted cash included in other assets (note 12)
—
38.2
—
38.2
2.3
—
Total cash, cash equivalents and restricted cash shown in the
consolidated statements of cash flows
$
326.8 $
342.5 $
197.3
2021
2020
2019
22.
Commitments and contingencies:
(a)
Operating leases:
At at December 31, 2021, the commitment under operating leases for vessels is $780,745,000 for 2022 to
2029 and for other leases is $10,418,000 for 2022 to 2031. Total commitments under these leases are as
follows:
2022
2023
2024
2025
2026
Thereafter
$
$
145.1
147.7
150.6
126.8
111.9
109.1
791.2
For operating leases indexed to three month LIBOR, commitments under these leases are calculated using the
LIBOR in place as at December 31, 2021 for the Company.
(b)
Vessels under construction:
As at December 31, 2021, the Company had entered into agreements to acquire 67 vessels (December 31,
2020 – five vessels). The Company has outstanding commitments for the remaining installment payments as
follows:
2022
2023
2024
Total
(c)
Letter of credit:
$
$
1,103.2
2,712.5
2,457.8
6,273.5
As at December 31, 2021, the Company has $10,350,000 (December 31, 2020 – $11,686,000) in letters of
credit outstanding in support of its mobile power generation business, all of which are unused.
F-49
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
23.
Financial instruments:
(a)
Fair value:
The carrying values of cash and cash equivalents, short-term investments, restricted cash, accounts receivable,
income tax payable, accounts payable and accrued liabilities approximate their fair values because of their
short term to maturity.
As of December 31, 2021, the fair value of the Company’s revolving credit facilities and term loan credit
facilities, excluding deferred financing fees is $2,326,568,000 (December 31, 2020 - $2,827,984,000) and the
carrying value is $2,341,879,000 (December 31, 2020 - $2,866,850,000). As of December 31, 2021, the fair
value of the Company’s other financing arrangements, excluding deferred financing fees, is $1,419,508,000
(December 31, 2020 - $891,710,000) and the carrying value is $1,363,098,000 (December 31, 2020 -
$879,468,000). The fair value of the revolving and term loan credit facilities and other financing
arrangements, excluding deferred financing fees, was estimated based on expected principal repayments and
interest, discounted by relevant forward rates plus a margin appropriate to the credit risk of the Company.
Therefore, the Company categorized the fair value of these financial instruments as Level 2 in the fair value
hierarchy.
As of December 31, 2021, the fair value of the Company’s senior unsecured notes is $1,349,212,000
(December 31, 2020 – $89,207,000) and the carrying value is $1,302,350,000 (December 31, 2020 –
$80,000,000). The fair value of the Company’s Senior Unsecured Exchangeable Notes was $209,566,000
(December 31, 2020 – $195,232,000) and the carrying value was $201,250,000 (December 31, 2020 –
$201,250,000) or $196,177,000 (December 31, 2020 – $195,000,000), net of debt discount. The fair value of
the Company’s Senior Secured Notes was $456,875,000 and the carrying value was $500,000,000. The fair
value was calculated using the present value of expected principal repayments and interest discounted by
relevant forward rates plus a margin appropriate to the credit risk of the Company. As a result, these amounts
were categorized as Level 2 in the fair value hierarchy.
The Company’s interest rate derivative financial instruments are re-measured to fair value at the end of each
reporting period. The fair values of the interest rate derivative financial instruments have been calculated by
discounting the future cash flow of both the fixed rate and variable rate interest rate payments. The discount
rate is derived from a yield curve created by nationally recognized financial institutions adjusted for the
associated credit risk. The fair values of the interest rate derivative financial instruments are determined based
on inputs that are readily available in public markets or can be derived from information available in publicly
quoted markets. Therefore, the Company categorized the fair value of these derivative financial instruments
as Level 2 in the fair value hierarchy.
As part of the acquisition of APR Energy, the Company obtained a contingent consideration asset related to
compensation the Company will receive from the Sellers on losses that may be generated from cash
repatriation from a foreign jurisdiction. The fair value of the contingent consideration asset is calculated as
the present value of expected future compensable losses from conversion of cash from foreign currency to US
dollars, derived from the discount expected to be realized on repatriation of cash from the foreign jurisdiction
over a specified period of time, which is a significant unobservable input. As such, the Company categorized
the fair value of the contingent consideration asset as Level 3 in the fair value hierarchy. The discount
expected to be realized on future repatriation of cash as of December 31, 2021 is 50%. An increase of 5% on
the discount would result in an increase in the fair value of approximately $620,000. A decrease of 5% on the
discount would result in a decrease in the fair value of approximately $619,000.
As part of the acquisition of APR Energy, the Company also obtained, a contingent consideration asset
related to compensation the Company expects to receive from Fairfax on losses realized on future sale or
disposal of certain property, plant and equipment and inventory items. The fair value of the contingent
consideration asset is determined based on the present value of expected future compensation, calculated as
the difference between the book value of the respective assets at acquisition and the realizable value of the
asset obtained from market quotes, which is a significant unobservable input. As such, the Company
categorized the fair value of the contingent consideration asset as Level 3 in the fair value hierarchy.
