PST – BT

PST buys five bulk carriers for US$150m

MOVING further from its purely container ship holdings past, Pacific Shipping Trust (PST) has acquired five 57,000 deadweight-tonne (dwt) supramax bulk carriers for US$150 million.

This is the third such acquisition of non-container ship vessels made by PST in five months.

Now, one-third of PST’s 21 vessels are bulk carriers, up from the two 180,000-dwt capesize bulk carriers it bought in June, PST’s first diversification move.

Last month, it bought two 24,000-dwt multi-purpose vessels (MPPs) to add to its fleet of 12 container ships.

The five supramax bulkers will be built by Tianjing Xingang Shipbuilding Industry.

After delivery between October 2012 and April 2013, they will be leased to Korean-based logistics company Glovis on time charter agreements.

The agreements with Glovis add US$250 million to PST’s total contracted revenue, bringing that figure to US$800 million, an increase of 45 per cent.

The tenor of the Glovis charters will last eight and 10 years, and will provide PST charter income stretching into 2023.

PST would not reveal the daily charter hire rate secured from Glovis due to non-disclosure terms from the latter.

However, going by PST’s comments that charter rates are the same for all five vessels, this pegs the rate at about US$15,500 per day.

While its latest buys have been strictly non-container ships, Teo Choo Wee, acting CEO of PST Management, the trustee-manager of PST, told BT that the company would consider diving back into the vessel class now that charter rates have risen sharply since last year.

London shipbroker Clarkson said in September that charter rates for a gearless panamax ship of 3,500 TEUs (twenty-foot equivalent units) rose to US$18,250 a day from an average US$6,575 a day throughout 2009.

‘The charter rates to the price of the vessels didn’t make sense at all to buy more. But now it seems it’s different,’ said Mr Teo. ‘We’ve also heard that a number of good operators are out there looking for financing, so if there’s a good deal out there, we’d definitely consider it.’

PST has slowly decreased income reliance on its parent company, Pacific International Lines (PIL).

Glovis is now its majority contributor to total contracted revenue, making up 31 per cent of PST’s total.

PIL makes up 24 per cent of total charter revenue, down from 35 per cent; Jiangsu Shagang 24 per cent from its previous 34 per cent; and Cosco Xiamen 14 per cent, down from 19 per cent. CSAV takes up 7 per cent, down from 12 per cent.

Separately, PST announced that it has secured financing worth US$150 million from Bangkok Bank, DBS Bank and Malayan Banking that will pay for about 81.9 per cent of its MPPs and capesize bulkers, costing about US$183 million in total.

The remaining 20 per cent of the vessels’ cost considerations are drawn from ‘funds made available from PST’s existing cash retention programme’.

Mr Teo said the securing of the bank financing should make it unnecessary for PST to raise new equity to fund these acquisitions.

The loan-to-value (LTV) ratio of PST is now at 46 per cent for its 12 container ships.

When the two capesize bulkers are delivered in September 2011, it will increase to 52 per cent.

After all nine new vessels are delivered in 2013, LTV ratio will reach 55 per cent.

PIL will be providing pre-delivery down payment for the five new supramax bulk carriers.

PST closed trading in the market yesterday 1.5 cents higher at 36 US cents.