Pacific Basin sells HK$772m shares

PUBLISHED : Wednesday, 13 May, 2009, 12:00am
UPDATED : Wednesday, 13 May, 2009, 12:00am

Pacific Basin Shipping, the Hong Kong-based bulk shipping company, placed HK$772 million worth of new shares yesterday, the second placement of new stock by the company in about a year.

The company placed 174.73 million shares at HK$4.28 to HK$4.42 each yesterday after the market closed.

The offer price was at a discount of 3.91 to 6.96 per cent to the last closing price of the stock.

Sources said Asian and European investors were keen to subscribe to the shares and the placement was completed at about 8pm. The pricing would be set towards the high end of the offering price, sources said.

Shares in Pacific Basin closed 2.13 per cent lower at HK$4.60 yesterday.

The new shares account for 10 per cent of existing shares and will incur 9 per cent of dilution in net profit per share after the placement. UBS is the bookrunner.

In May last year, Pacific Basin raised HK$2.14 billion from the market at HK$13.52 per share.

The company's stock price has dropped 65.3 per cent over the past 12 months as the global economic downturn cut demand for iron ore and coal, the two key commodities carried by bulk vessels.

The shares have gained 21.69 per cent this year to HK$4.60 in light of the recovery in the Baltic Dry Index, which gauges the blended charter rates on various bulk vessels, in the period.

The index gained one point to 2,215 points yesterday after surging 186.5 per cent this year from 773 points on January 1.

Pacific Basin has US$536 million of commitment on capital investment at the end of last year.

About US$225 million will be paid this year, of which US$114 million is for the investment in roll on, roll off vessels while US$60 million is dedicated for handysize vessels, the 15,000 to 35,000 deadweight tonne dry-bulk vessels.

The bulk shipping company is banking on the diversification to the roll on, roll off business to offset weakening demand on the trading of raw material.

In the first quarter, the company has covered 78 per cent of the total revenue days this year for handysize vessels.

The daily freight rate was fixed at US$15,430, compared with US$16,950 set a year earlier.