Document

6-K 1 atlascorpq120236-k.htm 6-K Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

Commission File Number 001-39237

ATLAS CORP.

(Exact name of Registrant as specified in its Charter)

23 Berkeley Square

London, United Kingdom

W1J 6HE

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1). Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7). Yes ☐ No ☒

Information Contained in this Form 6-K Report

Exhibit I to this Report contains certain financial information of Atlas Corp., as of and for the three months ended March 31, 2023.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ATLAS CORP.

Date: May 16, 2023	By:	/s/ Graham Talbot
		Graham Talbot
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT I

ATLAS CORP.

REPORT ON FORM 6-K FOR THE QUARTER ENDED MARCH 31, 2023

INDEX




Interim Consolidated Financial Statements (Unaudited)			1

Management’s Discussion and Analysis of Financial Condition and Results of Operations			21

Unless we otherwise specify, when used in this 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 Ltd., and APR Energy Ltd.’s subsidiaries.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ATLAS CORP.

Interim Consolidated Balance Sheets

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and par value amounts)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	882.7	$	280.0
Accounts receivable	85.1		98.6
Inventories	49.7		50.0
Prepaid expenses and other	47.2		44.4
Assets held for sale (note 6)	17.3		19.4
Net investment in lease (note 5)	21.3		21.0
Acquisition related assets	68.8		79.8
	1,172.1		593.2

Property, plant and equipment (note 6)	7,269.1		7,156.9
Vessels under construction (note 7)	1,548.4		1,422.5
Right-of-use assets (note 8)	661.9		746.7
Net investment in lease (note 5)	881.6		887.4
Goodwill	75.3		75.3
Deferred tax assets	0.6		0.5
Derivative instruments	88.4		107.1
Other assets (note 9)	320.7		312.8
	$	12,018.1	$	11,302.4
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$	235.8	$	204.3
Deferred revenue	57.0		25.2
Income tax payable	73.1		72.3
Long-term debt - current (note 10)	980.4		238.4
Operating lease liabilities - current	114.9		115.3
Finance lease liabilities - current	164.6		222.2
Other financing arrangements - current (note 11)	159.7		147.5
Other liabilities - current	10.7		13.3
	1,796.2		1,038.5

Long-term debt (note 10)	2,946.9		3,453.4
Operating lease liabilities	369.0		391.7
Other financing arrangements (note 11)	2,175.3		1,940.3
Derivative instruments	1.5		1.5
Other liabilities	56.2		51.2
Total liabilities	7,345.1		6,876.6

Cumulative redeemable preferred shares, $0.01 par value; 12,000,000 issued and outstanding (2022 – 12,000,000)	296.9		296.9

Shareholders’ equity:
Share capital (note 12):
Preferred shares; $0.01 par value; 150,000,000 shares authorized (2022 – 150,000,000); 20,118,833 shares issued and outstanding (2022 – 20,118,833) Common shares; $0.01 par value; 400,000,000 shares authorized (2022 – 400,000,000); 204,328,277 shares issued and outstanding (2022 – 281,565,472); nil shares held in treasury (2022 – 727,351)	2.0		2.8
Additional paid in capital	4,013.6		3,724.2
Retained earnings	378.3		420.0
Accumulated other comprehensive loss	(17.8)		(18.1)
	4,376.1		4,128.9
	$	12,018.1	$	11,302.4

Commitments and contingencies (note 14)

Subsequent events (note 16)

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Interim Consolidated Statements of Operations

(Unaudited)

(Expressed in millions of United States dollars, except per share amounts)


	Three Months Ended March 31,
	2023		2022
Revenue (note 3)	$	417.2	$	408.1
Operating expenses:
Operating expenses	88.4		86.6
Depreciation and amortization	94.2		88.1
General and administrative	42.4		27.9
Indemnity claim under acquisition agreement	—		(13.5)
Operating leases	30.1		33.6
Loss on sale (note 6)	0.6		2.4
	255.7		225.1
Operating earnings	161.5		183.0
Other expenses (income):
Interest expense	83.2		45.8
Interest income	(2.6)		(0.2)
Equity income on investment	(2.1)		(0.7)
Loss/(gain) on derivative instruments	11.1		(40.7)
Other expenses	6.1		9.1
	95.7		13.3
Net earnings before income tax	65.8		169.7
Income tax expense	7.0		0.3
Net earnings	$	58.8	$	169.4

