Hong Kong-listed shipowner and operator Pacific Basin Shipping will raise $175 million via selling convertible bonds. Mats Henrik Berglund led Pacific Basin Shipping will use the money for fleet expansion, renewal, and general corporate purposes. Pacific Basin Shipping’s bonds would mature in December 2025 with a bondholder’s put option in December 2023.
Pacific Basin Shipping’s bonds’ initial conversion price is set at $0.31 per share, representing a 31.9% premium on the closing share price of 31 October 2019. According to CEO Pacific Basin Shipping’s CEO Mats Henrik Berglund, a $175 million bond plan is attractive and beneficial to shareholders. $175 million bond plan is on attractive terms that would enhance the Pacific Basin Shipping’s balance sheet and liquidity position to support the organic expansion and renewal of the fleet. Out of a $175 million bond plan, $49.5 million would be used to fund the earlier acquisition of four handysize bulk carriers.
In September 2019, Pacific Basin Shipping acquired two (2) supramax and two (2) handysize bulk carriers for about $74 million. In September 2019, Pacific Basin Shipping was planning to fund the acquisition of four (4) second-hand bulk carriers with cash and selling new shares worth about $25 million. HSBC, BNP Paribas, and DNB Banks are acting as the joint lead managers for a $175 million bond issue which is subject to Pacific Basin Shipping’s shareholders’ approval.
Hong Kong-based shipowner and operator Pacific Basin Shipping is buying two (2) supramax and two (2) handysize bulk carriers from for about $74 million which will be 33% funded by equity and the rest will be paid in cash. According to Pacific Basin Shipping, the dry bulk market is recovering and Pacific Basin Shipping sees upsides in second-hand bulk carrier values and Pacific Basin Shipping’s board considers that these purchase prices are attractive. Three (3) of the bulk carriers already have been on long-term charter of Pacific Basin Shipping. Most likely, handysize bulk carriers 35K DWT MV Saldanha Bay and MV Seal Island, which Pacific Basin Shipping has had on long-term charter for at least a year.
Pacific Basin Shipping will eliminate long-term time charter costs and replace bulk carriers with significantly lower owned cash costs. In order to fund the equity portion of the four (4) bulk carriers, Pacific Basin Shipping will issue just over 106 million new shares, worth about $24 million in total. Pacific Basin Shipping’s shares are being issued at a price of HK$1.80 each, which represents a premium of 5.94% to the average closing price for the last 10 trading days before the bulk carrier acquisition contracts were signed. Acquisition of the four (4) bulk carriers is conditional on gaining approval from the Hong Kong Stock Exchange for the listing of the new shares.
Pacific Basin Shipping is led by Mats Berglund. Pacific Basin Shipping has acquired a total of eight (8) secondhand bulk carriers over the past 18 months. With the latest acquisition, Pacific Basin Shipping increased its fleet up to 115 ships.
Hong Kong-listed Pacific Basin Shipping’s CEO Mats Berglund explained that Pacific Basin will continue to buy more dry bulk carriers. Pacific Basin Shipping has an appetite for fleet growth despite China-America trade wars that assist to take the air out of the dry bulk balloon at the beginning of 2019. Hong Kong-listed Pacific Basin Shipping’s CEO Mats Berglund is sticking to clear sale and purchase targets of his company with bulk fundamentals and Chinese stimulus set to defeat short-term noise.
Pacific Basin Shipping has assets of $342 million in cash and 8 (eight) debt-free handy dry bulk carriers. In 2019, Pacific Basin Shipping operates 112 dry bulk carriers compared to 34 dry bulk carriers in 2012. Pacific Basin Shipping’s CEO Mats Berglund is optimistic for the medium and long term future of dry bulk market despite the drop off in rates at the beginning of 2019. Mats Berglund believes in that dry bulk market fundamental situation will win over the near-term nervousness.
Pacific Basin Shipping will continue to buy secondhand dry bulk carriers. Pacific Basin Shipping’s CEO Mats Berglund still sees a lot of value in secondhand dry bulk carriers. According to Mats Berglund, the gap between five-year-old and newbuilding prices in both the handysize and supramax dry bulk carriers has remained wide for the past 5 years. Pacific Basin Shipping’s CEO Mats Berglund believes that soon new technology and engine designs will be coming to shipbuilding. Pacific Basin Shipping is still looking for secondhand handysize and supramax dry bulk carriers.
Pacific Basin Shipping is aiming to invest more secondhand supramax dry bulk carriers than secondhand handysize dry bulk carriers. In 2018, Pacific Basin Shipping reported a profit of $72.3 million. At the beginning of 201, dry bulk handysize and supramax freight rates fell below the levels seen in the comparable periods of 2017 and 2018. According to Pacific Basin Shipping’s CEO Mats Berglund, it is really hard to predict future freight levels in 2019 and it is too early to say if 2019 will end up being weaker than 2018 overall. Mainly, trade wars and China tariffs on United States soybeans will deeply impact freight rates. Pacific Basin Shipping expects more volatility in 2019.
Pacific Basin Shipping operated 2001 built handy bulk carrier 29K DWT MV Baltic Sea’s one (1) crewman has died and another two (2) were taken to hospital in Mauritius. On 15 June 2018, crewmen were evacuated off Port Mathurin in Mauritius, and the cause of death is still under investigation. Hong Kong-flagged MV Baltic Sea is in the fleet of the Pacific Basin Shipping. After the captain of MV Baltic Sea distress call, MV Baltic Sea deviated to the nearest port of Port Mathurin in Mauritius and activating medevac.
HSBC Global Research raised the target price for Pacific Basin Shipping to HKD 1.80, from HKD 1.70. Previously due to positive supply-demand projection in 2019 HSBC Global Research evaluated the target price of HKD 1.70. HSBC Global Research believes the balance between bulk carrier supply and charterer demand will remain favourable shipowners in 2019.
Hong Kong-listed shipowner and operator Pacific Basin Shipping reported last week that dry bulk sector was past the worst part of the cycle in shipping history. Pacific Basin Shipping expects a gradual market improvement in dry bulk shipping sector.
In Q3 2017, Time Charter Equivalent (TCE) for the Pacific Basin Shipping’s handysize dry bulk carriers was $8,130 and supramax dry bulk carriers was $9,350. HSBC Global Research is now forecasting a loss of $9 million for Pacific Basin Shipping at the end of 2017.
Hong Kong-listed shipowner and operator Pacific Basin Shipping’s fleet number increased to 100 dry bulk carriers after the latest acquisition of 2010 built handy bulk carrier 31K M/V Ocean Harmony for about $9.4 million from the United Ocean Shipping. Even though the sudden jump in BDI (Baltic Dry Index), the dry bulk market has not been sustained a balance between supply and demand. In Q1 2017, Chinese economic and industrial activity has been slowly increasing.