IMPORTANT NOTICE

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terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result
of such access.
Confirmation of Your Representation: In order to be eligible to view the attached information memorandum or make an investment
decision with respect to the securities, investors must not be a U.S. person (as defined in Regulation S under the Securities Act (as
defined below)). The attached information memorandum is being sent at your request and by accepting the e-mail and accessing the
attached information memorandum, you shall be deemed to have represented to us (1) that you are not resident in the United States
(U.S.) nor a U.S. person, as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the Securities Act) nor
are you acting on behalf of a U.S. person, the electronic mail address that you gave us and to which this email has been delivered
is not located in the U.S. and, to the extent you purchase the securities described in the attached information memorandum, you
will be doing so pursuant to Regulation S under the Securities Act, and (2) that you consent to delivery of the attached information
memorandum and any amendments or supplements thereto by electronic transmission. By accepting this email and accessing
the attached information memorandum, if you are an investor in Singapore, you (A) represent and warrant that you are either an
institutional investor as defined under Section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), a
relevant person as defined under Section 275(2) of the SFA or a person to whom an offer, as referred to in Section 275(1A) of the
SFA, is being made and (B) agree to be bound by the limitations and restrictions described herein.
The attached information memorandum has been made available to you in electronic form. You are reminded that documents
transmitted via this medium may be altered or changed during the process of transmission and consequently none of Rickmers Trust
Management Pte. Ltd. (in its capacity as trustee-manager for Rickmers Maritime), DBS Bank Ltd., The Hongkong and Shanghai
Banking Corporation Limited or any person who controls any of them nor any of their respective directors, officers, employees,
representatives or affiliates accepts any liability or responsibility whatsoever in respect of any discrepancies between the information
memorandum distributed to you in electronic format and the hard copy version. A hard copy version will be provided to you upon
request.
Restrictions: The attached information memorandum is being furnished in connection with an offering of securities exempt from
registration under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities
described therein.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED
STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL
NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER
JURISDICTION AND MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.
Except with respect to eligible investors in jurisdictions where such offer is permitted by law, nothing in this electronic transmission
constitutes an offer or an invitation by or on behalf of Rickmers Trust Management Pte. Ltd. (in its capacity as trustee-manager for
Rickmers Maritime), DBS Bank Ltd. or The Hongkong and Shanghai Banking Corporation Limited to subscribe for or purchase any
of the securities described therein, and access has been limited so that it shall not constitute directed selling efforts (as defined in
Regulation S under the Securities Act).
The attached information memorandum or any materials relating to the offering do not constitute, and may not be used in connection
with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the
offering be made by a licensed broker or dealer and the dealers or any affiliate of the dealers is a licensed broker or dealer in that
jurisdiction, the offering shall be deemed to be made by the dealers or such affiliate on behalf of Rickmers Trust Management Pte.
Ltd. (in its capacity as trustee-manager for Rickmers Maritime) in such jurisdiction. The attached information memorandum may only
be communicated to persons in the United Kingdom in circumstances where section 21(1) of the Financial Services and Markets Act
2000 does not apply.
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located and you may not nor are you authorised to deliver this information memorandum, electronically or otherwise, to any other
person. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase
any of the securities described therein.
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INFORMATION MEMORANDUM DATED 19 NOVEMBER 2013
RICKMERS MARITIME
(a business trust constituted on 30 March 2007 under the laws of Singapore and registered under the
Business Trusts Act, Chapter 31A of Singapore)
(Registration Number: 2007003)
MANAGED BY
RICKMERS TRUST MANAGEMENT PTE. LTD.
(in its capacity as trustee-manager for Rickmers Maritime)
(Incorporated in the Republic of Singapore on 6 November 2006)
(UEN/Company Registration No. 200616499G)
S$ 300 ,000,000
Multicurrency Medium Term Note Programme
(the Programme)
Rickmers Trust Management Pte. Ltd. (in its capacity as trustee-manager for Rickmers Maritime (the Trust)) (the Issuer),
subject to compliance with all relevant laws, regulations and directives, may from time to time issue notes under the Programme
(the Notes). The aggregate nominal amount of Notes outstanding will not at any time exceed S$ 300 ,000,000 (or the equivalent
in other currencies) or such higher amount as may be agreed between the Issuer and the Arrangers.
Notes may be issued in series having one or more issue dates and the same maturity date, and on identical terms (including
as to listing) except (in the case of Notes other than variable rate notes (as described under the section Summary of the
Programme)) for the issue dates, issue prices and/or the dates of the first payment of interest, or (in the case of variable
rate notes) for the issue prices and rates of interest. Each series may be issued in one or more tranches on the same or
different issue dates. The Notes will be issued in bearer form and may be listed on a stock exchange. The Notes will initially
be represented by either a Temporary Global Note (as defined herein) or a Permanent Global Note (as defined herein) which
will be deposited on the issue date with either CDP (as defined herein) or a common depositary for Euroclear Bank SA/NV
(Euroclear) and Clearstream Banking, socit anonyme (Clearstream, Luxembourg) or otherwise delivered as agreed
between the Issuer and the relevant Dealer(s) (as defined herein). Subject to compliance with all relevant laws, regulations and
directives, the Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s) and
may be subject to redemption or purchase in whole or in part. The Notes will bear interest at a fixed, floating, variable or hybrid
rate or may not bear interest or may be such other notes as may be agreed between the Issuer and the relevant Dealer(s). The
Notes will be repayable at par, at a specified amount above or below par or at an amount determined by reference to a formula,
in each case with terms as specified in the Pricing Supplement (as defined herein) issued in relation to each series or tranche of
Notes. Details applicable to each series or tranche of Notes will be specified in the applicable Pricing Supplement which is to be
read in conjunction with this Information Memorandum.
This Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly,
this Information Memorandum and any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of the Notes to be issued from time to time by the Issuer pursuant to the Programme may not be
circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or
purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of
the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the Securities Act),
or with any securities regulatory authority of any state or other jurisdiction of the United States, and are subject to U.S. tax law
requirements. Accordingly, the Notes may not be offered, sold or delivered in the United States or to or for the account or benefit
of U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. See Subscription,
Purchase and Distribution for further details.
Approval in-principal has been received from the Singapore Exchange Securities Trading Limited (the SGX-ST) for the
establishment of the Programme and application will be made for the listing and quotation of any Notes which are agreed at
the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted
to the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or
opinions expressed or reports contained herein. Admission to the Official List of the SGX-ST and quotation of any Notes on the
SGX-ST is not to be taken as an indication of the merits of the Issuer, the Trust, the subsidiaries and associated companies of
the Trust (if any), the Programme or such Notes. Unlisted Notes may also be issued under the Programme.
Joint Arrangers
TABLE OF CONTENTS
Page
NOTICE ................................................................................................................................................ 1
FORWARD-LOOKING STATEMENTS ................................................................................................. 4
DEFINITIONS ....................................................................................................................................... 5
CORPORATE INFORMATION ............................................................................................................. 10
SUMMARY OF THE PROGRAMME .................................................................................................... 11
TERMS AND CONDITIONS OF THE NOTES ..................................................................................... 15
RISK FACTORS ................................................................................................................................... 40
THE TRUST .......................................................................................................................................... 60
SELECTED CONSOLIDATED FINANCIAL INFORMATION ................................................................ 87
PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS ........................................................ 93
CLEARING AND SETTLEMENT .......................................................................................................... 94
SINGAPORE TAXATION ...................................................................................................................... 96
SUBSCRIPTION, PURCHASE AND DISTRIBUTION ......................................................................... 100
APPENDICES
I: GENERAL AND OTHER INFORMATION .................................................................................. 103
II: AUDITED FINANCIAL STATEMENTS OF RICKMERS MARITIME AND ITS SUBSIDIARIES
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 .................................................... 106
III: AUDITED FINANCIAL STATEMENTS OF RICKMERS MARITIME AND ITS SUBSIDIARIES
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 .................................................... 159
IV: UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT
OF RICKMERS MARITIME AND ITS SUBSIDIARIES FOR THE THIRD QUARTER ENDED
30 SEPTEMBER 2013 ............................................................................................................... 213
V: REPORT OF MAERSK BROKER ASIA LTD.............................................................................. 230
VI: REPORT OF CLARKSON RESEARCH SERVICES LIMITED .................................................. 242
NOTICE
DBS Bank Ltd. and The Hongkong and Shanghai Banking Corporation Limited (together, the Arrangers)
have been authorised by the Issuer to arrange the Programme described herein. Under the Programme,
the Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time
issue Notes denominated in Singapore dollars and/or any other currencies.
This Information Memorandum contains information with regard to the Issuer, the Trust, the subsidiaries
and associated companies of the Trust (if any), the Programme and the Notes. The Issuer confirms that
this Information Memorandum contains all information which is or may be material in the context of the
Programme or the issue and offering of the Notes, that the information contained in this Information
Memorandum is true and accurate in all respects, that the opinions, expectations and intentions
expressed in this Information Memorandum have been carefully considered, are based on all relevant
considerations and facts existing at the date of this Information Memorandum and are fairly, reasonably
and honestly held by the directors of the Issuer, and that there are no other facts the omission of which
in the context of the Programme or the issue and offering of the Notes would or might make any such
information or expressions of opinion, expectation or intention misleading in any respect.
No person has been authorised to give any information or to make any representation other than those
contained in this Information Memorandum and, if given or made, such information or representation
must not be relied upon as having been authorised by the Issuer, either of the Arrangers or any of the
Dealers. Save as expressly stated in this Information Memorandum, nothing contained herein is, or may
be relied upon as, a promise or representation as to the future performance or policies of the Issuer, the
Trust or any of the subsidiaries or associated companies of the Trust (if any). Neither this Information
Memorandum nor any other document or information (or any part thereof) delivered or supplied under
or in relation to the Programme may be used for the purpose of, and does not constitute an offer of, or
solicitation or invitation by or on behalf of the Issuer, either of the Arrangers or any of the Dealers to
subscribe for or purchase, the Notes in any jurisdiction or under any circumstances in which such offer,
solicitation or invitation is unlawful, or not authorised or to any person to whom it is unlawful to make such
offer, solicitation or invitation. The distribution and publication of this Information Memorandum or any
such other document or information and the offer of the Notes in certain jurisdictions may be restricted
by law. Persons who distribute or publish this Information Memorandum or any such other document
or information or into whose possession this Information Memorandum or any such other document or
information comes are required to inform themselves about and to observe any such restrictions and all
applicable laws, orders, rules and regulations.
Neither this Information Memorandum nor any other document or information (or any part thereof)
delivered or supplied under or in relation to the Programme shall be deemed to constitute an offer of, or
an invitation by or on behalf of the Issuer, either of the Arrangers or any of the Dealers to subscribe for or
purchase, any of the Notes.
This Information Memorandum and any other documents or materials in relation to the issue, offering or
sale of the Notes have been prepared solely for the purpose of the initial sale by the relevant Dealer(s)
of the Notes from time to time to be issued pursuant to the Programme. This Information Memorandum
and such other documents or materials are made available to the recipients thereof solely on the basis
that they are persons falling within the ambit of Section 274 and/or Section 275 of the SFA and may not
be relied upon by any person other than persons to whom the Notes are sold or with whom they are
placed by the relevant Dealer(s) as aforesaid or for any other purpose. Recipients of this Information
Memorandum must not reissue, circulate or distribute this Information Memorandum or any part thereof in
any manner whatsoever.
