CAI INTERNATIONAL, INC. (CAP) SPO
|Company Name||CAI INTERNATIONAL, INC.|
|CEO||Victor M. Garcia|
|Employees (as of 9/30/2012)||91|
|State of Inc||--|
|Fiscal Year End||12/31|
|Exchange||New York Stock Exchange|
|Shares Over Alloted||0|
|Shareholder Shares Offered||1,259,446|
|Lockup Period (days)||180|
|Quiet Period Expiration||1/8/2013|
We estimate that the net proceeds from our sale of 2,518,892 shares of our common stock in this offering will be approximately $47.0 million (approximately $54.1 million if the underwriters’ over-allotment option is exercised in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. We expect to use the net proceeds from this offering for working capital and other general corporate purposes, which may include investments in equipment and other assets. We may also use the net proceeds, or a portion thereof, to pay down a portion of our senior secured revolving credit facility, or invest in or acquire businesses, assets, technologies and products that we believe will complement our existing operations. As of September 30, 2012, there was $321.0 million outstanding under our senior secured revolving credit facility and the average interest rate was 3.0% per annum. We assess acquisition opportunities on an ongoing basis and from time to time have discussions with other companies about potential transactions. We currently do not have any understandings, commitments or agreements with respect to an acquisition and we cannot assure you that we will make any acquisitions in the future. As of the date of this prospectus supplement, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. Accordingly, our management will have broad discretion over the use of the net proceeds from this offering. Pending these uses, we plan to invest the net proceeds in short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct guaranteed obligations of the United States. The goal with respect to investment of these net proceeds is capital preservation and liquidity so that funds are readily available to fund our operations. An affiliate of Wells Fargo Securities, LLC is a lender under our senior secured revolving credit facility and will receive a portion of the net proceeds of this offering if we use such proceeds to repay borrowings thereunder.
We may be unable to compete favorably in the highly competitive container leasing and container management businesses. We compete with a number of major leasing companies, many smaller lessors, manufacturers of container equipment, companies and financial institutions offering finance leases, promoters of container ownership and leasing as a tax-efficient investment, container shipping lines, which sometimes lease their excess container stocks, and suppliers of alternative types of containers for freight transport. Some of these competitors have greater financial resources and access to capital than we do. Additionally, some of these competitors may have large, underutilized inventories of containers, which could lead to significant downward pressure on per diem rates, margins and prices of containers. Our business requires large amounts of working capital to fund our operations. We are aware that some of our competitors have recently had ownership changes. As a consequence, these competitors may have greater resources available to aggressively seek to expand their market share. This could include offering lease rates with which we cannot effectively compete. We cannot assure you that we will be able to compete successfully against these competitors. Competition among container leasing companies depends upon many factors, including, among others, per diem rates; lease terms, including lease duration, drop-off restrictions and repair provisions; customer service; and the location, availability, quality and individual characteristics of containers. New entrants into the leasing business have been attracted by the high rate of containerized trade growth in recent years. New entrants may be willing to offer pricing or other terms that we are unwilling or unable to match. As a result, we may not be able to maintain a high utilization rate or achieve our growth plans.
Founded in 1989, we are one of the world’s leading container leasing and management companies. We purchase new and used containers, lease them primarily to container shipping lines, freight forwarders and other transportation companies and either retain them as part of our owned fleet or sell them
to container investors for whom we then provide management services. In operating our fleet, we lease, re-lease and dispose of containers and contract for the repair, repositioning and storage of containers. As of September 30, 2012, our fleet consisted of approximately 1,061,000 twenty-foot equivalent units (TEUs) of containers, 58.1% of which represented our owned fleet and 41.9% of which represented our managed fleet. On October 19, 2012, we purchased approximately 71,000 TEUs of container assets from Dritte Schroeder Container Beteiligungsgesellschaft mbH & CO. KG and its affiliate (Dritte Transaction). These container assets were part of our managed fleet prior to the transaction. Assuming that the Dritte Transaction had been in effect as of September 30, 2012, our owned fleet would have represented 64.8% of our total fleet. Average utilization of our fleet was 94.8% for the quarter ended September 30, 2012 and was 93.8% for the fourth quarter through November 27, 2012. We lease our containers to lessees under long-term leases, short-term leases and finance leases. Long-term leases cover a specified number of containers that will be on lease for one year or more. Short-term leases provide lessees with the ability to lease containers either for a fixed term of less than one year or without a fixed term on an as-needed basis, with flexible pick-up and drop-off of containers at depots worldwide, subject to certain restrictions. Finance leases are long-term lease contracts that generally grant the lessee the right to purchase the container at the end of the term for a nominal amount. As of September 30, 2012, 94.5% of our fleet, as measured in TEUs, was on lease, with 77.6% of these containers on long-term leases, 16.5% on short-term leases and 5.9% on finance leases, with the average remaining lease term for all long-term and finance leases of 35 months. As of November 27, 2012, our total outstanding debt (including capital lease obligations and collateralized financing obligations) was approximately $1,015.7 million. Interest expense on such debt will be approximately $9.3 million per quarter assuming floating interest rates remain consistent with those at September 30, 2012 and including amortized closing fees and unused commitment fees. We manage containers for container investors under management agreements that cover portfolios of containers. Our management agreements have multiple year terms and provide that we receive a management fee based upon the actual rental revenue for each container less the actual operating expenses directly attributable to that container. We also receive fees for selling used containers on behalf of container investors. We have a global infrastructure with 16 offices in 12 countries and 239 third-party container depot facilities in 50 countries. As of September 30, 2012, we had 91 employees worldwide. ----- Our corporate headquarters and principal executive offices are located at Steuart Tower, 1 Market Plaza, Suite 900, San Francisco, CA 94105. Our telephone number is (415) 788-0100. Our U.S. branch offices are located in Charleston, South Carolina and Florham Park, New Jersey. We operate our business in 16 offices in 12 countries including the United States, and have agents in Asia, Europe, South Africa, Australia and South America. Our wholly-owned international subsidiaries are located in the United Kingdom, Japan, Malaysia, Singapore, Sweden, Germany, Bermuda and Barbados. We also own 80% of CAIJ Ltd. in Japan. We maintain a website at www.capps.com.
|Company Counsel||Perkins Coie LLP|
|Lead Underwriter||Credit Suisse Securities (USA) LLC|
|Lead Underwriter||Keefe, Bruyette & Woods, Inc|
|Lead Underwriter||Wells Fargo Securities, LLC|
|Transfer Agent||Computershare Shareholder Services, Inc|
|Underwriter||Dahlman Rose & Company LLC|
|Underwriter||FBR Capital Markets & Co|
|Underwriter||Santander Securities Corp|
|Underwriter||Sterne, Agee and Leach, Inc|
|Underwriter||SunTrust Robinson Humphrey, Inc|
|Underwriter Counsel||Davis Polk & Wardwell LLP|
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