HI Gold Ocean No. 2 launches IPO

HI Gold Ocean No. 2 launches IPO
HI Gold Ocean Ship Investment No. 2 (HGO No.2) launches initial public offering (IPO) from coming Mar. 14 as first approved by MLTM in last Feb. for fund raising in 100% IPO under Korea Ship Investment Company (KSIC) Act amid attention.

HI Investment & Securities (HISS) announced on Mar. 9 that it will open subscriptions for HGO No. 2 at its branch offices across Korea over two days between Mar. 14 and 15.

HGO No. 2 offers KW 5,090 per share for subscriptions with a total number of 13.33904 million (mln) shares to raise KW 67.9110 billion in gross proceeds for the funding of two newbuilding 37,000-dwt handy bulkers.

HI Gold Ocean Ship Investment No. 1 (HGO No. 1) which was launched under Korea Capital Market Consolidation (KMCM) Act in the same structure as HGO No. 2) last year had been all sold out within 5 hours from the subscriptions opened. Meantime HGO No. 2 will take IPO procedures under KSIC Act for subscriptions to be followed by allocations of the subscribed shares.

HGO No. 2 is to be subscribed in minimum 100 shares by each individual investor at a yield rate of 7% per annum payable every three months for interest dividends. As this fund is designed fully in stock form, investors can expect to benefit the sales gains from the disposal of the vessel at a rising market in the shipping boom. The fund basically matures at the end of five years, but its maturity can be further extended up to 10 years longest depending upon the vessel market recovery.

HGO No. 2 offers net revenue increase effect for each individual investor based on 7% dividend income payable per year plus tax advantages of exclusion from standards of composite income tax because the separate taxation is imposed at 5% (5.5% inclusive of residence tax) on the dividend income up to KW 100 mln and at 14% (15.4% inclusive of residence tax) on the dividend income exceeding KW 100 mln respectively until the end of 2013 under KSIC Act.

Newbuilding contract for HGO No. 2 is scheduled to be concluded with Hyundai Mipo Dockyard for two 37,000 dwt handy sized bulkers at a contract price of US$ 26 mln (KW 29 bln) per vessel for deliveries set in Jan. and Mar. in 2012.

The vessels are to be fixed for 5 year bare boat charter to Hanjin Shipping at US$ 7,824 daily upon delivery.

On the other hand, HGO No. 2 can produce no dividends payable to investors in the event the charterer fails to pay due hire as it is designed 100% in stock form, and the principal amount invested cannot be recovered at a falling market in shipping slump after the fund matures.