Neither the delivery of this Information Memorandum (or any part thereof) nor the issue, offering,
purchase or sale of the Notes shall, under any circumstances, constitute a representation, or give rise to
any implication, that there has been no change in the prospects, results of operations or general affairs
of the Issuer or any of its subsidiaries or associated companies (if any) or in the information herein since
the date hereof or the date on which this Information Memorandum has been most recently amended or
supplemented.
1
The Arrangers and the Dealers have not separately verified the information contained in this Information
Memorandum. None of the Arrangers, any of the Dealers or any of their respective officers, employees or
agents is making any representation or warranty expressed or implied as to the merits of the Notes or the
subscription for, purchase or acquisition thereof, or the creditworthiness or financial condition or otherwise
of the Issuer, the Trust or the subsidiaries or associated companies of the Trust (if any). Further, none of
the Arrangers nor any of the Dealers makes any representation or warranty as to the Issuer, the Trust, the
subsidiaries or associated companies of the Trust (if any) or as to the accuracy, reliability or completeness
of the information set out herein (including the legal and regulatory requirements pertaining to Sections
274, 275 and 276 or any other provisions of the SFA) and the documents which are incorporated by
reference in, and form part of, this Information Memorandum.
Neither this Information Memorandum nor any other document or information (or any part thereof)
delivered or supplied under or in relation to the Programme or the issue of the Notes is intended to
provide the basis of any credit or other evaluation and should not be considered as a recommendation by
the Issuer, either of the Arrangers or any of the Dealers that any recipient of this Information Memorandum
or such other document or information (or such part thereof) should subscribe for or purchase any of
the Notes. A prospective purchaser must make its own assessment of the foregoing and other relevant
matters including the financial condition and affairs and the creditworthiness of the Issuer, the Trust and
the subsidiaries and associated companies of the Trust (if any), and obtain its own independent legal
or other advice thereon, and its investment must be based on its own independent investigation of the
financial condition and affairs and its appraisal of the creditworthiness of the Issuer, the Trust and the
subsidiaries and associated companies of the Trust (if any). Accordingly, notwithstanding anything herein,
none of the Arrangers, the Dealers or any of their respective officers, employees or agents shall be held
responsible for any loss or damage suffered or incurred by the recipients of this Information Memorandum
or such other document or information (or such part thereof) as a result of or arising from anything
expressly or implicitly contained in or referred to in this Information Memorandum or such other document
or information (or such part thereof) and the same shall not constitute a ground for rescission of any
purchase or acquisition of any of the Notes by a recipient of this Information Memorandum or such other
document or information (or such part thereof).
To the fullest extent permitted by law, none of the Arrangers nor any of the Dealers accepts any
responsibility for the contents of this Information Memorandum or for any other statement, made or
purported to be made by either of the Arrangers or any of the Dealers or on its behalf in connection with
the Issuer or the issue and offering of the Notes. Each Arranger and each Dealer accordingly disclaims all
and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might
otherwise have in respect of this Information Memorandum or any such statement.
The following documents published or issued from time to time after the date hereof shall be deemed
to be incorporated by reference in, and to form part of, this Information Memorandum: (1) any annual
reports, audited consolidated accounts and/or unaudited financial statements of the Trust and the
subsidiaries and associated companies of the Trust (if any) and (2) any supplement or amendment to
this Information Memorandum issued by the Issuer (including each relevant Pricing Supplement). This
Information Memorandum must be read in conjunction with all such documents which are incorporated by
reference herein and, with respect to any series or tranche of Notes, any Pricing Supplement in respect
of such series or tranche. Any statement contained in this Information Memorandum or in a document
deemed to be incorporated by reference herein is deemed to be modified or superseded for the purpose
of this Information Memorandum to the extent that a statement contained in this Information Memorandum
or in such subsequent document that is also deemed to be incorporated by reference herein modifies or
supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part
of this Information Memorandum. Copies of all documents deemed incorporated by reference herein are
available for inspection at the respective specified office of the Principal Paying Agent (as defined herein)
or, as the case may be, the Non-CDP Paying Agent (as defined herein).
Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain
conditions set out in the Programme Agreement (as defined herein) and the issue of the Notes by
the Issuer pursuant to the Programme Agreement. Any offer, invitation to offer or agreement made in
connection with the purchase or acquisition of the Notes or pursuant to this Information Memorandum
2
will (without any liability or responsibility on the part of the Issuer, either of the Arrangers or any of the
Dealers) lapse and cease to have any effect if (for any other reason whatsoever) the Notes are not issued
by the Issuer pursuant to the Programme Agreement.
Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to
rounding.
The attention of recipients of this Information Memorandum is drawn to the restrictions on resale of the
Notes set out under the section Subscription, Purchase and Distribution on pages 100 to 102 of this
Information Memorandum.
Any person(s) who is/are invited to purchase or subscribe for the Notes or to whom this
Information Memorandum is sent must not make any offer or sale, directly or indirectly, of any
Notes or distribute or cause to be distributed any document or other material in connection
therewith in any country or jurisdiction except in such manner and in such circumstances as will
result in compliance with any applicable laws and regulations.
Persons proposing to subscribe for or purchase any of the Notes are advised to consult their own
legal and other advisers before purchasing or acquiring the Notes.
3
FORWARD-LOOKING STATEMENTS
All statements contained in this Information Memorandum that are not statements of historical fact
constitute forward-looking statements. Some of these statements can be identified by forward-
looking terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would
and could or similar words. However, these words are not the exclusive means of identifying forward-
looking statements. All statements regarding the expected financial position, business strategy, plans
and prospects of the Issuer, the Trust and/or the Group (as defined herein) (including statements as to
the Issuers, the Trusts and/or the Groups revenue and profitability, prospects, future plans and other
matters discussed in this Information Memorandum regarding matters that are not historical facts and
including the financial forecasts, profit projections, statements as to the expansion plans of the Issuer,
the Trust and/or the Group, expected growth in the Issuer, the Trust and/or the Group and other related
matters), if any, are forward-looking statements and accordingly, are only predictions. These forward-
looking statements involve known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Issuer, the Trust and/or the Group to be materially
different from any future results, performance or achievements expressed or implied by such forward-
looking statements. These factors include, among others:
changes in general political, social and economic conditions;
changes in currency exchange and interest rates;
demographic changes;
changes in competitive conditions; and
other factors beyond the control of the Issuer and the Group.
Some of these factors are discussed in greater detail in this Information Memorandum, in particular, but
not limited to, under the section Investment Considerations.
Given the risks and uncertainties that may cause the actual future results, performance or achievements
of the Issuer, the Trust or the Group to be materially different from the results, performance or
achievements expected, expressed or implied by the financial forecasts, profit projections and forward-
looking statements in this Information Memorandum, undue reliance must not be placed on those
forecasts, projections and statements. The Issuer, the Arrangers and the Dealers do not represent or
warrant that the actual future results, performance or achievements of the Issuer, the Trust or the Group
will be as discussed in those statements.
Neither the delivery of this Information Memorandum nor the issue of any Notes by the Issuer under
any circumstances constitutes a continuing representation or creates any suggestion or implication that
there has been no change in the affairs of the Issuer, the Trust or the Group or any statement of fact or
information contained in this Information Memorandum since the date of this Information Memorandum or
the date on which this Information Memorandum has been most recently amended or supplemented.
Further, the Issuer, the Arrangers and the Dealers disclaim any responsibility, and undertake no
obligation, to update or revise any forward-looking statements contained herein to reflect any changes
in the expectations with respect thereto after the date of this Information Memorandum or to reflect any
change in events, conditions or circumstances on which any such statements are based.
4
DEFINITIONS
The following definitions have, where appropriate, been used in this Information Memorandum:
Agency Agreement : The Agency Agreement dated 19 November 2013 between (1)
the Issuer, as issuer, (2) the Principal Paying Agent, as principal
paying agent, (3) the Non-CDP Paying Agent, as non-CDP paying
agent, and (4) the Notes Trustee, as trustee for the holders of the
Notes, as amended, varied or supplemented from time to time.
Agent Bank : In relation to any Series of Notes, the person appointed as agent
bank for that Series and as specified in the applicable Pricing
Supplement.
Agent Bank Agreement : An agent bank agreement between the Issuer, the Notes Trustee
and the relevant Agent Bank made pursuant to Clause 2.5 of
the Programme Agreement, substantially in the form set out in
Appendix 6 to the Programme Agreement.
Arrangers : DBS Bank Ltd. and The Hongkong and Shanghai Banking
Corporation Limited.
Business Day : In respect of each Note, (a) a day (other than a Saturday, Sunday
or gazetted public holiday) on which Euroclear, Clearstream,
Luxembourg and the Depository, as applicable, are operating, (b)
a day (other than a Saturday, Sunday or gazetted public holiday)
on which banks and foreign exchange markets are open for
general business in the country of the Principal Paying Agents
specified office and (c) (if a payment is to be made on that day)
(i) (in the case of Notes denominated in Singapore dollars) a day
(other than a Saturday, Sunday or gazetted public holiday) on
which banks and foreign exchange markets are open for general
business in Singapore, (ii) (in the case of Notes denominated in
Euros) a day (other than a Saturday, Sunday or gazetted public
holiday) on which the TARGET System is open for settlement in
Euros and (iii) (in the case of Notes denominated in a currency
other than Singapore dollars and Euros) a day (other than a
Saturday, Sunday or gazetted public holiday) on which banks
and foreign exchange markets are open for general business in
Singapore and the principal financial centre for that currency.
Business Trusts Act : The Business Trusts Act, Chapter 31A of Singapore, as amended
or modified from time to time.
Capital Group : The Capital Group Companies, Inc.
CDP or the Depository : The Central Depository (Pte) Limited.
Common Unit : A Unit issued in accordance with the RM Trust Deed designated
as a Common Unit.
Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or
modified from time to time.
5
Conditions : In relation to the Notes of any Series, the terms and conditions
applicable thereto, which is substantially in the form set out
in Part II of Schedule 1 to the Notes Trust Deed, as modified,
with respect to any Notes represented by a Global Note, by the
provisions of such Global Note, shall incorporate any additional
provisions forming part of such terms and conditions set out in
the Pricing Supplement(s) relating to the Notes of such Series
and shall be endorsed on the Definitive Notes subject to
amendment and completion as referred to in the first paragraph
appearing after the heading Terms and Conditions of the Notes
as set out in Part II of Schedule 1 to the Notes Trust Deed, and
any reference to a particularly numbered Condition shall be
construed accordingly.
Couponholders : The holders of the Coupons.
Coupons : The interest coupons appertaining to an interest bearing
Definitive Note.
Dealers : Persons appointed as dealers under the Programme.
Definitive Note : A definitive Note, in bearer form, being substantially in the form
set out in Part I of Schedule 1 to the Notes Trust Deed and
having, where appropriate, Coupons attached on issue.
Directors : The directors (including alternate directors, if any) of the Issuer
as at the date of this Information Memorandum.
Euro : The currency of the member states of the European Union
that adopt the single currency in accordance with the Treaty
establishing the European Community, as amended from time to
time.
FY : Financial year ended 31 December.
