Pacific Basin nets $26m in ship deal
Niche bulk cargo specialist Pacific Basin Shipping yesterday booked a profit of $26.6 million after agreeing to sell five of its vessels and hire them back under 10-year charter arrangements at undisclosed rates.
The US$100 million in revenue Pacific Basin raised from selling the vessels, in the handysize range from 28,000 to 31,000 deadweight tonnes, will be 51 per cent used against the debt the ships carried, and the remainder will be applied to other borrowings.
'The ships that were sold had existing debt that had to be paid up,' chief executive Mark Harris said yesterday. 'The other half was free cash that we could have either stuck in the bank or used in the short term against other debt, which we decided was the better option for now.'
After their disposal, scheduled for next month, the company will have a fleet of 48 vessels - 28 of which it will own - with which it will continue to transport commodities such as iron ore, grains and lumber into mostly secondary ports in and around the Asia-Pacific region.
Pacific Basin was late last year known to be on the acquisition trail, looking to expand its fleet, but the company was subsequently chastened by rapidly rising prices for new handysize vessels, which jumped a comparative 25 per cent in the first quarter.
The prices commanded by the smaller class of bulk vessels have once again started to soften, according to Tim Huxley, the managing director of Clarkson Asia, a prominent shipbroking firm.
'There is beginning to be some pressure on the yards,' Mr Huxley said.
'So the prospects for buyers in the medium term are looking more favourable than they were six months ago.'
Mr Harris agreed that market conditions had improved, but he stopped short of describing them as favourable.
'The big picture is we would like to expand our fleet. The demand from our customers is there,' he said. 'But we're still employing a more cautious approach to any expansion and are waiting for the right time.'