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Rickmers Maritime eyes new equity for newbuildings

By Marcus Hand in Singapore - Wednesday 23 April 2008

RICKMERS Maritime is looking to raise $500m in new equity over the next three years to finance the remainder of its $1.3bn newbuilding programme.

The Singapore-listed shipping trust is seeking approval from shareholders to issue new securities on one or more occasions with a gross value of up to $650m.

In a roadshow presentation to unitholders ahead of an extraordinary general meeting on 5 May, Rickmers proposed three equity issues between now and the third quarter of 2010 to raise up to $500m.

These would be $100m in equity fund raising some time between now and the first quarter of 2009, $80m in the third quarter of 2009, and $320m in the third quarter of 2010.

Rickmers recently secured $627m in new credit facilities, which effectively cover the financing of nine 4,250 teu newbuildings it has on order for delivery by the end of 2009. The newbuildings are for long term charter contracts with Mitsui OSK Lines and Hanjin Shipping.

Rickmers Trust Management chief financial officer Quah Ban Huat described the plans as an “assumption” and that it was “not a commitment to raise equity”.

The trust stressed that the timing and size of any the equity issue would depend on the market conditions. Mr Quah added that if the market was poor it would not raise equity.

The first proposed issue of $100m would be to partially repay a $130m top-up debt facility, while the second $80m issue would be to partially fund the last three 4,250 teu newbuildings.

The trust has combined debt and cash of $670m, more than covering the $636m cost of the nine newbuildings.

The trust has long term aim of a 50:50 debt-to-equity ratio, and Mr Quah said it would also like to have some capacity to acquire more vessels. Rickmers Maritime is actively looking for more deals both on newbuildings and secondhand vessels.

A third round of proposed equity raising of $320m in the third quarter of 2010 would be to partially fund four 13,100 teu newbuildings being built at a cost of $711.6m, and all destined for long term charters with Maersk Line. The remaining $391.6m in investment for the four newbuildings would be funded through debt financing to be obtained at a later date, and cash reserves and excess cash from operations.