Singapore’s Pacific Radiance has received a mixed reception to its heavily discounted rights issue despite the current strength of the offshore market.
The Singapore-listed company received acceptances for just under 1bn of new shares or close to 74% of the planned issue of 1.35bn.
Valid acceptances totalled 783.9m shares, of which 687.6m where rights shares accepted and subscribed for by the existing majority shareholders.
As a result, the company will now only raise around SGD 22.94m ($17.1m) before costs of SGD 170,000 related to the rights issue.
Pacific Radiance, led by acting chief executive James Pang, had priced the new shares at SGD 0.023 in a move that would have raised up to SGD 31.1m if the offering had been fully subscribed.
The bulk of the funds raised, about SGD14.1m, will go towards the acquisition of new offshore vessels, while the remainder will go towards repaying bank debt.
In November 2023, Pacific Radiance announced plans for the rights issue to raise proceeds for vessel acquisitions as it looked to return to offshore support vessel ownership.
“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 at the time.
The shares were issued on the basis of three rights shares for every one ordinary share already held by shareholders of the company.
The issue price represented a discount of around 44% to the closing market price of SGD 0.041 per share made before the announcement of the fundraiser.
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 $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.
Clarksons says 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, although this is still 15% below the highest level reached in 2008.
