Pacific Basin Rights Issue for $151mln
By Aiswarya Lakshmi
Monday, April 18, 2016
Hong Kong bulker Pacific Basin has proposed a one-for-one rights issue in a bid to raise approximately $150.6m for strengthening its long term equity capital.
The shipping company plans to sell around 1.9 billion rights shares at a price of HKD0.60 per share, representing a 58.3% discount to last Friday’s closing price of HKD1.44 per share.
The net proceeds of the proposed Rights Issue will add long term equity capital which will be used to:(1) strengthen the Company’s balance sheet and liquidity position at a time when a number of companies in the industry are experiencing financial distress; and (2) allow the Group to reserve cash for potentially attractive acquisitions of second hand Handysize and Supramax vessels at historically depressed prices.
Leveraging the Group’s business model, the potential acquisitions would be able to generate an earnings premium compared to market indices.
Mats Berglund, Chief Executive Officer of Pacific Basin said: “This Rights Issue represents a significant transaction for the Company, adding new equity by offering existing shareholders the opportunity to buy new shares in proportion to their existing shareholdings."
He added: "This fundraising removes any doubt about our ability to safely navigate the protracted weak market and the expected put of our 2018 Convertible Bond in October 2016. Instead, it puts us on the front foot and enhances our ability to carefully assess and potentially capitalise on opportunities in the weak market.”