South Korean shipowner Pan Ocean has announced plans to delist its shares from the Singapore Exchange (SGX).
The company said it will offer to buy up shares at SGD 8.70 ($6.56) each, which is an 8.75% premium to the last transacted price of the shares on the last day of trading before the offer was made.
Pan Ocean said the delisting is not a take-private exercise as the company intends to maintain its primary listing on the Korea Exchange (KRX).
On the rationale for the delisting, Pan Ocean said that maintaining its dual listing status leads to “various compliance and associated costs” and that these resources could be better spent on business operations.
In addition, it said the KRX was “geographically more aligned” with the company's business operations and core business competencies.
Just 0.03%, or 170,597 shares, are traded on the SGX, while trading liquidity has been generally thin with just an average of 85 shares traded per day over the past month.
Pan Ocean has also made little use of Singapore’s capital markets and has not carried out any exercise to raise cash funding on the SGX in the last five years.
“The company is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future,” the shipowner said.
Shareholder approval
The delisting is subject to the approval of the SGX and both the delisting and exit offer will be conditional on obtaining approval from shareholders at an extraordinary general meeting.
In early May, Pan Ocean reported a first-quarter operating profit of KRW 48.9bn ($43.3m), which was 14% down on consensus estimates of KRW 57bn.
Shinhan Investment Corp analysts Eo-Yeon Hwang and Young-Hoon Song described earnings from spot contracts as “weaker than expected”.
“Freight rate hikes are not reflected in spot contracts signed in late 2020 and early 2021,” they said.
The two Seoul analysts now forecast that Pan Ocean will report an operating profit of KRW 94bn in the second quarter thanks to bulker additions made since the start of the year.
TradeWinds recently reported that the company had chartered in an additional 35 bulkers since the start of the year based on a quarterly company presentation.
The shipowner increased its bulker fleet from 186 at the end of last year to 221 at the end of the first quarter.
The Pan Ocean bulker fleet now comprises 46 capesizes, 45 panamaxes, 88 handymaxes and 42 handysizes.
If the company exits, the SGX will be left with just two listed traditional shipowners: Uni-Asia Group and Singapore Shipping.
