In a cost cutting move, Bermuda-registered Sea Containers Ltd. and General Electric Co. owned GE Capital Services have agreed to form a Bermuda-registered venture, GE SeaCo Ltd., out of the combination of their container ship operations.

Under the agreement, GE Capital would receive 70 percent of the profit from the venture's existing combined container fleets, but will evenly split profits from the use of containers purchased in the future.

Sea Containers president James B. Sherwood said, "The marine container leasing industry has experienced reduced profitability in recent years. It became increasingly apparent to ourselves and GE Capital that a combination of our fleets would permit substantial savings in operating and overhead expenses and thus help to improve profitability.'' Sea Containers has a fleet of ships that haul mostly specialised cargo. GE Capital's ships, operated by Genstar Container Corp. out of San Francisco, are focused more on standard dry cargo and refrigerated containers.

GE SeaCo will acquire Sea Containers's container depots and give preferred supplier status to Sea Container's container factories. It may also acquire other Sea Containers' units exclusively engaged in marine container leasing.

GE SeaCo will establish a UK-based management company, GE SeaCo Management Services Ltd., staffed by personnel from both Sea Containers and Genstar.

At closing and subject to definitive agreements and regulatory approval, GE Capital will buy $10 million in newly issued Sea containers Class A shares at the closing price September 23.

The company will also invest $15 million in a new issue of 7.25 percent preferred shares, convertible into Class B common shares at a 22 percent premium over the September 23 closing price.

Mr. Sherwood said Sea Containers may use these funds to redeem its outstanding $2.10 cumulative preferred shares, series 1982 totalling $27.6 million following completion of the transaction.

The combined fleets had an original cost of $3.5 billion and garnered combined rental revenue of $590 million in 1996.

GE SeaCo intends to purchase some $200 million worth of new containers next year, with profits on that fleet to be apportioned evenly.

The new company's board will have eight directors, split evenly between representatives from GE Capital and Sea Containers under Mr. Sherwood as chairman.

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