JIN - AGREEMENT SIGNED DISPOSAL OF A VESSEL
4 June 2009
The Board of Jinhui Shipping and Transportation Limited announces that Jinhe, a wholly-owned
subsidiary of the Company, entered into a memorandum of agreement with the Purchaser on 4 June
2009 for the disposal of a Panamax for a consideration of US$39,000,000.
THE DISPOSAL
Vendor
Jinhe is a ship owning company and a wholly-owned subsidiary of the Company as at date of this
announcement.
Purchaser
Consideration
Under the Agreement, Jinhe agrees to dispose of the Vessel for a consideration of US$39,000,000 payable by the Purchaser as follows:
(1) an initial deposit of US$7,800,000 will be payable by the Purchaser within three banking days from the date of signing of the Agreement to a bank account in the joint names of Jinhe and the Purchaser and will be released on the delivery of the Vessel; and
(2) the balance of US$31,200,000 will be payable on the delivery of the Vessel which will take place during the period between 15 November 2009 to 31 December 2009 at Jinhe’s option.
The consideration of the Vessel was determined with reference to the prevailing market values, driven by supply and demand and based on arm’s length negotiations with the Purchaser.
Vessel
The Vessel is a Panamax of deadweight 77,250 metric tons, built in 2006 and registered in Hong Kong. Jinhe is a special purpose company for holding the Vessel. The Vessel has been owned by the Group since April 2006 and its net book value as at 31 December 2008 was approximately US$30,273,000. The net profit both before and after taxation and extraordinary items attributable to Jinhe for the financial years ended 31 December 2008 and 31 December 2007 were approximately US$4,354,000 and US$4,351,000 respectively.
Use of Payment Received
The Group intends to use the net sale proceeds received pursuant to the Agreement for the general working capital of the Group.
REASONS FOR THE DISPOSAL
The Group’s principal activities include international ship chartering and ship owning. The Directors continuously review the prevailing market conditions of the shipping industry and monitor and adjust the Group's fleet size as appropriate. The Directors believe that the Disposal will enable the Group to enhance its working capital position and to further improve its liquidity. The Group currently owns one modern Capesize, two modern Panamaxes (including the Vessel), twenty one modern grabs fitted Supramaxes (including three Supramaxes which will be disposed by the Group later in 2009 as announced by the Company on 30 March 2009 and 2 June 2009 respectively) and one Handymax. Taking into account all existing commitments to acquire and dispose of other vessels as announced by the Company previously, the Group will have additional seventeen newly built grabs fitted Supramaxes, two newly built Post-Panamaxes, one newly built Panamax and one newly built Handysize for delivery going forward, where four of which will be delivered in 2009, seven in 2010, six in 2011, three in 2012 and one in 2013. The Board believes that the Disposal will not have any material adverse effect on the operations of the Group.
The terms and conditions of the Agreement have been agreed on normal commercial terms following arm’s length negotiations with reference to the prevailing market values. 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.
Based on the net book value of the Vessel as at 31 December 2008 as described above, the Group would realize a total book gain, after estimated expenses, of approximately US$7.6 million on disposal of the Vessel. However, the actual book gain which the Group would realize upon completion of the Disposal will depend on the actual net book value of the Vessel as at date of delivery in accordance with the Group’s depreciation policy for its vessels as shown in the Company’s annual report.
Jinhui Shipping and Transportation Limited