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Interim Consolidated Statements of Comprehensive Income

(Unaudited)

(Expressed in millions of United States dollars)


	Three Months Ended March 31,
	2023		2022
Net earnings	$	58.8	$	169.4
Other comprehensive income:
Amounts reclassified to net earnings during the period relating to cash flow hedging instruments	0.3		0.2
Comprehensive income	$	59.1	$	169.6

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Interim Consolidated Statements of Shareholders’ Equity and Cumulative Redeemable Preferred Shares

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and per share amounts)

Three months ended March 31, 2023


	Series J cumulative redeemable preferred shares			Number of common shares	Number of preferred shares	Common shares		Preferred shares		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total shareholders’ equity
	Shares	Amount
Balance, December 31, 2022, carried forward	12,000,000	$	296.9	281,565,472	20,118,833	$	2.5	$	0.3	$	3,724.2	$	420.0	$	(18.1)	$	4,128.9
Net earnings	—	—		—	—	—		—		—		58.8		—		58.8
Other comprehensive income	—	—		—	—	—		—		—		—		0.3		0.3
Issuance of common shares from unissued acquisition related equity consideration	—	—		727,351	—	—		—		—		—		—		—
Fairfax warrants exercised	—	—		6,000,000	—	—				78.7		—		—		78.7
Shares retired upon Merger (note 1(b))	—	—		(84,170,724)	—	(0.8)		—		246.6		—		—		245.8
Settlement of Exchangeable Notes	—	—		—	—	—		—		(29.4)		—		—		(29.4)
Adjustment to share-based compensation (note 12)	—	—		—	—	—		—		(11.7)		—		—		(11.7)
Dividends on common shares ($0.25 per share)	—	—		—	—	—		—		—		(72.2)		—		(72.2)
Dividends on preferred shares (Series D - $1.00 per share; Series H - $0.98 per share; Series I - $1.00 per share; Series J - $0.88 per share;)	—	—		—	—	—		—		—		(30.4)		—		(30.4)
Shares issued through dividend reinvestment program	—	—		6,178	—	—		—		0.1		(0.1)		—		—
Share-based compensation expense (note 12)	—	—		200,000	—	—		—		5.1		2.2		—		7.3
Balance, March 31, 2023	12,000,000	$	296.9	204,328,277	20,118,833	$	1.7	$	0.3	$	4,013.6	$	378.3	$	(17.8)	$	4,376.1

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Interim Consolidated Statements of Shareholders’ Equity

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and per share amounts)

Three months ended March 31, 2022


	Series J cumulative redeemable preferred shares			Number of common shares	Number of preferred shares	Common shares		Preferred shares		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total shareholders’ equity
	Shares	Amount
Balance, December 31, 2021, carried forward	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
Impact of accounting policy change	—	—		—	—	—		—		—		(5.1)		—		(5.1)
Adjusted balance, December 31, 2021	12,000,000	296.9		247,024,699	20,118,833	2.1		0.3		3,526.8		2.4		(19.1)		3,512.5
Net earnings	—	—		—	—	—		—		—		169.4		—		169.4
Other comprehensive income	—	—		—	—	—		—		—		—		0.2		0.2
Issuance of common shares from unissued acquisition related equity consideration	—	—		48,985	—	—		—		—		—		—		—
Dividends on common shares ($0.125 per share)	—	—		—	—	—		—		—		(31.6)		—		(31.6)
Dividends on preferred shares (Series D - $0.50 per share; Series H - $0.49 per share; Series I - $0.50 per share; Series J - $0.44 per share;)	—	—		—	—	—		—		—		(15.2)		—		(15.2)
Shares issued through dividend reinvestment program	—	—		6,262	—	—		—		0.1		(0.1)		—		—
Share-based compensation expense	—	—		4,795,674	—	0.1		—		4.5		(0.3)		—		4.3
Balance, March 31, 2022	12,000,000	$	296.9	251,875,620	20,118,833	$	2.2	$	0.3	$	3,531.4	$	124.6	$	(18.9)	$	3,639.6