Global Note : A global Note representing Notes of one or more Tranches of
the same Series, being a Temporary Global Note and/or, as the
context may require, a Permanent Global Note, in each case
without Coupons.
Group : The Trust and the subsidiaries of the Trust.
Issuer : Rickmers Trust Management Pte. Ltd. (in its capacity as trustee-
manager for Rickmers Maritime).
ITA : Income Tax Act, Chapter 134 of Singapore, as amended or
modified from time to time.
Latest Practicable Date : 4 November 2013.
MAS : Monetary Authority of Singapore.
Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch.
Noteholders : The holders of the Notes.
6
Notes : The multicurrency medium term notes of the Issuer issued or to
be issued pursuant to the Programme Agreement and constituted
by the Notes Trust Deed (and shall, where the context so admits,
include the Global Notes and the Definitive Notes).
Notes Trust Deed : The Notes Trust Deed dated 19 November 2013 made between
(1) the Issuer, as issuer, and (2) the Notes Trustee, as trustee, as
amended, varied or supplemented from time to time.
Notes Trustee : DB International Trust (Singapore) Limited.
Paying Agent : The Principal Paying Agent and the Non-CDP Paying Agent,
or such other or further institutions as may from time to time
be appointed by the Issuer as paying agent for the Notes and
Coupons.
Permanent Global Note : A Global Note representing Notes of one or more Tranches of the
same Series, either on issue or upon exchange of interests in a
Temporary Global Note, being substantially in the form set out in
Schedule 3 to the Notes Trust Deed.
Polaris : Polaris Shipmanagement Company Limited, a wholly-owned
subsidiary of Rickmers Second.
Pricing Supplement : In relation to any Tranche or Series, a pricing supplement
supplemental to this Information Memorandum, specifying the
relevant issue details in relation to such Tranche or, as the case
may be, Series, substantially in the form of Appendix 2 to the
Programme Agreement.
Principal Paying Agent : Deutsche Bank AG, Singapore Branch.
Programme : The S$ 300 ,000,000 Multicurrency Medium Term Note Programme
established by the Issuer pursuant to the Programme Agreement.
Programme Agreement : The Programme Agreement dated 19 November 2013 made
between (1) the Issuer, as issuer, (2) the Arrangers, as arrangers,
and (3) DBS Bank Ltd. and The Hongkong and Shanghai
Banking Corporation Limited, as dealers, as amended, varied or
supplemented from time to time.
Rickmers Group : Rickmers Holding and Rickmers Second, together with their
respective subsidiaries, including Polaris.
Rickmers Holding : Rickmers Holding GmbH & Cie. KG.
Rickmers Second : Rickmers Second Invest GmbH.
RM Trust Deed : The deed of trust constituting the Trust dated 30 March 2007
made by the Trustee-Manager, as trustee-manager, as may be
amended and restated from time to time.
Securities Account : Securities account or sub-account maintained by a Depositor (as
defined in Section 130A of the Companies Act) with CDP.
Securities Act : The Securities Act of 1933 of the United States, as amended or
modified from time to time.
7
Series : (1) (in relation to Notes other than variable rate notes) a Tranche,
together with any further Tranche or Tranches, which are (a)
expressed to be consolidated and forming a single series and
(b) identical in all respects (including as to listing) except for
their respective issue dates, issue prices and/or dates of the first
payment of interest and (2) (in relation to variable rate notes)
Notes which are identical in all respects (including as to listing)
except for their respective issue prices and rates of interest.
SFA : The Securities and Futures Act, Chapter 289 of Singapore, as
amended or modified from time to time.
SGX-ST : Singapore Exchange Securities Trading Limited.
Shares : Ordinary shares in the capital of the Issuer.
Ship Manager : Rickmers Shipmanagement (Singapore) Pte. Ltd.
Sponsor : Rickmers Holding.
subsidiary : (a) in relation to the Trust, any company, corporation, trust,
fund or other entity (whether or not a body corporate):
(i) which is controlled, directly or indirectly, by the Trust
(whether through the Issuer as trustee-manager for
the Trust or otherwise);
(ii) more than half of the interest of which is beneficially
owned, directly or indirectly, by the Trust (whether
through the Issuer as trustee-manager for the Trust
or otherwise); or
(iii) which is a subsidiary of any company, corporation,
trust, fund or other entity (whether or not a body
corporate) to which paragraph (i) or (ii) above
applies,
and, for these purposes, a company, corporation, trust,
fund, or other entity (whether or not a body corporate)
shall be treated as being controlled by the Trust if the
Trust (whether through the Issuer as trustee-manager
for the Trust or otherwise) is able to direct its affairs and/
or to control the composition of its board of directors or
equivalent body; and
(b) (in any other case) a subsidiary within the meaning of
Section 5 of the Companies Act, Chapter 50 of Singapore.
S$ and cents : Singapore dollars and cents respectively.
TARGET System : The Trans-European Automated Real-Time Gross Settlement
Express Transfer (known as TARGET 2) system which was
launched on 19 November 2007 or any successor thereto.
Temporary Global Note : A Global Note representing Notes of one or more Tranches of the
same Series on issue, being substantially in the form set out in
Schedule 2 to the Notes Trust Deed.
8
TEU : Twenty-foot equivalent unit, the international standard measure
for containers and containership capacity.
Tranche : Notes which are identical in all respects (including as to listing).
Trust : Rickmers Maritime, a business trust constituted on 30 March
2007 under the laws of Singapore.
Trust Property : Has the meaning ascribed to it in the Business Trusts Act.
Trustee-Manager : Rickmers Trust Management Pte. Ltd. (in its capacity as trustee-
manager of Rickmers Maritime).
Unit : An undivided interest in the Trust as provided for in the RM Trust
Deed.
Unitholder : The registered holder for the time being of a Unit including
persons so registered as joint holders, except that where the
registered holder is CDP, the term Unitholder shall, in relation
to Units registered in the name of CDP, mean, where the context
requires, the depositor whose Securities Account with CDP is
credited with Units.
United States or U.S. : United States of America.
US$ and US cents : The lawful currency of the United States of America, expressed
as United States dollars and cents respectively.

9 Months or 9M : Nine month financial period ended 30 September.
% : Per cent.
Words importing the singular, where applicable, include the plural and vice versa, and words importing
the masculine gender, where applicable, include the feminine and neuter genders. References to persons,
where applicable, include corporations. Any reference to a time of day in this Information Memorandum
is a reference to Singapore time unless otherwise stated. Any reference in this Information Memorandum
to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any
word defined under the Companies Act or the SFA or any statutory modification thereof and used in this
Information Memorandum, where applicable, has the meaning ascribed to it under the Companies Act or,
as the case may be, the SFA.
9
CORPORATE INFORMATION
Issuer : Rickmers Trust Management Pte. Ltd. (in its capacity as
trustee-manager for Rickmers Maritime)
Board of Directors : Mr Bertram R. C. Rickmers
Dr Ignace Van Meenen
Mr Lim How Teck
Mrs Lee Suet Fern
Mr Raymundo A. Yu Jr.
Company Secretaries : Ms Elizabeth Krishnan
Ms Basu Bedashruti Mitra
Registered Office : 8 Shenton Way #42-03
Singapore 068811
Auditors to the Issuer : PricewaterhouseCoopers LLP
8 Cross Street #17-00
PWC Building
Singapore 048424
Arrangers and Dealers of the
Programme
: DBS Bank Ltd.
12 Marina Boulevard, Level 42
Marina Bay Financial Centre Tower 3
Singapore 018982
The Hongkong and Shanghai Banking Corporation Limited
21 Collyer Quay
#11-01 HSBC Building
Singapore 049320
Legal Advisers to the Arrangers and
the Notes Trustee
: Allen & Gledhill LLP
One Marina Boulevard #28-00
Singapore 018989
Legal Advisers to the Issuer : Stamford Law Corporation
10 Collyer Quay
#27-00 Ocean Financial Centre
Singapore 049315
Principal Paying Agent : Deutsche Bank AG, Singapore Branch
One Raffles Quay
#17-00 South Tower
Singapore 048583
Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch
Level 52, International Commerce Centre,
1 Austin Road West,
Kowloon, Hong Kong
Trustee for the Noteholders : DB International Trust (Singapore) Limited
One Raffles Quay
#17-00 South Tower
Singapore 048583
10
SUMMARY OF THE PROGRAMME
The following summary is derived from, and should be read in conjunction with, the full text of this
Information Memorandum (and any relevant supplement to this Information Memorandum), the Notes
Trust Deed, the Agency Agreement and the relevant Pricing Supplement.
Issuer : Rickmers Trust Management Pte. Ltd. (in its capacity as trustee-
manager for Rickmers Maritime).
Arrangers : DBS Bank Ltd. and The Hongkong and Shanghai Banking
Corporation Limited.
Dealers : DBS Bank Ltd., The Hongkong and Shanghai Banking
Corporation Limited and/or such other Dealers as may be
appointed by the Issuer in accordance with the Programme
Agreement.
Notes Trustee : DB International Trust (Singapore) Limited.
Principal Paying Agent : Deutsche Bank AG, Singapore Branch.
Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch.
Description : S$ 300 ,000,000 Multicurrency Medium Term Note Programme.
Programme Size : The maximum aggregate principal amount of the Notes
outstanding at any time is S$ 300 ,000,000 (or its equivalent in
other currencies) or as may be agreed between the Issuer and
the Arrangers.
Currency : Subject to compliance with all relevant laws, regulations and
directives, Notes may be issued in Singapore dollars or any other
currency agreed between the Issuer and the relevant Dealer(s).
Purpose : Net proceeds arising from the issue of each tranche of Notes
under the Programme (after deducting issue expenses) will be
used to finance capital expenditures and for general corporate
purposes, including refinancing of borrowings and financing of
working capital requirements of the Trust and the subsidiaries of
the Trust, and/or as set forth in the relevant Pricing Supplement
applicable to such Notes.
Method of Issue : Notes may be issued from time to time under the Programme
on a syndicated or non-syndicated basis. Each Series may be
issued in one or more Tranches, on the same or different issue
dates. The minimum issue size for each Series is to be agreed
between the Issuer and the relevant Dealer(s). The specific terms
of each Series or Tranche will be specified in the relevant Pricing
Supplement.
Issue Price : Notes may be issued at par or at a discount, or premium, to par.
Maturities : Subject to compliance with all relevant laws, regulations and
directives, Notes may have maturities of such tenor as may be
agreed between the Issuer and the relevant Dealer(s).
11
Mandatory Redemption : Unless previously redeemed or purchased and cancelled, each
Note will be redeemed at its redemption amount on the maturity
date shown on its face or as specified in the relevant Pricing
Supplement.
Interest Basis : Notes may bear interest at fixed, floating, variable or hybrid rates
or such other rates as may be agreed between the Issuer and the
relevant Dealer(s) or may not bear interest.
Fixed Rate Notes : Fixed Rate Notes will bear a fixed rate of interest which will be
payable in arrear on specified dates and at maturity.
Floating Rate Notes : Floating Rate Notes which are denominated in Singapore dollars
will bear interest to be determined separately for each Series
by reference to S$ SIBOR or S$ SWAP RATE (or in any other
case such other benchmark as may be agreed between the
Issuer and the relevant Dealer(s)), as adjusted for any applicable
margin. Interest periods in relation to the Floating Rate Notes will
be agreed between the Issuer and the relevant Dealer(s) prior to
their issue.
