28-Apr-07 Rickmers priced at $1.57 per unit SHIPPING trust Rickmers Maritime is set to raise S$266 million in its Singapore initial public offering after it priced the deal at S$1.57 a unit yesterday. The final offer price is near the upper end of the official indicative price range of S$1.40 to S$1.62 a unit. Rickmers Maritime, a trust by German shipping firm Rickmers Group, is issuing 169.68 million units in its IPO, or 44.5 per cent of the total outstanding units. This is the third IPO for a shipping trust in Singapore in the past 12 months. First Ship Lease Trust priced its US$216 million IPO last month and Pacific Shipping Trust listed in May 2006. At the IPO price, the projected yield for a Rickmers unit would be 8.2 per cent, the company said in a statement. This would be below the 8.69 per cent offered by First Ship Lease. First Ship Lease is currently at US$0.94, or 4 per cent below its IPO price of US$0.98 a unit. Some 104.67 million units, or 27.5 per cent of the Rickmers total units, will be sold to cornerstone investors - Fidelity Investments Management, Bennelong Asset Management LLP, Citigroup Global Markets Ltd, Templeton Asset Management Ltd, and UOB Asset Management Ltd. Hamburg-based Rickmers Group and one of its associates will initially inject five ships into the trust. Rickmers Maritime has agreed to buy five more container ships later. Rickmers Group, which will hold a 28 per cent stake in the trust after it is listed, is controlled by its chairman Bertram Rickmers, whose family has been involved in the shipping industry for 170 years.Citigroup and Deutsche Bank are the joint global coordinators and bookrunners, whilst DBS Bank is a joint lead manager and coordinator. - Reuters
CONTAINERSHIP-BACKED business trust Rickmers Maritime aims to raise $444 million or more from a Singapore listing that will make it the third shipping trust on the local bourse. At an offer price range of $1.40 to $1.62, the trust, sponsored by German shipping powerhouse Rickmers Group, promises investors a tax-free dividend yield of 8 to 9.2 per cent for the nine months ending December 2007, and for projected years 2008 and 2009. Almost 8.5 million units are on offer to retail investors - less than 5 per cent of the total shares on offer. The rest will be placed to institutional investors.
Separately, cornerstone investors including Fidelity Investments Management, Templeton Asset Management and UOB Asset Management will subscribe for 27.5 per cent of the trust. Rickmers Group will retain about 28 per cent of what its founder and chairman Bertram Rickmers calls the group's 'little baby'.
At the news briefing yesterday Mr Rickmers, with other senior executives of the group, took pains to distinguish the trust's structure from Singapore-listed First Ship Lease (FSL) Trust and Pacific Shipping Trust.
For one, Rickmers Maritime will focus on containerships with capacity of at least 3,450 TEUs (Twenty-Foot Equivalent Units and attached charters of at least a year. And as sponsor, it will take on risk for the trust. 'We can order vessels on speculation and warehouse them,' said Mr Rickmers, the fifth-generation chairman of the family-owned company. The Rickmers family has been in shipping for more than 170 years and the group has expanded its fleet of ships owned or managed from 22 in 1997 to 81 at end-January this year.
Another key difference is that although Rickmers' business trust structure allows it to pay all operating cash flow as dividends, it intends to retain 25 per cent of cash flow. The retained cash is necessary for reinvestment and to ensure the trust's long-term sustainability, said CFO Quah Ban Huat, who was previously CFO at local energy retailer CityGas. Group chairman Mr Rickmers said the target yield will be met based on a three-quarters payout ratio - yield would be even higher if cash flow was distributed in full.
Like with FSL, a reward structure to incentivise dividend growth is in place. Rickmers will subordinate the payout of half of its units, or 15 per cent of the trust, to meet a minimum payout of 2.14 US cents to common shareholders. Management will receive incentive payments if distributions exceed 2.4 US cents a unit. Unlike with FSL, the management fee of a base US$1.6 million a year, with a variable component of 0.9 per cent of net charter revenue, is not subordinated to dividend payments.
Rickmers Maritime's initial portfolio of five vessels will be leased to three of the top five containership liners - Maersk, CMA CGM and Italia Marittima, which is part of Taiwan's Evergreen Group. Rickmers aims to reach out to the top 15 to 20 operators. It has plans to acquire five more vessels within a year and will draw down its debt facility of US$360 million to do so. It also has first right of refusal to nine Rickmers-owned vessels now under construction.