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Interim Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in millions of United States dollars)


	Three Months Ended March 31,
	2023		2022
Cash from (used in):
Operating activities:
Net earnings	$	58.8	$	169.4
Items not involving cash:
Depreciation and amortization	94.2		88.1
Change in right-of-use asset	23.3		29.6
Non-cash interest expense and accretion	4.2		5.6
Unrealized change in derivative instruments	18.6		(46.8)
Non-cash adjustment purchase option finance lease	9.2		—
Amortization of acquired revenue contracts and deferred revenue	6.2		3.2
Equity income on investment	(2.1)		(0.7)
Loss on sale	0.6		2.4
Other	(18.9)		4.5
Change in other operating assets and liabilities (note 13)	33.8		(80.4)
Cash from operating activities	227.9		174.9

Investing activities:
Expenditures for property, plant and equipment and vessels under construction	(327.8)		(123.2)
Expenditure for leased vessels	1.1		—
Payment on settlement of interest swap agreements	6.9		(5.0)
Gain on foreign currency repatriation	—		(3.2)
Receipt from contingent consideration asset	14.9		6.2
Other assets and liabilities	23.1		45.3
Capitalized interest relating to newbuilds	(19.8)		(9.3)
Cash used in investing activities	(301.6)		(89.2)

Financing activities:
Repayments of long-term debt and other financing arrangements	(56.3)		(71.5)
Issuance of long-term debt and other financing arrangements	487.8		—
Payment of lease liabilities	(7.7)		—
Settlement of capped call	25.3		—
Capital contribution from Poseidon	245.7		—
Financing fees	(10.0)		(5.1)
Dividends on common shares	(71.9)		(31.2)
Dividends on preferred shares	(15.2)		(15.2)
Proceeds from exercise of warrants	78.7		—
Cash from (used in) financing activities	676.4		(123.0)
Increase (Decrease) in cash and cash equivalents	602.7		(37.3)
Cash and cash equivalents and restricted cash, beginning of period	291.0		326.8
Cash and cash equivalents and restricted cash, end of period	$	893.7	$	289.5

Supplemental cash flow information (note 13)

See accompanying notes to interim consolidated financial statements.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

1.Significant accounting policies:

(a)Basis of presentation:

Except for the changes described in note 1(c), the accompanying interim financial information of Atlas Corp. (the “Company” or “Atlas”) has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), on a basis consistent with those followed in the December 31, 2022 audited annual consolidated financial statements of Atlas. The accompanying interim financial information is unaudited and reflects all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The unaudited interim consolidated financial statements do not include all the disclosures required under U.S. GAAP for annual financial statements and should be read in conjunction with the December 31, 2022 annual consolidated financial statements of Atlas filed with the U.S. Securities and Exchange Commission in the Company’s 2022 Annual Report on Form 20-F.

(b)On March 28, 2023, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 31, 2022, by and among Atlas, Poseidon Acquisition Corp. (“Poseidon”), an entity formed by certain affiliates of Fairfax Financial Holdings Limited (“Fairfax”), certain affiliates of the Washington Family (“Washington”), David Sokol, Chairman of the Board of Directors of the Company (the “Chairman”), Ocean Network Express Pte. Ltd., (“ONE”) and certain of their respective affiliates (collectively, the “Consortium”), and Poseidon Merger Sub, Inc., a wholly-owned subsidiary of Poseidon (“Merger Sub”), Merger Sub merged with and into the Company with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Poseidon (other than with respect to the Company’s preferred shares) (the “Merger”). Each common share outstanding prior to the Merger, other than common shares contributed to Poseidon immediately prior to the consummation of the Merger by Fairfax, Washington, the Chairman and the chief executive officer, were converted into the right to receive $15.50 per common share in cash.