Floating Rate Notes which are denominated in other currencies
will bear interest to be determined separately for each Series by
reference to such other benchmark as may be agreed between
the Issuer and the relevant Dealer(s).
Variable Rate Notes : Variable Rate Notes will bear interest at a variable rate
determined in accordance with the Conditions of the Notes.
Interest periods in relation to the Variable Rate Notes will be
agreed between the Issuer and the relevant Dealer(s) prior to
their issue.
Hybrid Notes : Hybrid Notes will bear interest, during the fixed rate period to
be agreed between the Issuer and the relevant Dealer(s), at a
fixed rate of interest which will be payable in arrear on specified
dates and, during the floating rate period to be agreed between
the Issuer and the relevant Dealer(s), at the rate of interest to
be determined by reference to S$ SIBOR or S$ SWAP RATE
(or such other benchmark as may be agreed between the Issuer
and the relevant Dealer(s)), as adjusted for any applicable margin
(provided that if the Hybrid Notes are denominated in a currency
other than Singapore dollars, such Hybrid Notes will bear interest
to be determined separately by reference to such benchmark as
may be agreed between the Issuer and the relevant Dealer(s)),
in each case payable at the end of each interest period to be
agreed between the Issuer and the relevant Dealer(s).
Zero Coupon Notes : Zero Coupon Notes may be issued at their nominal amount or at
a discount to it and will not bear interest other than in the case of
late payment.
Form and Denomination of Notes : The Notes will be issued in bearer form only and in such
denominations as may be agreed between the Issuer and the
relevant Dealer(s). Each Tranche or Series of Notes may initially
be represented by a Temporary Global Note or a Permanent
Global Note. Each Temporary Global Note may be deposited
on the relevant issue date with CDP, a common depositary for
Euroclear and Clearstream, Luxembourg and/or any other agreed
12
clearing system and will be exchangeable, upon request as
described therein, either for a Permanent Global Note or Definitive
Notes (as indicated in the applicable Pricing Supplement). Each
Permanent Global Note may be exchanged, unless otherwise
specified in the applicable Pricing Supplement, upon request as
described therein, in whole (but not in part) for Definitive Notes
upon the terms therein.
Custody of the Notes : Notes which are to be listed on the SGX-ST may be cleared
through CDP. Notes which are to be cleared through CDP are
required to be kept with CDP as authorised depository. Notes
which are cleared through Euroclear and/or Clearstream,
Luxembourg are required to be kept with a common depositary
on behalf of Euroclear and Clearstream Luxembourg.
Status of the Notes : The Notes and Coupons of all Series will constitute direct,
unconditional, unsubordinated and unsecured obligations of
the Issuer and shall at all times rank pari passu, without any
preference or priority among themselves, and pari passu with
all other present and future unsecured obligations (other than
subordinated obligations and priorities created by law) of the
Issuer.
Optional Redemption and
Purchase
: If so provided on the face of the Note and the relevant Pricing
Supplement, Notes may be redeemed (either in whole or in part)
prior to their stated maturity at the option of the Issuer and/or the
Noteholders. Further, if so provided on the face of the Note and
the relevant Pricing Supplement, Notes may be purchased by the
Issuer (either in whole or in part) prior to their stated maturity at
the option of the Issuer and/or the Noteholders.
Redemption upon Cessation or
Suspension of Trading of Units
: If on any date, (i) the units of the Trust cease to be traded on the
SGX-ST or (ii) trading in the units of the Trust on the SGX-ST is
suspended for a continuous period of more than ten market days,
the Issuer shall, at the option of the holder of any Note, redeem
such Note at its Redemption Amount together with interest
accrued to the date fixed for redemption on any date on which
interest is due to be paid on such Notes or, if earlier, the date
falling 45 days after the Effective Date. Effective Date means
(in the case of (i) above) the date of cessation of trading or (in
the case of (ii) above) the business day immediately following the
expiry of such continuous period of ten market days.
Negative Pledge : The Issuer has covenanted with the Notes Trustee in the Notes
Trust Deed that so long as any of the Notes remains outstanding,
it will not, and will ensure that none of its subsidiaries will,
create or permit to subsist any mortgage, charge, pledge, lien
or other form of security interest over the whole or any part of
its undertakings, assets, property or revenues, present or future,
to secure any Capital Markets Indebtedness (as defined in the
Terms and Conditions of the Notes) without at the same time or
prior thereto (i) securing the Notes equally and rateably therewith
or (ii) providing such other security for the Notes as may be
approved by an Extraordinary Resolution (as defined in the Notes
Trust Deed) of Noteholders.

13
Financial Covenants : The Issuer has further covenanted with the Notes Trustee in
the Notes Trust Deed that so long as any of the Notes remains
outstanding, it will ensure that:
(i) the Consolidated Unitholders Equity shall not at any time
be less than US$250,000,000;
(ii) the ratio of Consolidated Total Net Debt to Consolidated
Unitholders Equity shall not at any time be more than
2.5:1; and
(iii) the ratio of EBITDA to Interest Expense shall not at any
time be less than 1.5:1.

Events of Default : See Condition 9 of the Notes.
Taxation : All payments in respect of the Notes and the Coupons by the
Issuer are to be made free and clear of, and without deduction
or withholding for or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever
nature imposed, levied, collected, withheld or assessed by or
within Singapore or any authority thereof or therein having power
to tax, unless such withholding or deduction is required by law.
In such event, the Issuer is required to pay such additional
amounts as will result in the receipt by the Noteholders and the
Couponholders of such amounts as would have been received by
them had no such deduction or withholding been required, save
for certain exceptions. For further details, please see the section
Singapore Taxation herein.
Listing
: Each Series of the Notes may, if so agreed between the Issuer
and the relevant Dealer(s), be listed on the SGX-ST or any
stock exchange(s) as may be agreed between the Issuer and
the relevant Dealer(s), subject to all necessary approvals having
been obtained. If the application to the SGX-ST to list a particular
Series of Notes is approved, for so long as such Notes are listed
on the SGX-ST and the rules of the SGX-ST so require, such
Notes will be traded on the SGX-ST in a minimum board lot size
of at least S$200,000 (or its equivalent in foreign currencies).
Selling Restrictions : For a description of certain restrictions on offers, sales and
deliveries of Notes and the distribution of offering material
relating to the Notes, see the section Subscription, Purchase and
Distribution herein. Further restrictions may apply in connection
with any particular Series or Tranche of Notes set forth in the
relevant Pricing Supplement.
Governing Law : The Programme and any Notes issued under the Programme will
be governed by, and construed in accordance with, the laws of
Singapore.
14
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, subject to completion and amendment and
as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be
endorsed on the Notes in definitive form issued in exchange for the Global Note(s) representing each
Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the
Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied
(and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such
Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them
in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive Notes. References
in the Conditions to Notes are to the Notes of one Series only, not to all Notes that may be issued under
the Programme, details of the relevant Series being shown on the face of the relevant Notes and in the
relevant Pricing Supplement.
The Notes are constituted by a trust deed (as amended and supplemented, the Notes Trust Deed)
dated 19 November 2013 made between (1) Rickmers Trust Management Pte. Ltd. (the Issuer)
(in its capacity as trustee-manager for Rickmers Maritime (the Trust)) and (2) DB International Trust
(Singapore) Limited (the Notes Trustee, which expression shall wherever the context so admits
include such company and all other persons for the time being the trustee or trustees of the Notes
Trust Deed), as trustee for the Noteholders (as defined below), and (where applicable) the Notes are
issued with the benefit of a deed of covenant (as amended and supplemented, the Deed of Covenant)
dated 19 November 2013, relating to the Notes executed by the Issuer. These terms and conditions (the
Conditions) include summaries of, and are subject to, the detailed provisions of the Notes Trust Deed,
which include the form of the Notes, Coupons and Talons referred to below. The Issuer has entered into
an agency agreement (as amended and supplemented, the Agency Agreement) dated 19 November
2013 made between (1) the Issuer, (2) Deutsche Bank AG, Singapore Branch, as principal paying agent
(in such capacity, the Principal Paying Agent), (3) Deutsche Bank AG, Hong Kong Branch, as non-
CDP paying agent (in such capacity, the Non-CDP Paying Agent and, together with the Principal
Paying Agent and any other paying agent appointed by the Issuer pursuant to the Agency Agreement, the
Paying Agents and each a Paying Agent) and (4) the Notes Trustee, as trustee for the Noteholders.
The Noteholders and the holders of the coupons (the Coupons) appertaining to the interest-bearing
Notes (the Couponholders) and, where applicable in the case of such Notes, Talons for further
Coupons (the Talons) are bound by and are deemed to have notice of all of the provisions of the Notes
Trust Deed, the Agency Agreement and the Deed of Covenant. For the purposes of these Conditions, all
references to the Principal Paying Agent shall, with respect to a Series of Notes to be cleared through
a clearing system other than the CDP System (as defined in the Notes Trust Deed), be deemed to be a
reference to the Non-CDP Paying Agent and all such references shall be construed accordingly.
Copies of the Notes Trust Deed, the Agency Agreement and the Deed of Covenant are available for
inspection at the principal office of the Notes Trustee for the time being and at the respective specified
offices of the Paying Agents for the time being.
1. Form, Denomination and Title
(a) Form and Denomination
(i) The Notes of the Series of which this Note forms part (in these Conditions, the Notes) are
issued in bearer form in each case in the Denomination Amount shown hereon.
(ii) This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Hybrid Note or
a Zero Coupon Note (depending upon the Interest Basis shown on its face).
(iii) Notes are serially numbered and issued with Coupons (and, where appropriate, a Talon)
attached, save in the case of Notes that do not bear interest in which case references to
interest (other than in relation to default interest referred to in Condition 6(f)) in these
Conditions are not applicable.
(b) Title
(i) Title to the Notes and the Coupons and, where appropriate, Talons appertaining thereto shall
pass by delivery.
15
(ii) Except as ordered by a court of competent jurisdiction or as required by law, the holder of
any Note, Coupon or Talon shall be deemed to be and may be treated as the absolute owner
of such Note, Coupon or Talon, as the case may be, for the purpose of receiving payment
thereof or on account thereof and for all other purposes, whether or not such Note, Coupon
or Talon shall be overdue and notwithstanding any notice of ownership, theft, loss or forgery
thereof or any writing thereon made by anyone, and no person shall be liable for so treating
the holder.
(iii) For so long as any of the Notes is represented by a Global Note and such Global Note
is held by a common depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream
Banking, socit anonyme (Clearstream, Luxembourg) and/or The Central Depository
(Pte) Limited (the Depository), each person who is for the time being shown in the records
of Euroclear, Clearstream, Luxembourg and/or the Depository as the holder of a particular
principal amount of such Notes (in which regard any certificate or other document issued
by Euroclear, Clearstream, Luxembourg and/or the Depository as to the principal amount
of such Notes standing to the account of any person shall be conclusive and binding for
all purposes save for manifest error) shall be treated by the Issuer, the Principal Paying
Agent, the Non-CDP Paying Agent, the Agent Bank, all other agents of the Issuer and the
Notes Trustee as the holder of such principal amount of Notes other than with respect to
the payment of principal, premium, interest, distribution, redemption, purchase and/or any
other amounts in respect of the Notes, for which purpose the bearer of the Global Note
shall be treated by the Issuer, the Principal Paying Agent, the Non-CDP Paying Agent, the
Agent Bank, all other agents of the Issuer and the Notes Trustee as the holder of such
Notes in accordance with and subject to the terms of the Global Note (and the expressions
Noteholder and holder of Notes and related expressions shall be construed accordingly).
