RICKMERS, ssb remains a BUY with target price $2

Rickmers signs deal to buy 4 new vessels

This, together with a recent acquisition, will more than double its capacity

RICKMERS Maritime, which was floated on the Singapore Exchange (SGX) mainboard in May, has set sail to more than double its contracted fleet capacity. The business trust, which owns and operates containerships, said yesterday that it has signed a memorandum of understanding (MOU) to purchase four new 4,250 TEU (twenty-foot equivalent unit) vessels at US$69 million each.

This acquisition, together with a recently announced acquisition of four 13,100 TEU container vessels, will propel Rickmers to a contracted fleet capacity of 110,310 TEUs, up from 40,910 TEU.

The latest four vessels, to be acquired from Polaris Shipmanagement Company, are scheduled for delivery between February and December 2009 from the Jiangsu shipping facilities of Yangzijiang Shipbuilding (Holdings), also an SGX mainboard company.

Each vessel, to be paid on delivery, will commence service upon delivery with seven-year, fixed rate time charters to Hanjin Shipping in Seoul at US$25,950 per day.

Hanjin, Korea’s largest carrier that operates about 60 liner and tramper services transporting more than 100 million tonnes of cargo annually worldwide, also has the option to extend the charter period for another three years at a higher rate of US$27,950 per day.

Each of the new vessels is expected to contribute about US$9 million in revenue and US$7 million in Ebitda (earnings, before interest, tax, depreciation and amortisation) per annum in the initial years, which should add to distributable cash flow, said Quah Ban Huat, CFO of Rickmers’ trustee-manager.

Financing is being arranged, he said.

The four vessels are among the nine 4,250 TEU vessels that Rickmers said, during its IPO, that it would have the right of first offer to purchase.

‘With this acquisition in place, we will boast a more diversified network of liner companies that we collaborate closely with,’ said Thomas Preben Hansen, CEO of the trustee-manager.

RICKMERS MARITIME SPEEDS UP ACCRETIVE GROWTH WITH ACQUISITION OF FOUR 4,250 TEU CONTAINER VESSELS

Seven-year time charters to largest Korean liner shipping company
Acquisitions expected to be yield-accretive
Continues rapid expansion of fleet capacity

Singapore, 12th September 2007 – Rickmers Trust Management Pte. Ltd. (“RTM”), the trustee-manager of Rickmers Maritime, is pleased to announce that it has entered into a memorandum of understanding (“MOU”) to acquire four 4,250 TEU container vessels (the “Vessels”) from Polaris Shipmanagement Company Limited pursuant to the right of first offer granted to RTM under the Omnibus Agreement dated 24 April 2007 entered into by (1) RTM (acting on behalf of Rickmers Maritime), (2) Rickmers Holding GmbH Cie. KG, (3) Pacific Holdings International GmbH & Cie. KG and (4) Mr. Bertram R. C. Rickmers. The new acquisitions are in addition to the recently announced acquisition of four 13,100 TEU container vessels, which together will increase Rickmers Maritime’s current total contracted fleet capacity by 170% from 40,910 TEU to 110,310 TEU.

The four new Vessels are scheduled to be delivered between February and December 2009 from Yangzijiang Shipbuilding (Holdings) Ltd.’s (“Yangzijiang”) new shipbuilding facilities in the Jiangsu province of the People’s Republic of China (“PRC”). Yangzijiang is one of the leading shipbuilders in the PRC and is listed on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The purchase price of each vessel is US$69.0 million, to be paid upon delivery of the respective Vessels to Rickmers Maritime.

Each vessel will commence service upon delivery with seven-year, fixed-rate time charters to Hanjin Shipping, Seoul (the “Charterer”) at US$25,950 per day. Upon expiration of the initial seven-year charter period for each vessel, the Charterer has the option to extend the charter period for an additional three years at US$27,950 per day. Hanjin Shipping is Korea’s largest carrier that operates approximately 60 liner and tramper services transporting over 100 million tons of cargo annually worldwide. It ranks among the world’s top 10 container carriers¹. The Vessels will be built based on the same design as Rickmers Maritime’s current fleet of 4,250 TEU vessels, and this is expected to result in economies of scale and operating efficiencies. Each of the Vessels will be 260 metres in length, 32.25 metres in breadth and will have a cargo carrying capacity of 50,000 metric tonnes. The MAN B&W 49,720 horsepower fuel-efficient engines will allow each vessel to sail at a service speed of 24.5 knots.

The Vessels are among the nine 4,250 TEU vessels that were disclosed in Rickmers Maritime’s Initial Public Offering Prospectus² as falling under the right of first offer granted to RTM through Rickmers Group. These Vessels will provide a boost to Rickmers Maritime’s already fastgrowing fleet capacity. Last month, RTM announced the acquisition of four mega-sized container vessels, which at 13,100 TEU are among the largest container vessels in the world to be built.