(c)Comparative information:

Certain prior period information has been reclassified to conform with current financial statement presentation.

2.Segment reporting:

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 time charters. The Company’s mobile power generation segment owns and operates a fleet of power generation assets, including aero-derivative 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.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

2.Segment reporting (continued):

The following tables include the Company’s selected financial information by segment:


Three months ended March 31, 2023	Containership Leasing		Mobile Power Generation		Elimination and Other		Total
Revenue	$	385.3	$	31.9	$	—	$	417.2
Operating expense	80.2		8.2		—		88.4
Depreciation and amortization expense	84.3		9.9		—		94.2
General and administrative expense	31.9		11.8		(1.3)		42.4
Operating lease expense	29.2		0.9		—		30.1
Loss on sale	0.6		—		—		0.6
Interest income	(1.9)		(0.3)		(0.4)		(2.6)
Interest expense	80.2		3.2		(0.2)		83.2
Income tax expense	0.2		6.8		—		7.0


Three months ended March 31, 2022	Containership Leasing		Mobile Power Generation		Elimination and Other		Total
Revenue	$	384.6	$	23.5	$	—	$	408.1
Operating expense	75.0		11.6		—		86.6
Depreciation and amortization expense	78.4		9.7		—		88.1
General and administrative expense	13.9		11.4		2.6		27.9
Indemnity claim (income) under acquisition agreement	—		(13.5)		—		(13.5)
Operating lease expense	32.9		0.7		—		33.6
Gain on sale	2.0		0.4		—		2.4
Interest income	(0.1)		(0.1)		—		(0.2)
Interest expense	40.9		5.1		(0.2)		45.8
Income tax expense	0.3		—		—		0.3


	Three months ended March 31,
	2023		2022
Containership leasing adjusted EBITDA	$	244.0	$	262.8
Mobile power generation adjusted EBITDA(1)	11.0		13.3
Total segment adjusted EBITDA	255.0		276.1
Eliminations and other	(2.3)		(1.0)
Depreciation and amortization	94.2		88.1
Interest income	(2.6)		(0.2)
Interest expense	83.2		45.8
Loss (Gain) on derivative instruments	11.1		(40.7)
Other expenses	6.1		5.9
(Gain) Loss on contingent consideration asset	(1.1)		2.9
Loss on foreign currency repatriation	—		3.2
Loss on sale	0.6		2.4
Consolidated net earnings before tax	$	65.8	$	169.7

(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.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

2.Segment reporting (continued):


Total Assets	March 31, 2023		December 31, 2022
Containership Leasing	$	11,360.2	$	10,584.2
Mobile Power Generation	807.5		838.9
Elimination and Other	(149.6)		(120.7)
Total	$	12,018.1	$	11,302.4


	Three Months Ended March 31,
Capital expenditures by segment	2023		2022
Containership leasing	$	325.6	$	118.3
Mobile power generation	2.2		4.9

3.Revenue:

Revenue by type for the three months ended March 31, 2023 and 2022 is as follows:


	Three Months Ended March 31,
	2023		2022
Operating lease revenue	$	389.7	$	389.8
Interest income from leasing	19.2		16.1
Other	8.3		2.2
	$	417.2	$	408.1

As at March 31, 2023, the minimum future revenues to be received on committed operating leases, service arrangements and interest income to be earned from direct financing leases are as follows:


	Operating lease (1)		Finance lease (2)		Total committed revenue
Remainder of 2023	$	1,246.1	$	69.3	$	1,315.4
2024	1,585.0		72.4		1,657.4
2025	1,318.5		69.1		1,387.6
2026	976.0		66.7		1,042.7
2027	537.3		64.2		601.5
Thereafter	795.4		458.7		1,254.1
	$	6,458.3	$	800.4	$	7,258.7

(1)Minimum future operating lease revenue includes payments from signed charter agreements on operating vessels that have not yet commenced.