Notes which are represented by the Global Note will be transferable only in accordance with
the rules and procedures for the time being of Euroclear, Clearstream, Luxembourg and/or
the Depository.
(iv) In these Conditions, Global Note means the relevant Temporary Global Note representing
each Series or the relevant Permanent Global Note representing each Series, Noteholder
means the bearer of any Definitive Note (as defined in the Notes Trust Deed) and holder
(in relation to a Definitive Note, Coupon or Talon) means the bearer of any Definitive Note,
Coupon or Talon, Series means (1) (in relation to Notes other than Variable Rate Notes)
a Tranche, together with any further Tranche or Tranches, which are (A) expressed to be
consolidated and forming a single series and (B) identical in all respects (including as to
listing) except for their respective issue dates, issue prices and/or dates of the first payment
of interest and (2) (in relation to Variable Rate Notes) Notes which are identical in all
respects (including as to listing) except for their respective issue prices and rates of interest
and Tranche means Notes which are identical in all respects (including as to listing).
(v) Words and expressions defined in the Notes Trust Deed or used in the applicable Pricing
Supplement (as defined in the Notes Trust Deed) shall have the same meanings where used
in these Conditions unless the context otherwise requires or unless otherwise stated and
provided that, in the event of inconsistency between the Notes Trust Deed and the applicable
Pricing Supplement, the applicable Pricing Supplement will prevail.
2. Status
The Notes and Coupons of all Series constitute direct, unconditional, unsubordinated and
unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or
priority among themselves, and pari passu with all other present and future unsecured obligations
(other than subordinated obligations and priorities created by law) of the Issuer.
3. Negative Pledge and Financial Covenants
(a) Negative Pledge
The Issuer has covenanted with the Notes Trustee in the Notes Trust Deed that so long as any of
the Notes remains outstanding, it will not, and will ensure that none of its subsidiaries (as defined
in the Notes Trust Deed) will, create or permit to subsist any mortgage, charge, pledge, lien or
16
other form of security interest over the whole or any part of its undertakings, assets, property or
revenues, present or future, to secure any Capital Markets Indebtedness without at the same time
or prior thereto (i) securing the Notes equally and rateably therewith or (ii) providing such other
security for the Notes as may be approved by an Extraordinary Resolution (as defined in the Notes
Trust Deed) of Noteholders.
For the purposes of this Condition 3(a):
Capital Markets Indebtedness means any present or future obligation for the repayment of
borrowed moneys (including interest and other costs in connection therewith) which is in the form
of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities which
are, or are capable of being, quoted, listed, dealt in or traded on any stock exchange, or other
recognised over-the-counter or securities market.
(b) Financial Covenants
The Issuer has further covenanted with the Notes Trustee in the Notes Trust Deed that so long as
any of the Notes remains outstanding, it will ensure that:
(i) the Consolidated Unitholders Equity shall not at any time be less than US$250,000,000;
(ii) the ratio of Consolidated Total Net Debt to Consolidated Unitholders Equity shall not at any
time be more than 2.5:1; and
(iii) the ratio of EBITDA to Interest Expense shall not at any time be less than 1.5:1.
For the purpose of this Condition 3(b):
(1) Consolidated Total Debt means an amount (expressed in United States dollars) for the
time being, calculated on a consolidated basis, in accordance with International Financial
Reporting Standards (IFRS), equal to the aggregate of (and where such aggregate amount
falls to be calculated, no amount shall be taken into account more than once in the same
calculation):
(A) bank overdrafts and all other indebtedness in respect of any borrowings maturing
within 12 months of the Group (as defined in the Notes Trust Deed);
(B) the principal amount of the Notes or any bonds or debentures of any member of the
Group whether issued for cash or a consideration other than cash;
(C) the liabilities of the Issuer under the Notes Trust Deed or the Notes;
(D) all other indebtedness whatsoever of the Group for borrowed moneys; and
(E) any redeemable preference shares issued by any member of the Group and which is
regarded by IFRS as debt or other liability of the Group,
but excluding any perpetual securities which is regarded by IFRS as equity of the Trust or of
its subsidiaries;
(2) Consolidated Total Net Debt means Consolidated Total Debt less cash and cash
equivalent (CCE) balances, with CCE balances as defined in accordance with IFRS;
(3) Consolidated Unitholders Equity means the amount (expressed in United States dollars)
for the time being, calculated in accordance with IFRS, equal to the aggregate of:
(A) the amount paid up or credited as paid up on the common units in issue of the Issuer;
and
17
(B) the amounts standing to the credit of the capital and revenue reserves (including
capital redemption reserve fund, revaluation reserves and profit and loss account) of
the Group on a consolidated basis,
all as shown in the then latest audited consolidated balance sheet of the Group but after:
(aa) making such adjustments as may be appropriate in respect of any variation in the
capital and revenue reserves set out in paragraph (B) above of the Group since the
date of the latest audited consolidated balance sheet of the Group;
(bb) excluding any sums set aside for future taxation;
(cc) deducting:
(I) an amount equal to any distribution by any member of the Group prior to the
date of the latest audited consolidated balance sheet of the Group and which
have been declared or made since that date except so far as provided for in
such balance sheet and/or paid or due to be paid to members of the Group; and
(II) any debit balances on consolidated profit and loss account accrued after the
then latest audited consolidated financial statements of the Group;
(4) EBITDA means, in relation to any Test Period, the aggregate of the net earnings of
the Group on its ordinary activities during such Test Period before taking into account
Interest Expense and income tax expense but making adjustments thereto by adding
back depreciation charged and amount attributable to amortisation of goodwill and other
intangibles to the extent deducted in arriving at such earnings on ordinary activities during
such Test Period;
(5) Interest Expense means, in relation to any Test Period, the consolidated aggregate amount
of interest and other financing charges accrued, paid or payable (including any capitalised
interest paid or payable) by the Group during that Test Period; and
(6) Test Period means, in respect of each financial quarter, each period of three months
ending on the last day of such financial quarter of the Group.
4. (I) Interest on Fixed Rate Notes
(a) Interest Rate and Accrual
Each Fixed Rate Note bears interest on its Calculation Amount (as defined in Condition 4(II)
(d)) from the Interest Commencement Date in respect thereof and as shown on the face of
such Note at the rate per annum (expressed as a percentage) equal to the Interest Rate
shown on the face of such Note payable in arrear on each Interest Payment Date or Interest
Payment Dates shown on the face of such Note in each year and on the Maturity Date
shown on the face of such Note if that date does not fall on an Interest Payment Date.
The first payment of interest will be made on the Interest Payment Date next following the
Interest Commencement Date (and if the Interest Commencement Date is not an Interest
Payment Date, will amount to the Initial Broken Amount shown on the face of such Note),
unless the Maturity Date falls before the date on which the first payment of interest would
otherwise be due. If the Maturity Date is not an Interest Payment Date, interest from the
preceding Interest Payment Date (or from the Interest Commencement Date, as the case
may be) to the Maturity Date will amount to the Final Broken Amount shown on the face of
the Note.
Interest will cease to accrue on each Fixed Rate Note from the due date for redemption
thereof unless, upon due presentation and subject to the provisions of the Notes Trust Deed,
payment of the Redemption Amount shown on the face of the Note is improperly withheld or
18
refused, in which event interest at such rate will continue to accrue (as well after as before
judgment) at the rate and in the manner provided in this Condition 4(I) and the Agency
Agreement to the Relevant Date (as defined in Condition 7).
(b) Calculations
In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be
calculated on the Day Count Fraction shown on the face of the Note.
(II) Interest on Floating Rate Notes or Variable Rate Notes
(a) Interest Payment Dates
Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount
from the Interest Commencement Date in respect thereof and as shown on the face of
such Note, and such interest will be payable in arrear on each interest payment date
(Interest Payment Date). Such Interest Payment Date(s) is/are either shown hereon as
Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown
hereon, Interest Payment Date shall mean each date which (save as mentioned in these
Conditions) falls the number of months specified as the Interest Period on the face of the
Note (the Specified Number of Months) after the preceding Interest Payment Date or,
in the case of the first Interest Payment Date, after the Interest Commencement Date (and
which corresponds numerically with such preceding Interest Payment Date or the Interest
Commencement Date, as the case may be), provided that the Agreed Yield (as defined in
Condition 4(II)(c)) in respect of any Variable Rate Note for any Interest Period (as defined
below) relating to that Variable Rate Note shall be payable on the first day of that Interest
Period. If any Interest Payment Date referred to in these Conditions that is specified to be
subject to adjustment in accordance with a Business Day Convention would otherwise fall
on a day that is not a business day (as defined below), then if the Business Day Convention
specified is (1) the Floating Rate Business Day Convention, such date shall be postponed
to the next day which is a business day unless it would thereby fall into the next calendar
month, in which event (i) such date shall be brought forward to the immediately preceding
business day and (ii) each subsequent such date shall be the last business day of the month
in which such date would have fallen had it not been subject to adjustment, (2) the Following
Business Day Convention, such date shall be postponed to the next day that is a business
day, (3) the Modified Following Business Day Convention, such date shall be postponed to
the next day that is a business day unless it would thereby fall into the next calendar month,
in which event such date shall be brought forward to the immediately preceding business day
or (4) the Preceding Business Day Convention, such date shall be brought forward to the
immediately preceding business day.
The period beginning on the Interest Commencement Date and ending on the first Interest
Payment Date and each successive period beginning on an Interest Payment Date and
ending on the next succeeding Interest Payment Date is herein called an Interest Period.
Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due
date for redemption thereof unless, upon due presentation and subject to the provisions of
the Notes Trust Deed, payment of the Redemption Amount is improperly withheld or refused,
in which event interest will continue to accrue (as well after as before judgment) at the rate
and in the manner provided in this Condition 4(II) and the Agency Agreement to the Relevant
Date.
(b) Rate of Interest - Floating Rate Notes
(i) Each Floating Rate Note bears interest at a floating rate determined by reference to
a Benchmark as stated on the face of such Floating Rate Note, being (in the case of
Notes which are denominated in Singapore dollars) SIBOR (in which case such Note
will be a SIBOR Note) or Swap Rate (in which case such Note will be a Swap Rate
Note) or in any case (or in the case of Notes which are denominated in a currency
other than Singapore dollars) such other Benchmark as is set out on the face of such
Note.
19
Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated
on the face of such Note. The Spread is the percentage rate per annum specified on
the face of such Note as being applicable to the rate of interest for such Note. The rate
of interest so calculated shall be subject to Condition 4(V)(a) below.
The rate of interest payable in respect of a Floating Rate Note from time to time is
referred to in these Conditions as the Rate of Interest.
