PST to acquire five new 57,000 DWT Supramax
Bulk Carriers to be chartered to Glovis
SGX-ST Announcement, 26 November 2010
1. INTRODUCTION
(a) Ship Building Contracts(1) with Tianjin Xingang Shipbuilding Industry(2), for the construction of five new 57,000 DWT Supramax Bulk Carriers(3), and
(b) Time Charter Agreements(4) with Glovis5 pursuant to which the New Vessels will, upon delivery, be chartered to Glovis for periods of 8 and 10 years, collectively, the “Transaction”.
2. PRINCIPAL TERMS
2.1 Ship Building Contract The New Vessels are contracted for a total consideration of USD 150.0 Million and will be delivered between November 2012 and April 2013.
2.2 Time Charter Agreements Under the Time Charter Agreements the New Vessels will be chartered to Glovis upon delivery for charter periods of 8 and 10 years. The contracted revenue for the New Vessels for the lives of their respective charter periods will total approximately USD 250 Million.
3. PRE-DELIVERY FINANCING
The Trust’s sponsor, Pacific International Lines (Private) Limited (“PIL”), has agreed to support the Trust by providing pre-delivery financing for the Acquisition. As the pre-delivery financing from PIL is considered an interested person transaction, the Audit Committee of the Trust has met and has given in-principal approval for the financing arrangements.
4. RATIONALE FOR AND BENEFITS OF THE TRANSACTION
The Trustee-Manager believes the Transaction offers various benefits to PST and the unitholders of PST (“Unitholders”) including the following:
4.1 Yield accretion The New Vessels are expected to be accretive to PST’s distributable income once they are delivered and on hire.
4.2 Charterer and Income Diversification Strategy When the New Vessels are delivered and time chartered between Q4 2012 and Q2 2013 respectively, the Transaction is expected to improve the income diversification of PST.
4.3 Asset Diversification Strategy The Transaction provides further diversification of PST’s vessel portfolio which will now include containerships, bulk carriers and multi-purpose vessels. This diversification is expected to benefit Unitholders by reducing the reliance of PST’s income stream on any specific vessel type or any particular sector of the shipping industry.
4.4 Increased Contracted Revenue The New Vessels, when delivered, will provide a stable income stream for PST up to 2023 with PST’s current contracted revenue totaling approximately USD 800 Million.
5. THE CHARTERER
Glovis is an affiliate of the Hyundai Kia Automotive Group and is an investment-grade6 company listed on the Korea Exchange.
6. FINANCIAL EFFECTS OF THE TRANSACTION
Based on the assumption that the Transaction had been effected on 1 January 2009, the proforma financial impact on the earnings per Unit is not material. Based on the assumption that the Transaction had been effected on 31 December 2009, the proforma financial impact on the NTA per Unit is not material.
6 Glovis is rated BBB (Stable) by Standard & Poors and Baa2 (Stable) by Moody’s in 4 November 2010 and 21 September 2010 respectively.
Detailed report at: www.pacificshippingtrust.com.
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1. ship building contracts (the “Ship Building Contracts”)
2. Tianjin Xingang Shipbuilding Industry Co., Ltd. (the “Seller”)
3. five new 57,000 DWT Supramax Bulk Carriers (the “New Vessels”, and the construction and acquisition of the New Vessels is referred to as the “Acquisition”)
4. time charter agreements (the “Time Charter Agreements”)
5. Glovis Co., Ltd, Korea (“Glovis”)
PST Management Pte. Ltd. press release.