Friday, June 1, 2018

Shipping: Canadian Fund Fairfax Commits to New $500 Million Investment in David Sokol's Seaspan

From gCaptain May 31:
Fairfax Financial Holdings Ltd., the investment firm run by Prem Watsa, is preparing to increase its investment in Seaspan Corp. by $500 million to help fund the containership owner’s takeover ambitions.

Fairfax plans to exercise warrants to buy 77 million shares in the Hong Kong-based company at $6.50 per share in two phases starting this summer, according to a statement Thursday. It will exercise half in July and the rest in January.

Watsa said he is making the additional investment in Seaspan primarily based on the track record of the company’s Chairman David Sokol. Sokol, the former chairman of Berkshire Hathaway Inc.’s utility operations, took the same role at Seaspan in July as part of a shakeup that saw its co-founder, co-chairman and chief executive officer, Gerry Wang, resign.

In the 20 years that Sokol was at the helm of MidAmerican Energy Holdings Co., he grew the company’s assets from $500 million to $50 billion and its revenue from $100 million a year to $11 billion, Watsa said. MidAmerican had a return on equity of 23 percent per year on average over that period, he said.

Watsa noted the company started with just one geothermal plant in 1991. It was acquired by Warren Buffett’s Berkshire Hathaway in 1999, and by the time Sokol left 12 years later the company had pipelines, power plants and natural gas infrastructure under its umbrella.
“He went all the way up the value chain but was smart enough to go where others weren’t going and getting a good return all the time,” he said.

New Warrants
Toronto-based Fairfax acquired the warrants earlier this year through deals to buy $500 million of Seaspan’s debt. Fairfax will receive a new batch of warrants worth about $200 million for exercising the other ones early, according to the statement. The new warrants will give it the right to buy 25 million shares at $8.05 apiece within seven years....MORE
Previously on Seaspan:
Former Buffett Heir Apparent David Sokol Resurfaces In the Shipping Business

And on Mr. Sokol:
August 2015
Oil: "End Of The Line For Buffett's Burlington Northern" (BRK)
Burlington Northern is the largest hauler of crude out of the Bakken.
Should this scenario play out, and knowing Warren's almost chameleon-like promotional abilities, I would expect him to begin buffing his already-verdant green credentials and in particular those of the former Mid-American Energy division, now renamed Berkshire Hathaway Energy, which, under disgraced former heir-apparent David Sokol, became the owner of the largest wind turbine fleet in the U.S. and which, under current head Greg Abel, will become the largest single owner of utility-scale solar operations.
Just don't mention the coal....
August 2011 
Former Berkshire Hathaway Bigwig David Sokol Continues Buying Middleburg Financial (MBRG)  
The speculation is that this is going to be a "mini-Berkshire".
I don't know about that, Dave isn't Warren, but he is a good operator....

... We had a flurry of posts on Middleburg last March, here are a couple:

March 31
Middleburg Financial Approaching Escape Velocity on Word Sokol Was Buying Within the Last Two Weeks (MBRG; BRK.A)
March 31 
UPDATED: "Sokol: Off to Middleburg Financial? (Its Shares Are Soaring)" MBRG; BRK.B
March 2011 
Climateer line of the Day: Billionaire Insider Trading Edition
From a friend:

" I don't know if what Sokol did was illegal but I've got to tell you,
I felt safer after Martha Stewart was locked up.
First Runner-up:
A real oracle would have seen this coming.
-Anonymous Zerohedge commenter on 
Warren Buffett's reaction
David Sokol resigns from Berkshire Hathaway
David Sokol resigns from Berkshire Hathaway …Middleburg Financial Corp.’s sugar daddy David Sokol has resigned from Berkshire Hathaway. Sokol  of the handy “Berkshire benefactor” alliteration, it might mean that Sokol will be freed up to join Middleburg…
BizBeat 3/30/2011

March 2011 
Deal Journal is Running a Reader Poll on David Sokol's Lubrizol Trades! (BRK.A; BRK.B)
LIVE BLOG - David Sokol's Live Interview on CNBC's Squawk Box (BRK.A; BRK.B)
David Sokol Resigns From Berkshire Hathaway (BRK.A; BRK.B)
December 2010 
Berkshire Hathaway Subsidiary Gives Siemens Largest Onshore Wind Turbine Order (BRK.B; SI)
August 2010 
2016: "U.S. Facing a `Painful Period' as Debt Is Unwound, Berkshire's Sokol Says" and Fortune's Everything You Ever Wanted to Know about David Sokol article (BRK.B; BRK.A)

And many, many more. Use the search blog box if interested.

Warren really trusted him.