(ii) The Rate of Interest payable from time to time in respect of each Floating Rate Note
will be determined by the Agent Bank on the basis of the following provisions:
(1) in the case of Floating Rate Notes which are SIBOR Notes:
(A) the Agent Bank will, at or about the Relevant Time on the relevant
Interest Determination Date in respect of each Interest Period, determine
the Rate of Interest for such Interest Period which shall be the offered
rate for deposits in Singapore dollars for a period equal to the duration of
such Interest Period which appears on the Reuters Screen ABSIRFIX01
Page under the caption ABS SIBOR FIX - SIBOR AND SWAP OFFER
RATES - RATES AT 11:00 HRS SINGAPORE TIME and under the
column headed SGD SIBOR (or such other replacement page thereof
for the purpose of displaying SIBOR or such other Screen Page as may
be provided hereon) and as adjusted by the Spread (if any);
(B) if no such rate appears on the Reuters Screen ABSIRFIX01 Page under
the column headed SGD SIBOR (or such other replacement page
thereof or if no rate appears on such other Screen Page as may be
provided hereon) or if the Reuters Screen ABSIRFIX01 Page (or such
other replacement page thereof or such other Screen Page as may
be provided hereon) is unavailable for any reason, the Agent Bank will
request the principal Singapore offices of each of the Reference Banks
to provide the Agent Bank with the rate at which deposits in Singapore
dollars are offered by it at approximately the Relevant Time on the Interest
Determination Date to prime banks in the Singapore interbank market for
a period equivalent to the duration of such Interest Period commencing on
such Interest Payment Date in an amount comparable to the aggregate
principal amount of the relevant Floating Rate Notes. The Rate of Interest
for such Interest Period shall be the arithmetic mean (rounded up, if
necessary, to four decimal places) of such offered quotations and as
adjusted by the Spread (if any), as determined by the Agent Bank;
(C) if on any Interest Determination Date two but not all the Reference Banks
provide the Agent Bank with such quotations, the Rate of Interest for the
relevant Interest Period shall be determined in accordance with (B) above
on the basis of the quotations of those Reference Banks providing such
quotations; and
(D) if on any Interest Determination Date one only or none of the Reference
Banks provides the Agent Bank with such quotations, the Rate of
Interest for the relevant Interest Period shall be the rate per annum
which the Agent Bank determines to be the arithmetic mean (rounded
up, if necessary, to four decimal places) of the rates quoted by the
Reference Banks or those of them (being at least two in number) to the
Agent Bank at or about the Relevant Time on such Interest Determination
Date as being their cost (including the cost occasioned by or attributable
to complying with reserves, liquidity, deposit or other requirements
imposed on them by any relevant authority or authorities) of funding, for
the relevant Interest Period, an amount equal to the aggregate principal
amount of the relevant Floating Rate Notes for such Interest Period by
whatever means they determine to be most appropriate and as adjusted
20
by the Spread (if any) or if on such Interest Determination Date one
only or none of the Reference Banks provides the Agent Bank with such
quotation, the Rate of Interest for the relevant Interest Period shall be the
rate per annum which the Agent Bank determines to be the arithmetic
mean (rounded up, if necessary, to four decimal places) of the prime
lending rates for Singapore dollars quoted by the Reference Banks at
or about the Relevant Time on such Interest Determination Date and as
adjusted by the Spread (if any);
(2) in the case of Floating Rate Notes which are Swap Rate Notes:
(A) the Agent Bank will, at or about the Relevant Time on the relevant Interest
Determination Date in respect of each Interest Period, determine the Rate
of Interest for such Interest Period as being the rate which appears on the
Reuters Screen ABSFIX01 Page under the caption SGD SOR rates as
of 11:00hrs London Time under the column headed SGD SOR (or such
replacement page thereof for the purpose of displaying the swap rates of
leading reference banks) at or about the Relevant Time on such Interest
Determination Date and for a period equal to the duration of such Interest
Period and as adjusted by the Spread (if any);
(B) if on any Interest Determination Date no such rate is quoted on Reuters
Screen ABSFIX01 Page (or such other replacement page as aforesaid)
or Reuters Screen ABSFIX01 Page (or such other replacement page as
aforesaid) is unavailable for any reason, the Agent Bank will determine
the Rate of Interest for such Interest Period as being the rate (or, if there
is more than one rate which is published, the arithmetic mean of those
rates (rounded up, if necessary, to the nearest 1/16 per cent.)) for a period
equal to the duration of such Interest Period published by a recognised
industry body where such rate is widely used (after taking into account
the industry practice at that time), or by such other relevant authority as
the Agent Bank may select; and
(C) if on any Interest Determination Date the Agent Bank is otherwise unable
to determine the Rate of Interest under paragraphs (b)(ii)(2)(A) and (b)(ii)
(2)(B) above, the Rate of Interest shall be determined by the Agent Bank
to be the rate per annum equal to the arithmetic mean (rounded up, if
necessary, to four decimal places) of the rates quoted by the Singapore
offices of the Reference Banks or those of them (being at least two in
number) to the Agent Bank at or about 11.00 a.m. (Singapore time) on
the first business day following such Interest Determination Date as being
their cost (including the cost occasioned by or attributable to complying
with reserves, liquidity, deposit or other requirements imposed on them
by any relevant authority or authorities) of funding, for the relevant
Interest Period, an amount equal to the aggregate principal amount of the
relevant Floating Rate Notes for such Interest Period by whatever means
they determine to be most appropriate and as adjusted by the Spread
(if any), or if on such day one only or none of the Singapore offices of
the Reference Banks provides the Agent Bank with such quotation, the
Rate of Interest for the relevant Interest Period shall be the rate per
annum equal to the arithmetic mean (rounded up, if necessary, to four
decimal places) of the prime lending rates for Singapore dollars quoted
by the Singapore offices of the Reference Banks at or about 11.00 a.m.
(Singapore time) on such Interest Determination Date and as adjusted by
the Spread (if any) ;
21
(3) in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate
Notes or which are denominated in a currency other than Singapore dollars, the
Agent Bank will determine the Rate of Interest in respect of any Interest Period
at or about the Relevant Time on the Interest Determination Date in respect of
such Interest Period as follows:
(A) if the Primary Source (as defined below) for the Floating Rate is a Screen
Page (as defined below), subject as provided below, the Rate of Interest
in respect of such Interest Period shall be:
(aa) the Relevant Rate (as defined below) (where such Relevant Rate
on such Screen Page is a composite quotation or is customarily
supplied by one entity); or
(bb) the arithmetic mean of the Relevant Rates of the persons whose
Relevant Rates appear on that Screen Page, in each case
appearing on such Screen Page at the Relevant Time on the
Interest Determination Date,
and as adjusted by the Spread (if any);
(B) if the Primary Source for the Floating Rate is Reference Banks or if
paragraph (b)(ii)(3)(A)(aa) applies and no Relevant Rate appears on the
Screen Page at the Relevant Time on the Interest Determination Date
or if paragraph (b)(ii)(3)(A)(bb) applies and fewer than two Relevant
Rates appear on the Screen Page at the Relevant Time on the Interest
Determination Date, subject as provided below, the Rate of Interest
shall be the rate per annum which the Agent Bank determines to be the
arithmetic mean (rounded up, if necessary, to four decimal places) of the
Relevant Rates that each of the Reference Banks is quoting to leading
banks in the Relevant Financial Centre (as defined below) at the Relevant
Time on the Interest Determination Date and as adjusted by the Spread
(if any); and
(C) if paragraph (b)(ii)(3)(B) applies and the Agent Bank determines that
fewer than two Reference Banks are so quoting Relevant Rates, the
Rate of Interest shall be the Rate of Interest determined on the previous
Interest Determination Date.
(iii) On the last day of each Interest Period, the Issuer will pay interest on each Floating
Rate Note to which such Interest Period relates at the Rate of Interest for such Interest
Period.
(iv) For the avoidance of doubt, in the event that the Rate of Interest in relation to any
Interest Period is less than zero, the Rate of Interest in relation to such Interest Period
shall be equal to zero.
(c) Rate of Interest - Variable Rate Notes
(i) Each Variable Rate Note bears interest at a variable rate determined in accordance
with the provisions of this paragraph (c). The interest payable in respect of a Variable
Rate Note on the first day of an Interest Period relating to that Variable Rate Note is
referred to in these Conditions as the Agreed Yield and the rate of interest payable
in respect of a Variable Rate Note on the last day of an Interest Period relating to that
Variable Rate Note is referred to in these Conditions as the Rate of Interest.
(ii) The Agreed Yield or, as the case may be, the Rate of Interest payable from time to
time in respect of each Variable Rate Note for each Interest Period shall, subject as
referred to in paragraph (c)(iv) below, be determined as follows:
22
(1) not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor
later than 3.00 p.m. (Singapore time) on the third business day prior to the
commencement of each Interest Period, the Issuer and the Relevant Dealer (as
defined below) shall endeavour to agree on the following:
(A) whether interest in respect of such Variable Rate Note is to be paid on
the first day or the last day of such Interest Period;
(B) if interest in respect of such Variable Rate Note is agreed between the
Issuer and the Relevant Dealer to be paid on the first day of such Interest
Period, an Agreed Yield in respect of such Variable Rate Note for such
Interest Period (and, in the event of the Issuer and the Relevant Dealer
so agreeing on such Agreed Yield, the Interest Amount (as defined below)
for such Variable Rate Note for such Interest Period shall be zero); and
(C) if interest in respect of such Variable Rate Note is agreed between the
Issuer and the Relevant Dealer to be paid on the last day of such Interest
Period, a Rate of Interest in respect of such Variable Rate Note for such
Interest Period (an Agreed Rate) and, in the event of the Issuer and
the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate
shall be the Rate of Interest for such Variable Rate Note for such Interest
Period; and
(2) if the Issuer and the Relevant Dealer shall not have agreed either an Agreed
Yield or an Agreed Rate in respect of such Variable Rate Note for such Interest
Period by 3.00 p.m. (Singapore time) on the third business day prior to the
commencement of such Interest Period, or if there shall be no Relevant Dealer
during the period for agreement referred to in (1) above, the Rate of Interest
for such Variable Rate Note for such Interest Period shall automatically be the
rate per annum equal to the Fall Back Rate (as defined below) for such Interest
Period.
(iii) The Issuer has undertaken to the Principal Paying Agent and the Agent Bank that it
will as soon as possible after the Agreed Yield or, as the case may be, the Agreed
Rate in respect of any Variable Rate Note is determined but not later than 10.30 a.m.
(Singapore time) on the next following business day:
(1) notify or cause the Relevant Dealer to notify the Principal Paying Agent and the
Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for
such Variable Rate Note for such Interest Period; and
(2) cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable
Rate Note to be notified by the Principal Paying Agent to the relevant Noteholder
at its request.
(iv) For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest
Period for which there is neither an Agreed Yield nor Agreed Rate in respect of any
Variable Rate Note or no Relevant Dealer in respect of the Variable Rate Note(s) shall
be the rate (the Fall Back Rate) determined by reference to a Benchmark as stated
on the face of such Variable Rate Note(s), being (in the case of Variable Rate Notes
which are denominated in Singapore dollars) SIBOR (in which case such Variable
Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable Rate
Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable
Rate Notes which are denominated in a currency other than Singapore dollars) such
other Benchmark as is set out on the face of such Variable Rate Note(s).
