Seaspan swings to Q1 net profit of US$50.6M from loss of US$36.6M last year as revenue increased 50.5% year-over-year to US$121M, company continued to expand its full-time chartered fleet

HONG KONG , May 5, 2011 (press release) – Seaspan Corporation (NYSE: SSW) announced today the financial results for the quarter ended March 31, 2011. Below is a summary of Seaspan's key financial results for the recent quarter:

                                  Quarter Ended March
                                          31,                  Change
                                 ------------------------------------------
                                      2011        2010          $         %
                                 ------------------------------------------
Reported net earnings (loss)     $  50,552  $ (36,616)  $  87,168    238.1%
Normalized net earnings(1)       $  25,146  $   19,628  $   5,518     28.1%
Earnings (loss) per share, basic $    0.56  $   (0.63)  $    1.19    188.9%
Earnings (loss) per share,
 diluted                         $    0.53  $   (0.63)  $    1.16    184.8%
Normalized earnings per share,
 converted(1) (Series A preferred
 shares converted at $15)        $    0.24  $     0.24  $    0.00      0.0%
Cash available for distribution
 to common shareholders(2)       $  50,897  $   39,932  $  10,965     27.5%
Adjusted EBITDA(3)               $  87,235  $   56,028  $  31,207     55.7%

Summary of Key Highlights:

-- Achieved vessel utilization of 98.9% for the quarter ended March 31,
2011;

-- Accepted delivery of 3 newbuilding vessels during the quarter, bringing
Seaspan's fleet to a total of 58 vessels at March 31, 2011;

-- Paid a fourth quarter dividend of $0.125 per common share on February
11, 2011;

-- Board of directors adopted a progressive dividend policy and expects to
increase the dividend by 50 percent to $0.75 per share in 2011 on an
annualized basis;

-- Declared a first quarter dividend of $0.1875 per common share to be paid
on May 23, 2011 to all shareholders of record as of May 14, 2011,
increasing cumulative dividends declared to $7.1525 per common share
since August 2005 initial public offering;

-- Completed public offering of 10 million shares of 9.5% Series C
preferred stock in January 2011, for net proceeds of $241 million;

-- Entered into an investment venture established by an affiliate of The
Carlyle Group, which will invest up to $900 million equity capital in
containership assets, primarily newbuilding vessels strategic to the
People's Republic of China, Taiwan, Hong Kong and Macau; and

-- Re-entered the newbuilding market for the first time since 2007 by
signing a letter of intent with a leading Chinese shipyard for a
significant order of New Panamax 10000 TEU vessels.


Gerry Wang, Chief Executive Officer, Co-Chairman, and Co-Founder of Seaspan commented, "During the first quarter, Seaspan continued to expand its fully time chartered fleet, increasing revenue, net earnings and cash flow. Complementing this success, we took important steps to position the Company to grow beyond its contracted fleet in order to capitalize on an attractive ship acquisition environment. Specifically, we re-entered the newbuilding market by signing a letter of intent with a leading Chinese shipyard and entered into an agreement to establish what we anticipate will be a favourable containership investment venture."

Mr. Wang added, "We continue to take proactive measures to ensure that Seaspan's balance sheet remains strong and the Company has significant capital for growth. In pursuing future growth, we will continue to seek opportunities that reinforce our position as a leading independent charter owner of containerships."

Dividend Policy:

In February 2011, Seaspan's board of directors adopted a progressive dividend policy aimed at sustainably increasing dividends in a manner that preserves Seaspan's long-term financial strength and its ability to expand its fleet.

Mr. Wang commented, "We are pleased to increase our first quarter 2011 dividend by 50% due to our increasing cash flows generated through the strength of our business model and our continued delivery of contracted newbuilding vessels."

First Quarter Developments:

Issuance of 10 Million Series C Preferred Shares

On January 28, 2011, Seaspan completed a public offering of 10 million shares of its Series C preferred stock at a price of $25 per share, for net proceeds of $241 million. Dividends will be payable on the Series C preferred shares at an initial rate of 9.5% per annum of the stated liquidation preference of $25 per share. Seaspan will use the net proceeds from this offering for general corporate purposes, which may include making vessel acquisitions or investments.

Investment in Containership-Focused Investment Venture and New Employment Agreement with Co-Chairman and CEO Gerry Wang

In March 2011, Seaspan, entered into an agreement with an affiliate of global alternative asset manager, The Carlyle Group, Tiger Management Limited, and an affiliate of Dennis R. Washington to form an investment venture (the "New Venture") to capitalize on current growth opportunities in the containership market. The New Venture will invest up to $900 million equity capital in containership assets, primarily newbuilding vessels strategic to the People's Republic of China, Taiwan, Hong Kong and Macau. This amount will be reduced by any investments The Carlyle Group makes in a tanker and bulker carrier investment vehicle. Seaspan has agreed to make a minority investment in the New Venture of up to $100 million during the investment period, which is anticipated to be up to five years. Seaspan's Chief Executive Officer, Gerry Wang, will serve in a senior leadership role with the New Venture subject to his fiduciary duties to Seaspan.