(2)Minimum future interest income includes direct financing leases currently in effect.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

3.Revenue (continued):

As at March 31, 2023, the minimum future revenues to be received based on each segment are as follows:


	Containership Leasing(1)(2)		Mobile Power Generation		Total committed revenue
Remainder of 2023	$	1,224.2	$	91.2	$	1,315.4
2024	1,581.3		76.1		1,657.4
2025	1,311.5		76.1		1,387.6
2026	1,042.7		—		1,042.7
2027	601.5		—		601.5
Thereafter	1,254.1		—		1,254.1
	$	7,015.3	$	243.4	$	7,258.7

(1)Minimum future operating lease revenue includes payments from signed charter agreements on operating vessels that have not yet commenced.

(2)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.

4.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)In January 2023, Fairfax exercised warrants to purchase 6,000,000 common shares of Atlas for gross aggregate of $78,710,000. Following this exercise, Fairfax has no outstanding warrants.

During the three months ended March 31, 2023, the dividends paid on Series J Preferred Shares equal to $5,250,000 (March 31, 2022 – $5,250,000).

(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. During the three months ended March 31, 2023, in relation to the expiry of an indemnification obligation, 727,351 common shares reserved in treasury were issued out of Holdback Shares to the APR sellers. As of March 31, 2023, all Holdback Shares have been released.

In addition, the Company received $3,836,217 for the three months ended March 31, 2023 (March 31, 2022 – $2,921,000) from Fairfax for the settlement of an indemnity related to losses realized on sale or disposal of certain property, plant and equipment and inventory items and $11,039,000 for reimbursement of fees, costs and settlement payments incurred from indemnified litigation.

(d)Pursuant to ship management agreements, the Company manages the ship operations of the vessels owned by its joint venture with the Zhejiang Energy Group. During the three months ended March 31, 2023, the Company earned revenue of $2,554,000 (2022 – $489,000) and incurred expenses of $2,406,000 (2022 – $498,000) in connection with the ship management of the vessels.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

5.Net investment in lease:


	March 31, 2023		December 31, 2022
Undiscounted lease receivable	$	1,700.5	$	1,724.4
Unearned interest income	(797.6)		(816.0)
Net investment in lease, total	902.9		908.4
Current portion of net investment in lease	(21.3)		(21.0)
Net investment in lease	$	881.6	$	887.4

At March 31, 2023, the minimum lease receivable from finance leases are as follows:


Remainder of 2023	$	73.0
2024	97.1
2025	96.9
2026	96.9
2027	96.9
Thereafter	1,239.7
	$	1,700.5

6.Property, plant and equipment:


March 31, 2023	Cost		Accumulated depreciation		Net book value
Vessels	$	9,782.7	$	(2,856.7)	$	6,926.0
Equipment and other	529.7		(186.6)		343.1
Property, plant and equipment	$	10,312.4	$	(3,043.3)	$	7,269.1


December 31, 2022	Cost		Accumulated depreciation		Net book value
Vessels	$	9,610.7	$	(2,805.6)	$	6,805.1
Equipment and other	542.9		(191.1)		351.8
Property, plant and equipment	$	10,153.6	$	(2,996.7)	$	7,156.9

During the three months ended March 31, 2023, depreciation and amortization expense relating to property, plant and equipment was $82,015,000 (2022 – $80,486,000).

Vessel sales and deliveries

On January 17, 2023, the Company completed the sale of one 4,250 TEU vessel with gross proceeds of $21,600,000. During the three months ended March 31, 2023, the Company took delivery of a 15,000 TEU vessel for an aggregate purchase price of $140,001,000, which commenced a 12-year charter upon delivery.

Assets classified as held for sale

In February 2023, the Company entered into memoranda of agreement with a liner company for the sale of a 4,250 TEU vessel. As at March 31, 2023, the vessel is classified as held for sale and a loss on classification as asset held for sale of $3,542,000 was recognized for this vessel.