Mr. Thomas Preben Hansen, Chief Executive Officer of RTM said: “With this MOU, Rickmers Maritime is taking yet another major step towards achieving growth through accretive acquisitions with well-established and internationally renowned counterparties. Hanjin Shipping is the largest Korean container liner shipping company and we are proud to have them as our partner. With this acquisition in place, we will boast a more diversified network of liner companies that we collaborate closely with.”

Mr. Quah Ban Huat, Chief Financial Officer of RTM, added, “Each of the new Vessels is expected to contribute approximately US$9 million in revenue and US$7 million in EBITDA³ per annum in its initial years, which should lead to an increase in distributable cash flow once the Vessels are delivered and operating. Financing the new acquisitions is currently being arranged and will be announced as soon as it is finalised. Going forward, we will continue to seek yield accretive acquisitions as part of our growth strategy and goal to deliver positive returns to our Unitholders.”

The purchase of the Vessels is subject to the entry into of Memorandum of Agreements. The transaction will be classified as an interested person transaction under the Listing Manual of the SGX-ST and is subject to the approval of Unitholders at an extraordinary general meeting (“EGM”) to be convened. A circular in relation to the acquisition containing more detailed financial information, a notice of the EGM and the recommendation of the audit committee will be dispatched to Unitholders in due course.

¹ Source: AXS-Alphaliner TOP 100, Operated fleets as at 12 September 2007
² Dated 24 April 2007
³ EBITDA to be net earnings before interest, undrawn credit facility fees, taxes, depreciation and amortisation of deferred financing fees, drydocking expenses and charter contracts.

Source : SGX

BUY S$1.53 STI : 3,228.66
Price Target : 12-Month S$ 1.80
Reason for Report : Initiating coverage
Potential Catalyst : Acquisitions

Acquisition pipeline from Sponsor

Contracted fleet of ten vessels with staggered deliveries up to Feb 08. As at IPO, RMT’s initial portfolio consisted of five container vessels with a total capacity of 20,460 TEUs. A sixth vessel, CMA CGM Azure, was recently delivered ahead of schedule with another four to be delivered by Mar 08. As such, RMT’s fleet capacity will almost double, rising from 20,460 TEUs as at IPO to 40,910 TEUs in less than twelve months from date of listing. Following the delivery of these vessels, the average age of the vessels will be 1.1 years. These vessels are/ will be on long-term, fixed rate time charters to leading liner companies, such as Maersk Lines, CMA CGM and Italia Marittima (part of the Evergreen Group).

Pipeline. RMT recently entered into an MOU to acquire four 13,100TEU vessels, which will raise its contracted fleet capacity by 128% to 93,310 TEUs. The vessels will start to contribute from between Aug and Nov 2010 and will be chartered out to AP Moller-Maersk for ten years. Established reputation and relationship of the Rickmers Group. Rickmers Group is a leading container vessel owner and has developed strong relationships with some of the world’s largest container liner shipping companies such as Maersk Line, CMA CGM, CSAV, MSC, NOL, Evergreen, OOCL, NYK, Hamburg Sud and Hapag-Lloyd. RMT is able to leverage on
this.

Attractive growth platform – Right of First Offer/non-compete arrangements with Rickmers Group. RMT will be the exclusive vehicle of the Rickmers Group for acquiring, owning and operating containerships of at least 3,450 TEU. The Rickmers Group will also give RMT an opportunity to negotiate with and acquire from third parties, ahead of all other Rickmers Group members, any containerships of at least 3,450 TEU that have charters of more than one year.

Rickmers Maritime posts US$2.8m net profit

RICKMERS Maritime – Singapore’s third shipping trust which was listed in May this year – posted net profit of US$2.8 million for its first financial period from March 30 to June 30.

Rickmers, managed by Rickmers Trust Management, was constituted on March 30 and acquired its initial fleet of five containerships on May 3. Its first operating period is therefore essentially May 4 (when it was listed) to June 30.

The shipping trust reported revenue of US$7.3 million and announced a distribution of 1.364 US cents per unit, in line with projections, for the period.

The aim of the trust is to provide its unit holders with regular quarterly cash distributions through revenue generated by long-term fixed rate time charters of its fleet of container vessels. The current fleet comprised six containerships with four more to be delivered in the coming months.

Rickmers generated US$5.9 million of available cash from operating activities, about 12 per cent higher than the initial public offering forecast.

Rickmers expects to benefit from the continuing strength of the containership market. It pointed to increases being recorded in newbuilding prices as well as second-hand values and charter rates.

The availability of charter free containerships, especially in the sizes exceeding 3,500 TEU, has been significantly reduced with only a limited number of ships coming onto the market over the next 12-18 months, the trust said.

‘The momentum in the market has been fuelled by continuous strong trade growth figures reported in the westbound Far East- Europe trade, which has somewhat compensated for the more moderate growth figures reported on the Transpacific trade,’ it said.

The first shipping trust – Pacific Shipping Trust – made its debut in May last year, followed by First Ship Lease Trust and Rickmers Maritime.