Seaspan has a right of first refusal on certain containership investment opportunities that become available to the New Venture, which right of first refusal continues in place until March 31, 2015 unless earlier terminated as the result of certain triggering events, including if Seaspan exercises this right for more than 50% of the aggregate vessels subject to the right prior to specific dates. Seaspan also has a right of first offer for any containership the New Venture proposes to sell in certain transactions.

In connection with Seaspan's investment in the New Venture, Seaspan has entered into a new employment agreement with Gerry Wang. Mr. Wang will continue to serve as Seaspan's Chief Executive Officer through January 1, 2013, after which date he is expected to continue in his strategic leadership role as Co-Chairman of Seaspan's board of directors. Mr. Wang has agreed to continue to provide transaction services to Seaspan following the term of his employment.

On the recommendation of the conflicts committee of Seaspan's board of directors, the members of the board of directors without an interest in the transactions unanimously approved Seaspan's investment in the New Venture and the related transactions, including the right of first refusal, and Mr. Wang's new employment agreement and his post-employment transaction services agreement. Bank of America Merrill Lynch acted as financial advisor to Seaspan and the conflicts committee.

Letter of Intent for Newbuilding Order

Seaspan also announced that it is re-entering the newbuilding market for the first time since 2007. In February 2011, Seaspan signed a letter of intent with a leading Chinese shipyard for a significant order of New Panamax 10000 TEU vessels. Seaspan expects that any order resulting from this letter of intent will be made available to the New Venture and that any vessels ordered thereunder will be subject to Seaspan's right of first refusal. Consistent with its strategy, Seaspan expects to enter into long-term time charters with leading liner companies concurrently with reaching a definitive purchase agreement.

Subsequent events:

Seaspan is currently in discussions with Korean and Chinese shipyards as it has re-entered the newbuilding market.

On April 21, 2011, Seaspan accepted delivery of the COSCO Vietnam, bringing its operating fleet to 59 vessels.

Seaspan accepted delivery of 13 vessels during the year ended December 31, 2010. Seaspan began 2011 with 55 vessels in operation and during the quarter ended March 31, 2011, accepted delivery of 3 vessels, bringing its fleet to a total of 58 vessels in operation as at March 31, 2011. Operating days are the primary driver of revenue, while ownership days are the primary driver for ship operating costs.

Vessel utilization was 98.9% for the quarter ended March 31, 2011, compared to 97.2% for the corresponding period of the prior year.

This increase in vessel utilization for the quarter ended March 31, 2011 was primarily due to the 90 days of unscheduled off-hire resulting from the grounding of the CSCL Hamburg (currently the CSAV Licanten) in the Gulf of Aqaba on December 31, 2009. For the quarter ended March 31, 2010 there was one dry-docking for CSCL Vancouver which resulted in 20 days of scheduled off-hire. During the quarter ended March 31, 2011 Seaspan completed four dry-dockings for CSCL Sao Paulo, Jakarta Express, Saigon Express and Rio Grande Express. CSCL Sao Paulo's next dry-docking was originally scheduled for 2013; however, we combined the scheduled dry-docking for this vessel with repairs initiated in December 2010 to achieve savings and defer the next scheduled dry-docking to 2016. This dry-docking resulted in a total of seven days of scheduled off-hire. The four dry-dockings resulted in a total of 53 days of scheduled off-hire. Seaspan's vessel utilization since its initial public offering in August 2005 is 99.1%.

Depreciation

The increase in depreciation expense for the quarter ended March 31, 2011 compared to the corresponding period of the prior year was due to the additional ownership days from the 3 deliveries in 2011 and a full period of ownership for the 13 deliveries in 2010.

General and Administrative Expenses

The increase in general and administrative expenses for the quarter ended March 31, 2011 was primarily due to the new employment agreement with our chief executive officer, additional fees paid to our board of directors for an increased number of meetings and increased costs to support growth.

