[ Sea Containers & GE Capital Services to Form a Joint..]

Sea Containers & GE Capital Services to Form a Joint Venture to Operat
e Their Marine Container Fleets

Sea Containers Ltd., marine container lessor, passenger transport and
hotels company, and GE Capital Services have signed a Memorandum of Un
derstanding to create GE SeaCo Ltd., a Bermuda-based joint venture com
pany to operate their existing combined marine container fleets. “Th
e creation of GE SeaCo Ltd. is a significant development in the marine
container industry, featuring the combined resources and expertise of
Sea Containers Ltd. and GE Capital Services,” said Mr. James B. Sher
wood, President of Sea Containers.
“GE SeaCo will combine the strength of General Electric with one of t
he most respected marine container lessors, Sea Containers, which was
founded by Jim Sherwood in the early 1960s,”said Gary C. Wendt, Chair
man, President and Chief Executive officer of GE Capital Services. “T
his combination of expertise between Sea Containers and Genstar will c
learly bring important efficiencies and better services to our custome
rs.”
Mr. James B. Sherwood said “This marine container leasing industry ha
s experienced reduced profitability in recent years. It became increas
ingly apparent to ourselves and GE Capital that a combination of our f
leets would permit substantials savings in operating and overhead expe
nses and thus help to improve profitability.”
The proposed transation is subject to various conditions, including co
nclusion conclusion of definitive agreements which are now being draft
ed and regulatory approval.
The GE Capital fleet is currently operated by Genstar Container Corpor
ation, a GE Capital company based in San Francisco, California. GE Sea
Co will acquire Sea Containers’ container depots and will give prefer
red supplier status to Sea Containers’ container factories. It may al
so acquire certain Sea Containers’ subsidiaries engaged exclusively i
n marine container leasing, changing the companies’ names from “Sea
Containers” to “GE SeaCo”GE SeaCo will have a board of eight direct
ors, four appointed by Sea Containers and four by GE Capital. James B.
Sherwood, President of Sea Container Ltd., will become Chairman of GE
SeaCo’s board of directors and Nigel D.T. Andrews, Executive Vice Pr
esident of GE Capital, will serve as Deputy Cairman. Robert S. Ward, S
ea Containers’ Senior Vice President-Container Division, will become
a director and serve as President and Chief Executive Officer of GE Se
aCo, while Daniel J. O’Sullivar, Sea Containers’ Senior Vice Preside
nt and Chief Financial Officer, will become a director, Senior Vice Pr
esident and Chief Financial Officer of GE SeaCo.
GE SeaCo will establish a wholly-owned U.K. based service company to b
e called GE SeaCo Service Ltd. to provide management services. GE SeaC
o will be staffed with personnel from both Sea Containers and Genstar.
GE Seaco will operate the existing combined marine container fleets wh
ich total approximately 1.2million twenty foot equipment units, under
master lease agreements with the existing fleet owners. All current co
ntainer leases to customers will remain in force.
Sea Containers’ fleet consists in large measure ot specialized contai
ner types while GE Capital Services’ fleet is weighted more towards s
tandard dry cargo and refrigerated containers.
The combined fleets had an original cost of $3.5 billion with a combin
ed rental revenue of $590 million in 1996. Future profits from these
fleets after master lease payments will be apportioned approximately 3
0% to Sea Containers and 70% to GE Capital.
GE SeaCo expects to purchase about $200 million of new containers in 1
998, with profits on the GE SeaCo-owned fleet to be shared equally bet
ween the joint venture partners. A 15-year revolving credit, quarante
ed 50% by Sea Containers and 50% by GE Capital Services, will be put i
n place to fund such purchases. Securitized financing may also be used
in due course to fund container additions.
At closing GE Capital Services will be investing $10 million in newly
issued Sea Containers Calss A common shares at the clsosing price on S
eptember 23, 1997 and $ 15 million in a new issue of 7.25% Preferred S
hares convertible into Class 2 common shares at a 22% premium over the
closing price on September 23, 1997. Mr. Sherwood said Sea Container
s may use these funds to redeem its outstanding $2.10 cumulative prefe
rred shares, series 1982 totaling $27.6 million following completion o
f the transation.