23
Such rate may be adjusted by adding or subtracting the Spread (if any) stated on
the face of such Variable Rate Note. The Spread is the percentage rate per annum
specified on the face of such Variable Rate Note as being applicable to the rate of
interest for such Variable Rate Note. The rate of interest so calculated shall be subject
to Condition 4(V)(a) below.
The Fall Back Rate payable from time to time in respect of each Variable Rate Note
will be determined by the Agent Bank in accordance with the provisions of Condition
4(II)(b)(ii) above (mutatis mutandis) and references therein to Rate of Interest shall
mean Fall Back Rate.
(v) If interest is payable in respect of a Variable Rate Note on the first day of an Interest
Period relating to such Variable Rate Note, the Issuer will pay the Agreed Yield
applicable to such Variable Rate Note for such Interest Period on the first day of such
Interest Period. If interest is payable in respect of a Variable Rate Note on the last
day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the
Interest Amount for such Variable Rate Note for such Interest Period on the last day of
such Interest Period.
(vi) For the avoidance of doubt, in the event that the Rate of Interest in relation to any
Interest Period is less than zero, the Rate of Interest in relation to such Interest Period
shall be equal to zero.
(d) Definitions
As used in these Conditions:
Agent Bank means in relation to any Series of Notes, the person appointed as the agent
bank pursuant to the terms of the Agency Agreement as specified in the applicable Pricing
Supplement;
Benchmark means the rate specified as such in the applicable Pricing Supplement;
business day means, in respect of each Note, (a) a day (other than a Saturday, Sunday or
gazetted public holiday) on which Euroclear, Clearstream, Luxembourg and the Depository,
as applicable, are operating, (b) a day (other than a Saturday, Sunday or gazetted public
holiday) on which banks and foreign exchange markets are open for general business in the
country of the Principal Paying Agents specified office and (c) (if a payment is to be made
on that day) (i) (in the case of Notes denominated in Singapore dollars) a day (other than a
Saturday, Sunday or gazetted public holiday) on which banks and foreign exchange markets
are open for general business in Singapore, (ii) (in the case of Notes denominated in Euros)
a day (other than a Saturday, Sunday or gazetted public holiday) on which the TARGET
System is open for settlement in Euros and (iii) (in the case of Notes denominated in a
currency other than Singapore dollars and Euros) a day (other than a Saturday, Sunday or
gazetted public holiday) on which banks and foreign exchange markets are open for general
business in Singapore and the principal financial centre for that currency;
Calculation Amount means the amount specified as such on the face of any Note, or if no
such amount is so specified, the Denomination Amount of such Note as shown on the face
thereof;
Euro means the currency of the member states of the European Union that adopt the
single currency in accordance with the Treaty establishing the European Community, as
amended from time to time;
Interest Commencement Date means the Issue Date or such other date as may be
specified as the Interest Commencement Date on the face of such Note;
Interest Determination Date means, in respect of any Interest Period, that number of
business days prior thereto as is set out in the applicable Pricing Supplement or on the face
of the relevant Note;
24
Primary Source means the Screen Page specified as such in the applicable Pricing
Supplement and (in the case of any Screen Page provided by any information service other
than the Reuters Monitor Money Rates Service (Reuters)) agreed to by the Agent Bank;
Reference Banks means the institutions specified as such hereon or, if none, three major
banks selected by the Agent Bank in the interbank market that is most closely connected
with the Benchmark;
Relevant Currency means the currency in which the Notes are denominated;
Relevant Dealer means, in respect of any Variable Rate Note, the Dealer party to the
Programme Agreement referred to in the Agency Agreement with whom the Issuer has
concluded or is negotiating an agreement for the issue of such Variable Rate Note pursuant
to the Programme Agreement;
Relevant Financial Centre means, in the case of interest to be determined on an Interest
Determination Date with respect to any Floating Rate Note or Variable Rate Note, the
financial centre specified in the applicable Pricing Supplement or on the face of the relevant
Note or, if none is so specified, Singapore;
Relevant Rate means the Benchmark for a Calculation Amount of the Relevant Currency
for a period (if applicable or appropriate to the Benchmark) equal to the relevant Interest
Period;
Relevant Time means, with respect to any Interest Determination Date, the local time in
the Relevant Financial Centre at which it is customary to determine bid and offered rates
in respect of deposits in the Relevant Currency in the interbank market in the Relevant
Financial Centre;
Screen Page means such page, section, caption, column or other part of a particular
information service (including, but not limited to, the Bloomberg agency and Reuters) as may
be specified hereon for the purpose of providing the Benchmark, or such other page, section,
caption, column or other part as may replace it on that information service or on such other
information service, in each case as may be nominated by the person or organisation
providing or sponsoring the information appearing there for the purpose of displaying rates
or prices comparable to the Benchmark; and
TARGET System means the Trans-European Automated Real-Time Gross Settlement
Express Transfer (known as TARGET 2) system which was launched on 19 November 2007
or any successor thereto.
(III) Interest on Hybrid Notes
(a) Interest Rate and Accrual
Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement
Date in respect thereof and as shown on the face of such Note.
(b) Fixed Rate Period
(i) In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note
bears interest on its Calculation Amount from the first day of the Fixed Rate Period
at the rate per annum (expressed as a percentage) equal to the Interest Rate shown
on the face of such Note payable in arrear on each Interest Payment Date or Interest
Payment Dates shown on the face of the Note in each year and on the last day of the
Fixed Rate Period if that date does not fall on an Interest Payment Date.
(ii) The first payment of interest will be made on the Interest Payment Date next following
the first day of the Fixed Rate Period (and if the first day of the Fixed Rate Period is
not an Interest Payment Date, will amount to the Initial Broken Amount shown on the
face of such Note), unless the last day of the Fixed Rate Period falls before the date
on which the first payment of interest would otherwise be due. If the last day of the
25
Fixed Rate Period is not an Interest Payment Date, interest from the preceding Interest
Payment Date (or from the first day of the Fixed Rate Period, as the case may be) to
the last day of the Fixed Rate Period will amount to the Final Broken Amount shown
on the face of the Note.
(iii) Where the due date of redemption of any Hybrid Note falls within the Fixed Rate
Period, interest will cease to accrue on the Note from the due date for redemption
thereof unless, upon due presentation and subject to the provisions of the Notes Trust
Deed, payment of principal (or Redemption Amount, as the case may be) is improperly
withheld or refused, in which event interest at such rate will continue to accrue (as well
after as before judgment) at the rate and in the manner provided in this Condition 4(III)
and the Agency Agreement to the Relevant Date.
(iv) In the case of a Hybrid Note, interest in respect of a period of less than one year will
be calculated on the Day Count Fraction shown on the face of the Note during the
Fixed Rate Period.
(c) Floating Rate Period
(i) In respect of the Floating Rate Period shown on the face of such Note, each Hybrid
Note bears interest on its Calculation Amount from the first day of the Floating Rate
Period, and such interest will be payable in arrear on each interest payment date
(Interest Payment Date). Such Interest Payment Date(s) is/are either shown hereon
as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s)
is/are shown hereon, Interest Payment Date shall mean each date which (save as
mentioned in these Conditions) falls the number of months specified as the Interest
Period on the face of the Note (the Specified Number of Months) after the
preceding Interest Payment Date or, in the case of the first Interest Payment Date,
after the first day of the Floating Rate Period (and which corresponds numerically with
such preceding Interest Payment Date or the first day of the Floating Rate Period, as
the case may be). If any Interest Payment Date referred to in these Conditions that is
specified to be subject to adjustment in accordance with a Business Day Convention
would otherwise fall on a day that is not a business day, then if the Business Day
Convention specified is (1) the Floating Rate Business Day Convention, such date
shall be postponed to the next day which is a business day unless it would thereby
fall into the next calendar month, in which event (i) such date shall be brought forward
to the immediately preceding business day and (ii) each subsequent such date shall
be the last business day of the month in which such date would have fallen had it not
been subject to adjustment, (2) the Following Business Day Convention, such date
shall be postponed to the next day that is a business day, (3) the Modified Following
Business Day Convention, such date shall be postponed to the next day that is a
business day unless it would thereby fall into the next calendar month, in which event
such date shall be brought forward to the immediately preceding business day or (4)
the Preceding Business Day Convention, such date shall be brought forward to the
immediately preceding business day.
(ii) The period beginning on the first day of the Floating Rate Period and ending on the
first Interest Payment Date and each successive period beginning on an Interest
Payment Date and ending on the next succeeding Interest Payment Date is herein
called an Interest Period.
(iii) Where the due date of redemption of any Hybrid Note falls within the Floating Rate
Period, interest will cease to accrue on the Note from the due date for redemption
thereof unless, upon due presentation thereof, payment of principal (or Redemption
Amount, as the case may be) is improperly withheld or refused, in which event interest
will continue to accrue (as well after as before judgment) at the rate and in the manner
provided in this Condition 4(III) and the Agency Agreement to the Relevant Date.
26
(iv) The provisions of Condition 4(II)(b) shall apply to each Hybrid Note during the Floating
Rate Period as though references therein to Floating Rate Notes are references to
Hybrid Notes.
(IV) Zero Coupon Notes
Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable
prior to the Maturity Date and is not paid when due, the amount due and payable prior
to the Maturity Date shall be the Early Redemption Amount of such Note (determined
in accordance with Condition 5(i)). As from the Maturity Date, the rate of interest for any
overdue principal of such a Note shall be a rate per annum (expressed as a percentage)
equal to the Amortisation Yield (as defined in Condition 5(i)).
(V) Calculations
(a) Determination of Rate of Interest and Calculation of Interest Amounts
The Agent Bank will, as soon as practicable after the Relevant Time on each Interest
Determination Date determine the Rate of Interest and calculate the amount of interest
payable (the Interest Amounts) in respect of each Calculation Amount of the relevant
Floating Rate Notes, Variable Rate Notes or (where applicable) Hybrid Notes for the relevant
Interest Period. The amount of interest payable in respect of any Floating Rate Note, Variable
Rate Note or (where applicable) Hybrid Note shall be calculated by multiplying the product
of the Rate of Interest and the Calculation Amount, by the Day Count Fraction shown on the
Note and rounding the resultant figure to the nearest sub-unit of the Relevant Currency. The
determination of any rate or amount, the obtaining of each quotation and the making of each
determination or calculation by the Agent Bank shall (in the absence of manifest or proven
error) be final and binding upon all parties.
(b) Notification
The Agent Bank will cause the Rate of Interest and the Interest Amounts for each Interest
Period and the relevant Interest Payment Date to be notified to the Principal Paying Agent,
the Notes Trustee and the Issuer as soon as possible after their determination but in no event
later than the fourth business day thereafter. In the case of Floating Rate Notes, the Agent
Bank will also cause the Rate of Interest and the Interest Amounts for each Interest Period
and the relevant Interest Payment Date to be notified to Noteholders in accordance with
Condition 15 as soon as possible after their determination. The Interest Amounts and the
Interest Payment Date so notified may subsequently be amended (or appropriate alternative
arrangements made by way of adjustment) without notice in the event of an extension
or shortening of the Interest Period by reason of any Interest Payment Date not being a
business day. If the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid
Notes become due and payable under Condition 9, the Rate of Interest and Interest Amounts
payable in respect of the Floating Rate Notes, Variable Rate Notes or, as the case may be,
Hybrid Notes shall nevertheless continue to be calculated as previously in accordance with
this Condition but no publication of the Rate of Interest and Interest Amounts need to be
made unless the Notes Trustee requires otherwise.