7.Vessels under construction

During the three months ended March 31, 2023, vessels under construction includes $17,766,000 of capitalized interest and $243,152,000 of installment payments (March 31, 2022 - $9,347,000 and $103,307,000, respectively).

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

8.Right-of-use assets:


March 31, 2023	Cost		Accumulated amortization		Net book value
Vessel operating leases	$	835.5	$	(357.9)	$	477.6
Vessel finance leases	184.4		(7.2)		177.2
Other operating leases	15.5		(8.4)		7.1
Right-of-use assets	$	1,035.4	$	(373.5)	$	661.9


December 31, 2022	Cost		Accumulated amortization		Net book value
Vessel operating leases	$	835.5	$	(335.5)	$	500.0
Vessel finance leases	246.6		(7.9)		238.7
Other operating leases	15.6		(7.6)		8.0
Right-of-use assets	$	1,097.7	$	(351.0)	$	746.7

In January 2022, the Company exercised its option under an existing lease financing arrangement to purchase one 10,000 TEU vessel. The purchase was completed in January 2023 at the pre-determined purchase price of $52,690,000.

During the three months ended March 31, 2023, the amortization of right-of-use assets was $23,300,000 (2022 – $29,600,000).

9.Other assets:


	March 31, 2023		December 31, 2022
Intangible assets	$	70.2	$	75.7
Deferred dry-dock	99.6		86.9
Restricted cash	11.0		11.0
Contingent consideration asset	40.1		39.5
Deferred financing fees on undrawn financing	57.8		57.3
Other	42.0		42.4
	$	320.7	$	312.8

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

10.Long-term debt:


	March 31, 2023		December 31, 2022
Long-term debt:
Revolving credit facilities (a) (e)	$	—	$	—
Term loan credit facilities (b) (e)	1,417.6		1,233.0
Senior unsecured notes (c)	1,302.4		1,302.4
Senior unsecured exchangeable notes(d)	253.1		201.3
Senior secured notes	1,000.0		1,000.0
	3,973.1		3,736.7
Deferred financing fees	(45.8)		(44.9)
Long-term debt	3,927.3		3,691.8
Current portion of long-term debt	(980.4)		(238.4)
Long-term debt	$	2,946.9	$	3,453.4

a) Revolving credit facilities:

As at March 31, 2023 and December 31, 2022, the Company had three revolving credit facilities, which provided, as at March 31, 2023, for aggregate borrowings of up to $700,000,000 (December 31, 2022 – $700,000,000), of which $700,000,000 (December 31, 2022 - $700,000,000) was undrawn.

The Company is subject to commitment fees ranging between 0.45% and 0.5% (December 31, 2022 – 0.45% and 0.5%) calculated on the undrawn amounts under the various facilities.

(b)Term loan credit facilities:

In March 2023, the Company entered into amended and restated senior secured loan facilities which increase the commitments under the bank loan facilities by $250,000,000, $200,000,000 of which were drawn immediately and $50,000,000 of which may be drawn by the Company on or before September 3, 2023, (ii) increase the amount of total borrowing permitted relative to total assets from 65% to 75%, (iii) replace the London Interbank Offered Rate with the Secured Overnight Financing Rate as the reference interest rate, and (iv) extend the maturities of tranches due in 2026 and 2027 by approximately two years.

As at March 31, 2023, the Company has entered into $3,878,778,000 (December 31, 2022 – $3,751,731,000) of term loan credit facilities, of which $2,461,183,000 (December 31, 2022 - $2,518,743,000) was undrawn.

Term loan credit facilities drawn mature between August 10, 2023 and January 21, 2030.

For the Company’s floating rate term loan credit facilities, interest is calculated based on three month or six month benchmark rate plus a margin per annum, dependent on the interest period selected by the Company. The three month and six month average LIBOR was 4.9% and 5.2%, respectively (December 31, 2022 – 4.8% and 3.5%) and the three month average SOFR was 4.9% (December 31, 2022 – 3.0%). The margins ranged between 0.4% and 3.5% as at March 31, 2023 (December 31, 2022 – 0.4% and 2.5% ).