F-50
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
23.
Financial instruments (continued):
(a)
Fair value (continued):
Unobservable inputs for recurring and non-recurring Level 3 disclosures are obtained from third parties
whenever possible and reviewed by the Company for reasonableness.
(b)
Interest rate swap derivatives:
The Company uses interest rate derivative financial instruments, consisting of interest rate swaps to manage
its interest rate risk associated with its variable rate debt. If interest rates remain at their current levels, the
Company expects that $16,818,000 would be settled in cash in the next 12 months on instruments maturing
after December 31, 2021. The amount of the actual settlement may be different depending on the interest rate
in effect at the time settlements are made.
As of December 31, 2021, the Company had the following outstanding interest rate derivatives:
Fixed per
annum rate
swapped
for LIBOR
Notional
amount as of
December 31,
2021
Maximum
notional
amount(1)
5.4200%
1.6490%
0.7270%
1.6850%
0.6300%
0.6600%
1.4900%
$
269.6 $
160.0
125.0
110.0
92.0
92.0
26.9
269.6
160.0
125.0
110.0
92.0
92.0
26.9
Effective date
Ending date
September 6, 2007
September 27, 2019
May 31, 2024
May 14, 2024
March 26, 2020
March 26, 2025
November 14, 2019
May 15, 2024
January 21, 2021
October 14, 2026
February 4, 2021
October 14, 2026
February 4, 2020
December 30, 2025
(1)
Over the term of the interest rate swaps, the notional amounts increase and decrease. These amounts represent the peak notional
amount over the remaining term of the swap.
(c)
Financial instruments measured at fair value:
The following provides information about the Company’s financial instruments measured at fair value:
Contingent consideration asset (note 12 (c))
Fair value of derivative assets
Interest rate swaps
Fair value of derivative liabilities
Interest rate swaps
2021
2020
$
55.3 $
90.9
6.1
28.5
—
63.0
There are no amounts subject to the master netting arrangements in 2021 or 2020.
F-51
Table of Contents
ATLAS CORP.
Notes to Consolidated Financial Statements (Continued)
(Tabular amounts in millions of United States dollars, except per share amount and number of shares)
Years ended December 31, 2021, 2020 and 2019
23.
Financial instruments (continued):
(c)
Financial instruments measured at fair value (continued):
The following table provides information about gains and losses included in net earnings and reclassified
from accumulated other comprehensive loss (“AOCL”) into earnings:
(Gain) Loss recognized in net earnings:
(Gain) Loss on interest rate swaps (1)
(Gain) on derivative put instrument
Loss (Gain) on contingent consideration asset
Loss reclassified from AOCL to net earnings(2)
Interest expense
Depreciation and amortization
2021
2020
2019
$
(14.0) $
36.4 $
(0.1)
5.1
0.2
1.0
(0.9)
(6.8)
0.3
1.0
58.8
(23.7)
—
0.3
0.7
(1)
(2)
For the years ended December 31, 2021, 2020 and 2019, cash flows related to actual settlement of interest rate swaps were
$26,758,000, $21,789,000 and $126,782,000 respectively. These are included in investing activities on the consolidated
statements of cash flows.
The effective portion of changes in unrealized loss on interest rate swaps was recorded in accumulated other comprehensive loss
until September 30, 2008 when these contracts were voluntarily de-designated as accounting hedges. The amounts in
accumulated other comprehensive loss are recognized in earnings when and where the previously hedged interest is recognized
in earnings.
The estimated amount of AOCL expected to be reclassified to net earnings within the next 12 months is
approximately $1,019,000.
24.
Subsequent events:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
On January 6, 2022, the Company declared quarterly dividends of $0.496875, $0.492188, $0.500000,
$0.437500 per Series D, Series H, Series I and Series J preferred share, respectively, representing a total
distribution of $15,223,000 to all shareholders of record on January 28, 2022.
On January 6, 2022, the Company declared a quarterly dividend of $0.125 per common share to all
shareholders of record as of January 20, 2022.
In January 2022, the Company exercised its option under an existing lease financing arrangement to purchase
one 10,000 TEU vessel. The purchase is expected to complete in January 2023 at the pre-determined
purchase price of $52,690,000.
In January 2022, the Company entered into an interest rate swap with a notional amount of $500,000,000.
The swap has a 10-year term and the Company pays a fixed rate of 1.925% and receives a floating rate based
on three month LIBOR.
In February 2022, the Company sold one 4,250 TEU vessel for an aggregate purchase price of $32,750,000.
The Company continues to manage the ship operations of the vessel.
In February 2022, the Company entered into a $250,000,000 3-year sustainability-linked unsecured revolving
credit facility (the “2022 RCF”). The 2022 RCF replaces the Company’s $150,000,000 2-year unsecured
revolving credit facility and bears interest at market rate.
In March 2022, the Atlas Plan was amended and restated to increase the number of common shares issuable
under the Atlas Plan from 10,000,000 to 20,000,000.
F-52
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this Annual Report on its behalf.
SIGNATURE
Date: March 24, 2022
By:
/s/ Graham Talbot
ATLAS CORP.
Graham Talbot
Chief Financial Officer
(Principal Financial and Accounting Officer)