Is Pan-United’s port listing good for shareholders?

SINGAPORE (May 12): On May 3, Pan-United announced a renounceable non-underwritten rights issue of up to 141.6 million new shares at 43 cents each to raise some $61 million. The issue price is a steep discount of 41.1% to Pan-United’s closing price of 73 cents a share prior to the announcement.

Following the rights issue, Pan-United intends to restructure its ports business, Xinghua Port Holdings and distribute shares in this business to shareholders. Currently, Xinghua owns 90% of Singapore Changshu Development (SCD). SCD owns 95% of Changshu Xinghua Co (CXP), which in turn owns 90% of Changshu Changjiang International Port Co (CCIP). Both CXP and CCIP are port operators in China. The other 10% of SCD is held by Petroships Investment.

Petroships will swap its 10% stake in SCD for a 10% stake in Xinghua. Xinghua will also issue new shares worth up to 5% of the company to some employees and business partners. Finally, a $102 million loan extended by Pan-United to Xinghua will be converted into Xinghua shares. Pan-United will then distribute all its shares in Xinghua to Pan-United shareholders. Subsequently, Xinghua will cease to be a subsidiary of Pan-United.

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