Pacific Shipping to buy US$200m of ships a year

(SINGAPORE) Singapore’s Pacific Shipping Trust is in advanced negotiations to buy several ships and plans to add US$200 million worth of ships yearly to its current portfolio of eight container vessels, its CEO told Reuters yesterday.

Pacific Shipping, which has a market cap of US$148 million, is also looking at diversifying its fleet and is particularly interested in bulk carriers, which are currently enjoying ‘exceptionally’ good charter rates.

‘Before the stock markets crashed, there was a tremendous amount of liquidity chasing ships, driving up prices to a point where the corresponding charter rates did not make sense anymore,’ Pacific Shipping chief executive officer Subhangshu Dutt told Reuters in an interview.

Liquidity-rich private equity firms such as Seacastle, linked to the US-listed Fortress Investment Group, and Bear Stearns Merchant Banking have bought up vessels and shipping lines this year, but Mr Dutt said the ‘buying frenzy’ has since died down. ‘Now at least we can sit down and discuss, and prices are no longer a moving target,’ he said.

Mr Dutt said two new container ships that the trust acquired this month for US$136 million will be funded by bank loans, as the ongoing global credit crunch sparked by the US sub-prime crisis has not impacted the shipping sector.

‘The perception for shipping has not changed, which is that it’s backed by solid fundamentals and assets,’ he said, adding that charter rates for container ships should continue rising for the rest of the year, until a seasonal slowdown in early 2008.

Mr Dutt said Pacific Shipping has no need to issue new shares in the trust until 2009, after the two new ships are delivered. ‘Only then will we have the revenue stream to match the new equity. Otherwise we will end up diluting the yield,’ Mr Dutt pointed out.

Pacific Shipping was listed in May 2006 and was the first of three shipping trusts to trade on the Singapore Exchange.

First Ship Lease and Rickmers Maritime Trust have market caps of US$425 million and US$342 million.

Of the three shipping trusts, Pacific Shipping is the only one whose stock is trading at above its IPO price, though Mr Dutt said the trust’s stock price and trading volumes are still ‘below expectations’.

‘We had hoped to see an increase in price and trading volumes with the two new trusts coming in, but we haven’t seen that happening,’ Mr Dutt noted. ‘We’ll need more time and effort to help investors understand the benefits of shipping trusts.’ – Reuters

PST’s two new vessels to boost capacity 61% in ’09

PACIFIC Shipping Trust (PST) said yesterday that its proposed US$136.2 million acquisition of two new vessels will significantly raise its revenue and total fleet capacity in 2009.

Giving more details about the acquisition in a filing to the Singapore Exchange, PST (Singapore’s first publicly listed business trust) said revenue will increase by 54 per cent to about US$53 million per annum and is expected to be yield accretive once the ships are in operation. PST’s fleet capacity will increase by 61 per cent to 22,364 TEU (20ft containers) from 13,864 TEU previously.

The acquisition was first announced in May. The 4,250 TEU vessels cost approximately US$68.1 million each and are chartered to Chilean operator Compania SudAmericana de Vapores (CSAV), the largest liner shipping company in South America. The two ships are being constructed by Dalian Shipbuilding Industry Co in China. They are scheduled for delivery in November and December 2008.

The acquisition is PST’s first since it went public in May 2006.

After the acquisition, the total number of vessels under its portfolio will increase from eight to 10 and trust expenses per vessel could potentially be lower due to greater economies of scale, PST said.

The new vessels will be chartered to CSAV for US$26,000 per day for the first two years and US$25,500 per day for the remaining three years.

PACIFIC SHIPPING TRUST’S US$136 MILLION ACQUISITION TO RAISE REVENUE BY 54% IN 2009

• Acquisition to diversify revenue base and is expected to beyield accretive

SINGAPORE, 14 September 2007 – Pacific Shipping Trust (PST)’s US$136.2 million (S$207 million) proposed acquisition of two new vessels will significantly raise its revenue and total fleet capacity in 2009.

In an announcement to the Stock Exchange today, PST, Singapore’s first publicly-listed business trust, gave more details on the proposed acquisition which was first announced on May 4, 2007.

It said the 4,250 TEU vessels to be acquired from Pacific International Lines (Private) Limited (PIL) and chartered to the Chilean Operator, Compania SudAmericana de Vapores SA (CSAV), the largest liner shipping company in South America, will increase revenue by 54% to about US$53 million per annum and is expected to be yield accretive once they are delivered and in operation.

PST’s fleet capacity will also grow by 61% to 22,364 TEU from 13,864 TEU previously.
The two vessels to be acquired at approximately US$68.1 million each are being constructed at Dalian Shipbuilding Industry Co., Ltd, one of China’s most reputable shipyards. They are scheduled for delivery in November and December 2008 respectively. This is PST’s first acquisition since it went public in May 2006.

The acquisition will diversify PST’s revenue base. After the acquisition, the total number of vessels under PST’s portfolio will increase from 8 to 10 and trust expenses per vessel could potentially be lower due to greater economies of scale.

The new vessels will be chartered to CSAV for US$26,000 per day for the first two years and US$25,500 per day for the remaining three years. CSAV is based in Valparaiso, Chile. As on 12th September 2007, the company operates about 84 ships with a slot capacity in the region of 244,000 TEUs. Listed on the Chilean Stock Exchange, CSAV is ranked 16th in the world among container liner operators.

Subhangshu Dutt, CEO of PSTM, said: “We are pleased that our first acquisition is covered by a charterer of such high standing as CSAV. This acquisition is in line with our principal strategy of investing in quality income-producing vessels which will provide a regular and sustainable steam of income to our unitholders as well as enhance the yields on their investments.”

Mr. Dutt also added that the acquisition could mark the start of a longer-term relationship with CSAV, leading to more value creation opportunities in the future.

In connection with the acquisition, PST has entered into a ship management agreement with PIL for the provision of ship management services for one year with an agreed ship management fee of US$ 90,000 per vessel per annum. As the acquisition from PIL and the provision of ship management services by PIL for a fee would constitute interested person transactions under the Listing Manual as their aggregate value exceeds 5% of the latest audited NTA of PST for the year ended 31 December 2006, the acquisition from and provision of ship management services by PIL is conditional upon approval of PST’s unitholders during the extraordinary general meeting to be convened on a later date.

The trustee-manager is PST Management Pte. Ltd., a wholly-owned subsidiary of PIL, which owns about 34% of PST.

Source : SGX