The following letter was sent to Atlas Corporation today.
Attention: Corporate Secretary, Atlas Corporation
7th Merchant Corporation Letter to Atlas Corporation Special Committee
Please forward to Chairman, Special Committee Re Poseidon Acquisition Take Private Proposal
TORONTO, Sept. 06, 2022 (GLOBE NEWSWIRE) —
2300 Yonge Street, Suite 1600
23 Berkeley Square
London, United Kingdom, W1J 6HE
Attention: Chairman, Atlas Special Committee re Poseidon Acquisition Corp Privatization Proposal
Dear Chairman, Special Committee
My name is Scott Leckie and myself and my firm, the merchant bank 7th Merchant Corporation, own shares in Atlas Corporation. In addition, the limited partners of 7th Merchant Corporation’s predecessor firm Takota Asset Management owned shares of Atlas through their interest in the Takota Premium Value LP and other clients through their Takota Premium Value and Takota Classic Value segregated accounts. While Takota is no longer a registered portfolio management firm, and no longer advising clients (the former clients of Takota had their capital returned in 2020), most opted at the time to take their economic interest in “kind” rather than cash, including their shares of Atlas Corp (nee Seaspan). Many of these investors still hold their shares today.
I am writing to you today to express my confidence that the Special Committee formed by the Atlas Board to consider the take private proposal received from a consortium of current Atlas shareholders and other parties under the entity Poseidon Acquisition Corp will conclude that any take private transaction would require a more robust bid price than that currently on offer in order to be deemed fair to minority shareholders.
When I did my original work on Atlas, I observed that a much smaller, less diverse and higher risk Seaspan was able to generate enough cash flow in parts of the business cycle to provide a dividend yield which supported a “mid -20’s” share price. When I look at Atlas today I see a much larger, much more diverse and less risky corporate entity whose cash flow and forward looking cash flow potential should support a somewhat similar share price (larger revenues, comparable margins, more shares outstanding).
It gives me great comfort to know that principled investors like Prem Watsa and his Fairfax Financial are a part of this take private proposal. I know Fairfax to have built a strong and positive reputation for fairness in its corporate dealings and I believe this reputation for fairness will allow them to see both sides of the negotiating table and conclude that offering a reasonable and fair premium to minority shareholders today for giving up their economic interest in Atlas is the right thing to do.
It would seem to me that only a revised take private price of $18+ USD is a fair and just outcome in the prevailing circumstances and leaves both minority and control shareholders with a palatable result.
We await the work and recommendation of the Special Committee before considering any further commentary on this proposal.
Scott Leckie, CFA
Principal, CEO & Chairman
7th Merchant Corporation
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