PST – BT

PIL unveils plan to delist Pacific Shipping Trust

The group proposes to take PST private, offering 43 US cents in cash per unit

SINGAPORE’s first shipping trust to list – Pacific Shipping Trust (PST) – might soon become the first one to delist as well, after years of lacklustre share performance for the shipping trust brigade.

Holding company Pacific International Lines Pte Ltd (PIL) announced yesterday its proposal to take PST private. PIL plans to streamline the structure of the PST group along with that of the offeror group. The shipping firm will be offering 43 US cents in cash for every unit in the trust that it does not already own – a 14.7 per cent premium over its last-traded price of 37.5 US cents. PST listed on the Singapore Exchange in a 2006 initial public offering price of 45 US cents a unit.

Against the volume-weighted average price (VWAP) of 35.4 US cents for the six-month period before the offer, the offer price stands at a premium of 21 per cent.

So tepid has trading activity been for the business trust in recent months that the VWAPs for the one month, three months and six months before the offer were in a tight range of about 35 to 36 US cents.

Among other things, the proposed privatisation hinges on the delisting resolution being approved by at least 75 per cent of the total number of issued units held by the unitholders present and voting at an extraordinary general meeting to be called. Also, the resolution cannot be opposed by 10 per cent or more of the same such units.

Under the proposed voluntary delisting, the minimum acceptance condition is for PIL to end up holding a stake of at least 75 per cent in the trust. Currently, PIL holds about 59.19 per cent. Subject to the Securities Industry Council’s consent, the offeror has the right to waive this condition.

Trustee-manager PST Management Pte Ltd noted the trust’s low trading liquidity with an average daily trading volume that represents about 0.1 per cent of the trust’s total free float.

It also cited the need for greater operating flexibility as one of the reasons for the decision to go private.

‘For as long as PST remains a listed business trust and seeks to expand its business and vessel portfolio, PST would have to fund such new vessels through a combination of equity, debt and/or internal cash resources,’ it said.

‘Any potential acquisitions will be benchmarked against PST’s distribution yield. . . This places a constraint on PST’s ability to issue new units since its investment decision will be compared against its distribution yield, which is in turn a function of the prevailing trading prices of the units.’

The other two shipping trusts in Singapore have also seen their unit prices take a beating. Rickmers Maritime’s units have fallen 21.8 per cent in value year to date to 30.5 cents. It had listed at an offer price of $1.57 per unit. First Ship Lease Trust’s units have shed 44 per cent since January. They last traded at 26 cents, against their IPO price of $1.50 a unit.