Interest Expense

Interest expense is comprised of interest at the variable rate plus the applicable margin incurred on debt for operating vessels and a reclassification of amounts from accumulated other comprehensive income related to previously designated hedging relationships. The increase in interest expense for the quarter ended March 31, 2011, was primarily due to higher average operating debt balances compared to the same quarter in the prior year. The average LIBOR for the quarter ended March 31, 2011 was 0.4%, compared to 0.2% for the corresponding period of the prior year. Although Seaspan has entered into fixed interest rate swaps, the difference between the variable interest rate and the swapped fixed rate on operating debt is recorded in Seaspan's change in fair value of financial instruments caption as required by financial reporting standards. The interest incurred on long-term debt for Seaspan's vessels under construction is capitalized to the respective vessels under construction.

Change in Fair Value of Financial Instruments

The change in fair value of financial instruments resulted in a gain of $5.8 million for the quarter ended March 31, 2011, compared to a loss of $65.5 million for the corresponding period of the prior year. The change in fair value gain for the quarter ended March 31, 2011 was primarily due to fluctuations in the forward LIBOR curve and actual cash interest payments made.

Dividend Declared:

For the quarter ended March 31, 2011, Seaspan declared a quarterly dividend of $0.1875 per common share, representing a total distribution of $12.9 million. The dividend will be paid on May 23, 2011 to all shareholders of record as of May 14, 2011. Because Seaspan adopted a dividend reinvestment plan, or DRIP, the actual amount of cash dividends paid may be less than $12.9 million based on shareholder participation in the DRIP.

Since Seaspan's initial public offering in August 2005, the company has declared cumulative dividends of $7.1525 per common share. Since Seaspan adopted the DRIP in May 2008, a total of 2.2 million shares have been issued through shareholder participation in the DRIP. Since the plan's adoption, participating shareholders have invested $23.0 million in the DRIP.

On May 2, 2011, Seaspan paid a quarterly dividend of $0.606944 per share on its 9.5% Series C preferred shares, representing a distribution of $6.1 million. The dividend was paid to all 9.5% Series C preferred shareholders of record as of April 29, 2011 for the period from January 28, 2011 to April 29, 2011.

About Seaspan

Seaspan is a leading independent charter owner of containerships, which it charters primarily pursuant to long-term fixed-rate time charters to major container liner companies. Seaspan's contracted fleet of 69 containerships consists of 59 containerships in operation and 10 containerships scheduled for delivery through March 2012. Seaspan's operating fleet of 59 vessels has an average age of approximately five years and an average remaining charter period of approximately seven years. All of the 10 vessels to be delivered to Seaspan are already committed to fixed-rate time charters of 12 years in duration from delivery. Seaspan's customer base consists of eight of the world's largest liner companies, including A.P. Moller-Maersk A/S, China Shipping Container Lines (Asia) Co., Ltd., Compania Sud Americana de Vapores S.A., COSCO Container Lines Co., Ltd., Hapag-Lloyd USA, LLC, Kawasaki Kisen Kaisha Ltd., Mitsui O.S.K. Lines, Ltd., and United Arab Shipping Company (S.A.G.).

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

Seaspan's Series C preferred shares are listed on the New York Stock Exchange under the symbol "SSW PR C".

                        
                           SEASPAN CORPORATION
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT FOR THE QUARTER
                        ENDED MARCH 31, 2011 AND 2010
           (IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)

                                                      Quarter        Quarter
                                                        ended          ended
                                                    March 31,      March 31,
                                                         2011           2010
                                                 ---------------------------

Revenue                                          $    120,995   $     80,369

Operating expenses:
 Ship operating                                        31,066         22,457
 Depreciation                                          29,958         20,318
 General and administrative                             2,694          1,884
                                                 ---------------------------
                                                       63,718         44,659
                                                 ---------------------------

Operating earnings                                     57,277         35,710

Other expenses (earnings):
 Interest expense                                      10,147          5,053
 Interest income                                        (155)           (30)
 Undrawn credit facility fees                           1,261          1,155
 Amortization of deferred charges                       1,274            657
 Change in fair value of financial instruments        (5,802)         65,491
                                                 ---------------------------
                                                        6,725         72,326
                                                 ---------------------------

Net earnings (loss)                              $     50,552   $   (36,616)

Deficit, beginning of period                        (469,616)      (349,802)
Dividends on common shares                            (8,581)        (6,783)
Dividends on Series B preferred shares                  (591)              -
Amortization of Series C issuance costs                 (324)              -
                                                 ---------------------------
Deficit, end of period                           $  (428,560)   $  (393,201)
                                                 ---------------------------
                                                 ---------------------------

Weighted average number of shares, basic               68,854         67,910
Weighted average number of shares, diluted             85,285         92,666

Earnings (loss) per share, basic                 $       0.56   $     (0.63)
                                                 ---------------------------
                                                 ---------------------------
Earnings (loss) per share, diluted               $       0.53   $     (0.63)
                                                 ---------------------------
                                                 ---------------------------

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