ocbc report today highlights the fact that Rickmers needs a lot of loans to pay for new ships ordered. but how to raise so much $? At what price, equity? We also note that credit facilities for the US$711.6m vessels due in FY10 have not been arranged yet. We believe the market value of those vessels would have taken a hit versus the asset cost pre-fixed by RMT. So even if lenders provide 100% loan-to-market value, it would not cover the cost of the vessel. We expect the terms on those facilities to be even more stringent, and expect fresh equity will again be needed to fund the FY10 vessels. In total, we estimate that RMT needs around US$600m in fresh equity, at least, over the next two or three years. At current price levels, any issue would be highly dilutive to existing unitholders.
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