JINHUI SHIPPING AND TRANSPORTATION LIMITED
JIN - AGREEMENT SIGNED ACQUISITION OF A VESSEL
The board of directors (the "Board") of Jinhui Shipping and Transportation Limited (the "Company")
announces that Jinchao Marine Inc. ("Jinchao"), a wholly-owned subsidiary of the Company, entered
into a contract on 10 March 2008 to acquire a Panamax newbuilding at a purchase price of
JPY5,550,000,000 (the "Acquisition").
THE CONTRACT
The Acquisition
Pursuant to a contract (the "Contract") entered into between Jinchao and Xing Long Maritime S.A.
(the "Contractor") on 10 March 2008, the Contractor has ordered a designated shipbuilder, Sasebo
Heavy Industries Co., Ltd. (the "Builder") to build and complete a deadweight 75,000 metric tons
type bulk carrier (the "Vessel") in Japan, and has agreed to sell and deliver the Vessel to Jinchao, and
Jinchao has agreed to purchase and take delivery of the Vessel from the Contractor. The Vessel is
proposed to be used for chartering out to gain operating income by Jinchao after delivery.
To the best of the Board’s knowledge, information and belief having made all reasonable enquiry, the
Contractor is an independent third party not connected with the directors, chief executive or
substantial shareholders of the Company or its subsidiaries or any of their respective associates.
Consideration
Subject to certain provisions for adjustment to reduce the purchase price of the Vessel contained in
the Contract relating to, amongst other things, delay in delivery of the Vessel, guaranteed speed
deficiency, guaranteed fuel consumption being exceeded or guaranteed deadweight deficiency, the
purchase price for the Vessel is JPY5,550,000,000 and is payable by Jinchao as follows:
(1) the first installment in the sum of JPY555,000,000 will be payable within three banking days
after signing of the Contract;
(2) the second installment in the sum of JPY555,000,000 will be payable on or before 10 March
2009;
(3) the third installment in the sum of JPY555,000,000 will be payable around October 2010;
(4) the fourth installment in the sum of JPY555,000,000 will be payable around December 2010;
and
(5) the last installment in the sum of JPY3,330,000,000 will be payable upon delivery of the
Vessel on or before 30 April 2011.
The purchase price for the Vessel will be payable by cash in Japanese Yen. It is currently expected
that the purchase price will be funded by bank financing and internal resources of the Company and
its subsidiaries (the "Group"). The purchase price of the Vessel was determined with reference to
current market values of similar type of vessels and on the basis of arm's length negotiations.
Condition Subsequent
According to the Contract, if the construction permission for the Vessel shall not have been granted
by the Japanese Government at least 30 days prior to the erection of the first block of the Vessel, the
Contract shall automatically become null and void, unless otherwise mutually agreed in writing
between all the parties involved. The Contractor shall refund any payment already made by Jinchao
under the Contract with agreed interest to Jinchao. If the Contract becomes null and void, a further
announcement will be issued by the Company in this respect.
Delivery
The Contract provides for the delivery of the Vessel on or before 30 April 2011 to Jinchao in Japan.
Pursuant to the terms of the Contract, if there is any delay in delivery of the Vessel which continues
for a period of 180 days from the thirty-first day after the agreed delivery date, then after such period
has expired, Jinchao may at its option rescind the Contract. The Contractor shall thereupon promptly
refund to Jinchao the full amount of all sums received by the Contractor together with interest
accrued thereon at an agreed rate from the date of receipt by the Contractor of such amount to the date
of full payment to Jinchao of such amount.
Undertaking
Pursuant to the Contract, the Contractor has also agreed to undertake the Builder's warranty of quality
to Jinchao upon delivery of the Vessel including the undertaking by the Contractor to remedy any
defects in the Vessel free of charge to Jinchao due to defective material and/or bad workmanship on
the part of the Builder and/or its subcontractors within a period of twelve months after the date of
delivery of the Vessel.
GUARANTEE BY THE COMPANY
The Company also executed on 10 March 2008 a guarantee in favour of the Contractor pursuant to
which the Company agrees to guarantee the due and faithful performance and fulfillment by Jinchao
in accordance with the terms of the Contract.
REASONS FOR THE ACQUISITION
The Group’s principal activities include international ship chartering and ship owning. The
Acquisition will enable the Group to further complement our owned young and modern fleet of
vessels to serve the growing needs of our customers. The Group currently owns eighteen modern
grabs fitted Supramaxes, one modern Capesize and one modern Panamax. Taking into account all
existing commitments to acquire and dispose of other vessels as announced by the Company
previously, the Group will have additional nineteen newly built grabs fitted Supramaxes, two newly
built Panamaxes and one second hand Handymax for delivery going forward, where four of which
will be delivered in 2008, seven in 2009, five in 2010, three in 2011, two in 2012 and one in 2013.
The terms and conditions of the Contract have been agreed on normal commercial terms following
arm’s length negotiations. The Board considers such terms and conditions are fair and reasonable and
in the best interests of the Company and its shareholders as a whole. The Company believes it is an
opportune moment during recent market situations to further expand its fleet of vessels in order to
increase operating income for the Group.
By order of the Board
Ng Kam Wah Thomas
Managing Director
10 March 2008
JINHUI SHIPPING AND TRANSPORTATION LIMITED, press release
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