Hong Kong-listed dry bulk shipping company Pacific Basin Shipping is planning to raise approximately USD 150.6 million through a rights issue.
Pacific Basin says the proposed rights issue is to add a long-term equity capital which will be used to strengthen the company’s balance sheet and liquidity position and allow to reserve cash for potential acquisitions of second-hand Handysize and Supramax vessels ‘at historically depressed prices’.
Under the move, the company is to grant its shareholders to buy shares at a subscription price of approx. USD 0.08 on the basis of one rights share for every existing share. A discount is approx. 58% to the closing price of USD 0.19 on 15 April 2016.
“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. 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,” Mats Berglund, Chief Executive Officer of Pacific Basin, points out.
Pacific Basin’s underlying loss in 2015 was USD 27.8 million driven by continued oversupply and reduced dry bulk demand. Due to the challenging market conditions, the company underwent many changes trying to reduce expenses such as the exit from RoRo and towage business and focusing fully on dry bulk business.