PST – BT

Pacific Shipping Trust sees 15% rise in fleet value

Independent broker values its portfolio of 8 ships at US$287m

PACIFIC Shipping Trust’s (PST) current portfolio of eight ships has been valued at US$287 million. This is 15 per cent higher than the book value and nearly 6 per cent higher than the total purchase price.

The valuation was done by Singapore-based independent broker Team Shipbrokers and was conducted on a charter-free basis. The eight vessels in Pacific’s current portfolio had a book value of US$249 million as at Dec 31, 2007, and their total purchase price was listed as US$271 million at the trust’s initial public offering in May 2006.

‘The rise in our asset values reflects the strong demand for quality container ships in 2007, when both new building and second-hand vessels were sold at record prices,’ said PST Management chief executive Subhangshu Dutt. ‘We hope this valuation dispels the concerns among some investors that ships only depreciate in value.

‘As trustee manager of PST, we are committed to maximising value for unitholders by providing a high, stable yield that comes from a diversified portfolio of quality, well maintained assets,’ he added.

PST will keep to its accounting policy of not revising the book values of its vessels.

PST also announced yesterday the launch of a new 1,800 TEU (twenty-foot equivalent) vessel. The US$43 million vessel is being built at China’s Dalian Shipbuilding Industry (Group) Co and is due for delivery at end-March.

The vessel will be Singapore-flagged and bareboat-chartered to PST sponsor Pacific International Lines (PIL) for eight years. In bareboat charters, the shipowner provides only the ship. The charterer has complete control over the management and operation of the vessel for an agreed leasing period and pays all operating costs including crew stores and bunker.

The Kota Nabil’s sister vessel, another 1,800 TEU container ship costing US$43 million, will be delivered to PST by end-May. These two ships are expected to raise the shipping trust’s total contracted revenue per annum by 15.7 per cent to about US$61.9 million.

Last September, PST announced the acquisition of two 4,250 TEU ships from PIL which it will time-charter to leading South American liner shipping company CSAV. With the latest two new vessels, PST’s portfolio will expand by half from eight to 12 vessels by the end of the year.

‘The early delivery of this vessel will mean that our unit-holders will realise the yield accretion promptly,’ said Mr Dutt. And he assured unit-holders that ‘we are continually on the lookout for more acquisitions which are yield accretive and which can diversify our charterer base’.