Pacific Basin swoops for four bulkers

Pacific Basin Tiawai Point
Dirty tankers and dry bulk vessels to benefit most from reductions in Excess of Loss rates

Hong Kong’s Pacific Basin Shipping is set to acquire four bulk carriers for US$88.5m.

In a release issued on 14 May the company announced it had reached an agreement to purchase two supramax and two handysize vessels through a combination of cash and new shares.

The vessels include one second hand supramax (2010 built) for US$15.5m delivery Q1 2019; one resale newbuilding supramax (2018 built) for US$28m delivery mid-2018; one second hand handysize (2015 built) for US$20.5m delivery Q4 2018 and; a resale newbuilding handysize (2018 built) for US$24.5m delivery Q4 2018.

To complete the deal Pacific Basin will pay US$44.21m and issue to the ship’s sellers a total of 170,760,137 new Pacific Basin shares.

The new shares will be issued under the company’s General Mandate, and will in aggregate represent approximately 3.68% of Pacific Basin’s enlarged issued share capital after the allotment and issue of all these new shares.

The issue price of HK$2.036 per new share issued to the ships’ sellers is equal to the average closing price for the last five trading days immediately prior to the date of the ship acquisition contracts.

Pacific Basin also revealed that it had acquired a 2009 Japanese-built 32,000 dwt Handysize log/bulk carrier at the end of April in an all-cash deal with expected delivery in June 2018. Following the delivery of this ship and the four vessels in the above-mentioned transaction, Pacific Basin’s owned fleet will grow to 111 ships.

Putting the case for the sudden expansion of the fleet the company said: “These vessels are modern, high quality Imabari and Tsuneishi-built ships with designs suitable for the company’s operations.

“Two of the four vessels are Supramaxes, allowing us to increase our relatively low proportion of owned versus chartered-in Supramax vessels. The Dry Bulk market is recovering and we consider that these purchase prices are attractive and that the vessels will be beneficially employed within the Group’s fleet for the long term after they are delivered.

“The 2015-built Handysize ship we are buying is currently under our long-term time charter, so our purchase of this vessel would replace our charter cost with significantly lower operating costs and thus benefit our operating cash flow.”

Just a month ago a leading shipbroker told a Hong Kong audience that there was as much as 30% to 50% upside on bulkers compared to when the market was previously at the current level.

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