PST – BT
Pacific Shipping to raise US$92.3m
Proceeds set to finance part of cost of 4 new vessels
AS the global credit crunch starts to affect Singapore shipping companies, Pacific Shipping Trust (PST) yesterday announced a plan to raise US$92.3 million from the stock market through a non-renounceable preferential offering of new units. The proceeds are mainly intended to finance and refinance part of cost of four new vessels.
PST proposes to issue 252.8 million new units at 36.5 US cents per new unit – a 5.2 per cent discount to the average traded price on Friday – on the basis of three new units for every four existing units. The trust’s sponsor, Pacific International Lines (PIL) has undertaken – subject to some conditions – to subscribe and pay for its provisional allocation of the new units, as well as any new units that remain unsubscribed.
PIL is the major unitholder of PST with a current direct interest of 34.6 per cent.
‘In light of the current tight credit markets, the preferential offering represents a unique opportunity for unit holders to participate in a capital-raising exercise that provides certainty of funding, as it is fully supported by our sponsor PIL,’ said trustee-manager PST Management’s CEO Alvin Cheng.
‘While financing for the new vessels has already been secured, the proceeds of the preferential offering will lower our aggregate gearing, providing us with the financial flexibility to react swiftly as yield-accretive investment opportunities arise.’
The move will help strengthen PST’s balance sheet and reduce its leverage to 50 per cent from 69 per cent, Mr Cheng said. This will increase PST’s borrowing capacity to US$120.5 million and enable it to pursue medium-term yield growth opportunities.
Leverage of 70 per cent is about the maximum that lenders are comfortable with, and the fresh capital will give the trust more flexibility.
The increased capital base could also increase trading liquidity, with the percentage of trading units potentially rising to 75 per cent if minority unit holders take up all their allotments, PST said.
PST closed one US cent lower at 37.5 US cents yesterday.