A connected transaction between Bocimar and Wah Kwong Newbuildings (WKNB) will allow Bocimar to buy an undisclosed stake in Otter Shipping for US$1 from Albatros Investments. Otter, which has entered into a shipbuilding agreement with Sasebo Heavy Industries to build a 169,770 deadweight tonne bulk carrier for $35 million, is due to take delivery of the vessel in July. Terms of the deal are that Bocimar will enter into a five-year time-charter agreement with Otter. However, WKNB can require Otter to sell the vessel to a third party at any time before the end of the charter. If it does, Bocimar will receive half of any profit. Upon expiration of the charter, Bocimar has the option to buy half the issued share capital of Otter at a price equal to 50 per cent of the equity of the company. Otter is a wholly owned subsidiary of Albatros, which is a wholly owned subsidiary of CMB, of which Bocimar is a wholly owned subsidiary. WKNB is a wholly owned subsidiary of Wah Kwong Shipping Holdings, in which CMB indirectly owns a stake of about 27.8 per cent. The deed between Bocimar and WKNB constitutes a connected transaction under Listing Rules. Wah Kwong Shipping Holdings secretary Li Man-kit said ordering the vessel in a rising market created an opportunity to make a profit from the vessel's resale. Trading of vessels was an integral part of the business of a shipping group and had contributed significantly to the results of the company in particular, and to the tramping sector of the shipping industry in general. By obtaining a commitment to a time charter of five years at market rates in advance of anticipated delivery, the directors believed the terms of the time charter were favourable to the group. A board committee comprising Yuning Fu and William Turnbull has been established to advise independent shareholders about the deed. Mr Li said a special general meeting would be convened as soon as practicable at which a resolution would be put forward for the independent shareholders to approve the deed. Bocimar Far East Holdings would be required to abstain from voting on the resolution.