Singapore’s Pacific Radiance has unveiled plans for a heavily discounted rights issue as it looks to return to offshore support vessel ownership.
The Singapore-listed company plans to issue 1.35bn new shares at SGD 0.023 each in a move that could raise up to SGD 31.1m ($22m).
The shares are being issued on the basis of three rights shares for every one ordinary share already held by shareholders of the company.
The issue price represents a discount of around 44% to the recent closing market price of SGD 0.041 per share, the company said in a regulatory filing.
Pacific Radiance said it was proposing the rights issue to raise proceeds for making strategic investments and/or acquisitions if such opportunities arise.
“There are opportunities in the market for the group to acquire vessels. But [the sector] is capital intensive, and its growth is largely dependent on the company’s ability to tap equity and/or debt financing,” it said.
“The company is accordingly undertaking the rights issue to raise the capital required to be deployed as and when an opportunity to acquire vessels arise.
“The proceeds from the rights issue are also intended to repay bank borrowings and fund the working capital requirements of the group,” the company added.
Prior to 2022, Pacific Radiance’s core business was owning and operating OSVs, but it was forced to sell its entire fleet as part of a restructuring following the collapse of the offshore market.
The fleet of 33 vessels was sold to Mexican offshore company E-NAV Offshore for a total of $200m.
Now, however, Pacific Radiance said its senior management believes that the offshore marine industry has “turned the corner” and is recovering, and there is an opportunity to return to the offshore business.
“The offshore business is led by a senior management team with over 30 years of expertise, and the board firmly believes that the company’s best interests lie in returning to a familiar and well-understood business domain,” Pacific Radiance said.
The company said the outlook for the offshore oil and gas market is “encouraging”, with demand remaining supportive despite the uncertain geopolitical and economic conditions and supply looking constrained due to modest newbuilding activities after years of tonnage removal during the long downturn.
“For the offshore wind market, the increase in new capital commitments driven by energy transition and focus on energy security is expected to continue driving demand for offshore vessels supporting the offshore wind farm construction and maintenance,” it added.
Clarksons recently reported that since 2021, a strong upward movement in vessel utilisation and day rates has taken hold in the offshore market, as improved demand has combined with the effect of years of supply-side rebalancing via recycling, conversion out and long-term layup.
The shipbroker said its OSV day rate index is up 30% year on year and 107% since its September 2020 low. The OSV specific index is now slightly above its 2014 peak, though this is still 15% below the highest level reached in 2008.