For one of the term loan credit facilities with a total principal amount outstanding of $11,232,000 (December 31, 2022 – $14,425,000), interest is calculated based on the Export-Import Bank of Korea (“KEXIM”) rate plus 0.7% per annum.

The weighted average rate of interest, including the applicable margin, was 6.9% as at March 31, 2023 (December 31, 2022 – 6.4%) for the Company’s term loan credit facilities. Interest payments are made in monthly, quarterly or semi-annual payments.

The Company is subject to commitment fees ranging between 0.2% and 0.6% (December 31, 2022 – 0.25% and 0.6%) calculated on the undrawn amounts under the various facilities.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

10.Long-term debt (continued):

(b)Term loan credit facilities (continued):

The following is a schedule of future minimum repayments of the Company’s term loan credit facilities as of March 31, 2023.


Remainder of 2023	$	204.5
2024	114.9
2025	170.4
2026	99.9
2027	99.9
Thereafter	728.0
	$	1,417.6

(c)As a result of the Merger (note 1(b)), the Company’s common shares were de-listed on April 10, 2023 (the “De-listing”). The Company has notified the holders of the 2024 NOK Bonds and the 2026 NOK Bonds of this de-listing event and that each holder of the 2024 NOK Bonds and the 2026 NOK Bonds have a right to require the Company to purchase all or some of the bonds held by such holder (a “NOK Put Option”) at a price equal to 101% of the principal amount plus accrued interest. Each holder may exercise a NOK Put Option during the exercise period which ends on May 3, 2023 with payment to be made on May 10, 2023 (note 16(a)). Due to this put option which was triggered by the De-listing resulting from the Merger, the 2024 NOK Bonds and the 2026 NOK Bonds are classified as a current liability.

(d)The Merger (note 1(b)) and subsequent de-listing of the Company’s common shares on April 10, 2023 constitutes a “Make-Whole Fundamental Change” under the terms of Seaspan’s exchangeable notes (“Exchangeable Notes”) issued in December 2020. On March 28, 2023, the Company entered into a supplemental indenture providing the holders of the Exchangeable Notes the right to exchange each $1,000 principal amount of such Exchangeable Note into a number of units based on a defined exchange rate. In connection with the Make-Whole Fundamental Change, each holder has the right, at its option, to exchange all or any portion of its Exchangeable Notes at any time from during the make-whole exchange period ending on May 22, 2023 at an increased exchange rate on account of a Make-Whole Fundamental Change (note 16(b)).

(e)Credit facilities – other:

As at March 31, 2023, the Company’s credit facilities were primarily secured by first-priority mortgages granted on most of its power generation assets and 53 of its vessels, together with other related security. The security for each of the Company’s current secured credit facilities may include, without limitation:

•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; and

•A pledge over the related retention accounts.

As at March 31, 2023, $1,188,703,000 principal amount of indebtedness under one of the Company’s term loan and revolving credit facilities, together with $1,000,000,000 of sustainability-linked fixed rate notes with maturities from June 2031 to September 2037, was secured by a portfolio of 48 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.

ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

10.Long-term debt (continued):

(f)Credit facilities – other (continued):

The Company may prepay certain amounts outstanding without penalty, other than breakage costs in certain circumstances. A prepayment may be required as a result of certain events, including (without limitation) a change of control, 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 acceptable 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 March 31, 2023.

11.Other financing arrangements:


	March 31, 2023		December 31, 2022
Other financing arrangements	$	2,372.0	$	2,119.7
Deferred financing fees	(37.0)		(31.9)
Other financing arrangements	2,335.0		2,087.8
Current portion of other financing arrangements	(159.7)		(147.5)
Other financing arrangements	$	2,175.3	$	1,940.3

Based on amounts funded for other financing arrangements, payments due to lessors would be as follows:


Remainder of 2023	$	119.3
2024	166.5
2025

SEC Form 6-K filed by Atlas Corp.