(c) Determination or Calculation by the Notes Trustee
If the Agent Bank does not at any material time determine or calculate the Rate of Interest
for an Interest Period or any Interest Amount, the Notes Trustee shall do so. In doing so,
the Notes Trustee shall apply the foregoing provisions of this Condition, with any necessary
consequential amendments, to the extent that, in its opinion, it can do so, and, in all other
respects, it shall do so in such manner as it shall deem fair and reasonable in all the
circumstances.
(d) Agent Bank and Reference Banks
The Issuer will procure that, so long as any Floating Rate Note, Variable Rate Note or Hybrid
Note remains outstanding, there shall at all times be three Reference Banks (or such other
number as may be required) and, so long as any Floating Rate Note, Variable Rate Note,
Hybrid Note or Zero Coupon Note remains outstanding, there shall at all times be an Agent
27
Bank. If any Reference Bank (acting through its relevant office) is unable or unwilling to
continue to act as a Reference Bank or the Agent Bank is unable or unwilling to act as such
or if the Agent Bank fails duly to establish the Rate of Interest for any Interest Period or to
calculate the Interest Amounts, the Issuer will appoint another bank with an office in the
Relevant Financial Centre to act as such in its place. The Agent Bank may not resign its
duties without a successor having been appointed as aforesaid.
5. Redemption and Purchase
(a) Final Redemption
Unless previously redeemed or purchased and cancelled as provided below, this Note will be
redeemed at its Redemption Amount on the Maturity Date shown on its face (if this Note is shown
on its face to be a Fixed Rate Note, Hybrid Note (during the Fixed Rate Period) or Zero Coupon
Note) or on the Interest Payment Date falling in the Redemption Month shown on its face (if this
Note is shown on its face to be a Floating Rate Note, Variable Rate Note or Hybrid Note (during
the Floating Rate Period)).
(b) Purchase at the Option of Issuer
If so provided hereon, the Issuer shall have the option to purchase all or any of the Fixed Rate
Notes, Floating Rate Notes, Variable Rate Notes or Hybrid Notes at their Redemption Amount on
any date on which interest is due to be paid on such Notes and the Noteholders shall be bound to
sell such Notes to the Issuer accordingly. To exercise such option, the Issuer shall give irrevocable
notice to the Noteholders within the Issuers Purchase Option Period shown on the face hereof.
Such Notes may be held, resold or surrendered to the Principal Paying Agent for cancellation. The
Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at
any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of
calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11.
In the case of a purchase of some only of the Notes, the notice to Noteholders shall also contain
the certificate numbers of the Notes to be purchased, which shall have been drawn by or on behalf
of the Issuer in such place and in such manner as may be agreed between the Issuer and the
Notes Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on
any Stock Exchange (as defined in the Notes Trust Deed), the Issuer shall comply with the rules of
such Stock Exchange in relation to the publication of any purchase of such Notes.
(c) Purchase at the Option of Noteholders
(i) Each Noteholder shall have the option to have all or any of his Variable Rate Notes
purchased by the Issuer at their Redemption Amount on any Interest Payment Date and
the Issuer will purchase such Variable Rate Notes accordingly. To exercise such option, a
Noteholder shall deposit any Variable Rate Notes to be purchased with the Principal Paying
Agent at its specified office together with all Coupons and any unexchanged Talon, if any,
relating to such Variable Rate Notes which mature after the date fixed for purchase, together
with a duly completed option exercise notice in the form obtainable from the Principal Paying
Agent within the Noteholders VRN Purchase Option Period shown on the face hereof. Any
Variable Rate Notes so deposited may not be withdrawn (except as provided in the Agency
Agreement) without the prior consent of the Issuer. Such Variable Rate Notes may be held,
resold or surrendered to the Principal Paying Agent for cancellation. The Variable Rate Notes
so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at
any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes
of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9,
10 and 11.
(ii) If so provided hereon, each Noteholder shall have the option to have all or any of his
Fixed Rate Notes, Floating Rate Notes or Hybrid Notes purchased by the Issuer at their
Redemption Amount on any date on which interest is due to be paid on such Notes and
the Issuer will purchase such Notes accordingly. To exercise such option, a Noteholder shall
deposit any Notes to be purchased with the Principal Paying Agent at its specified office
together with all Coupons and any unexchanged Talon, if any, relating to such Notes which
mature after the date fixed for purchase, together with a duly completed option exercise
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notice in the form obtainable from the Principal Paying Agent within the Noteholders
Purchase Option Period shown on the face hereof. Any Notes so deposited may not be
withdrawn (except as provided in the Agency Agreement) without the prior consent of the
Issuer. Such Notes may be held, resold or surrendered to the Principal Paying Agent for
cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not
entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be
outstanding for the purposes of calculating quorums at meetings of the Noteholders or for
the purposes of Conditions 9, 10 and 11.
(d) Redemption at the Option of the Issuer
If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within
the Issuers Redemption Option Period shown on the face hereof, redeem all or, if so provided,
some of the Notes at their Redemption Amount or integral multiples thereof and on the date or
dates so provided. Any such redemption of Notes shall be at their Redemption Amount, together
with interest accrued to the date fixed for redemption.
All Notes in respect of which any such notice is given shall be redeemed on the date specified in
such notice in accordance with this Condition.
In the case of a partial redemption of the Notes, the notice to Noteholders shall also contain the
certificate numbers of the Notes to be redeemed, which shall have been drawn by or on behalf of
the Issuer in such place and in such manner as may be agreed between the Issuer and the Notes
Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on any
Stock Exchange, the Issuer shall comply with the rules of such Stock Exchange in relation to the
publication of any redemption of such Notes.
(e) Redemption at the Option of Noteholders
If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note
on the date or dates so provided at its Redemption Amount, together with interest accrued to the
date fixed for redemption. To exercise such option, the holder must deposit such Note (together with
all unmatured Coupons and any unexchanged Talon, if any) with the Principal Paying Agent at its
specified office, together with a duly completed option exercise notice in the form obtainable from
the Principal Paying Agent or the Issuer (as applicable) within the Noteholders Redemption Option
Period shown on the face hereof. Any Note so deposited may not be withdrawn (except as provided
in the Agency Agreement) without the prior consent of the Issuer.
(f) Redemption for Taxation Reasons
If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not
in part, on any Interest Payment Date or, if so specified hereon, at any time on giving not less
than 30 nor more than 60 days notice to the Noteholders (which notice shall be irrevocable), at
their Redemption Amount or (in the case of Zero Coupon Notes) Early Redemption Amount (as
defined in Condition 5(i) below) (together with interest accrued to (but excluding) the date fixed
for redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided
or referred to in Condition 7, or increase the payment of such additional amounts, as a result
of any change in, or amendment to, the laws (or any regulations, rulings or other administrative
pronouncements promulgated thereunder) of Singapore or any political subdivision or any authority
thereof or therein having power to tax, or any change in the application or official interpretation
of such laws, regulations, rulings or other administrative pronouncements, which change or
amendment is made public on or after the Issue Date or any other date specified in the Pricing
Supplement, and (ii) such obligations cannot be avoided by the Issuer taking reasonable measures
available to it, provided that no such notice of redemption shall be given earlier than 90 days prior
to the earliest date on which the Issuer would be obliged to pay such additional amounts were
a payment in respect of the Notes then due. Prior to the publication of any notice of redemption
pursuant to this paragraph, the Issuer shall deliver to the Notes Trustee and the Principal Paying
Agent (1) a certificate signed by a duly authorised signatory of the Issuer setting forth a statement
of facts and stating that the obligation referred to in (i) above cannot be avoided by the Issuer
taking reasonable measures available to it, and (2) an opinion of independent legal, tax or any
other professional advisers of recognised standing to the effect that the Issuer has or is likely to
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become obliged to pay such additional amounts as a result of such change or amendment and the
Notes Trustee shall be entitled to accept such certificate and opinion as sufficient evidence of the
satisfaction of the condition precedent to the right of the Issuer so to redeem having occurred, in
which event it shall be conclusive and binding on the Noteholders and the Couponholders.
(g) Redemption upon Cessation or Suspension of Trading of Units
If on any date, (i) the units of the Trust cease to be traded on the SGX-ST or (ii) trading in the
units of the Trust on the SGX-ST is suspended for a continuous period of more than ten market
days, the Issuer shall, at the option of the holder of any Note, redeem such Note at its Redemption
Amount together with interest accrued to the date fixed for redemption on any date on which
interest is due to be paid on such Notes or, if earlier, the date falling 45 days after the Effective
Date. The Issuer shall within seven days after the Effective Date, give notice to the Notes Trustee,
the Principal Paying Agent and the Noteholders of the occurrence of the event specified in this
paragraph (g) (provided that any failure by the Issuer to give such notice shall not prejudice any
Noteholder of such option). To exercise such option, the holder must deposit such Note (together
with all unmatured Coupons and unexchanged Talon, if any) with the Principal Paying Agent at its
specified office, together with an Exercise Notice in the form obtainable from the Principal Paying
Agent or the Issuer (as applicable) not later than 21 days after the Effective Date. Any Note so
deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior
consent of the Issuer.
In this Condition 5(g):
(1) Effective Date means (in the case of (i) above) the date of cessation of trading or (in the
case of (ii) above) the business day immediately following the expiry of such continuous
period of ten market days; and
(2) market days means a day on which the SGX-ST is open for securities trading.
(h) Purchases
The Issuer or any of the related corporations of the Trust may at any time purchase Notes at any
price (provided that they are purchased together with all unmatured Coupons and unexchanged
Talon, if any, relating to them) in the open market or otherwise, provided that in any such case such
purchase or purchases is in compliance with all relevant laws, regulations and directives.
Notes purchased by the Issuer or any of the related corporations of the Trust may be surrendered
by the purchaser through the Issuer to the Principal Paying Agent for cancellation or may at the
option of the Issuer or relevant subsidiary be held or resold.
For the purposes of these Conditions, directive includes any present or future directive,
regulation, request, requirement, rule or credit restraint programme of any relevant agency,
authority, central bank department, government, legislative, minister, ministry, official public or
statutory corporation, self-regulating organisation, or stock exchange.
(i) Early Redemption of Zero Coupon Notes
(i) The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early
Redemption Amount of which is not linked to an index and/or formula, upon redemption of
such Note pursuant to Condition 5(f) or upon it becoming due and payable as provided in
Condition 9, shall be the Amortised Face Amount (calculated as provided below) of such
Note unless otherwise specified hereon.
(ii) Subject to the provisions of sub-paragraph (iii) below, the Amortised Face Amount of any
such Note shall be the scheduled Redemption Amount of such Note on the Maturity Date
discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield
(which, if none is shown hereon, shall be such rate as would produce an Amortised Face
Amount equal to the issue price of the Notes if they were discounted back to their issue price
on the Issue Date) compounded annually.
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(iii) If the Early Redemption Amount payable in respect of any such Note upon its redemption
pursuant to Condition 5(f) or upon it becoming due and payable as provided in Condition
9 is not paid when due, the Early Redemption Amount due and payable in respect of such
Note shall be the Amortised Face Amount of such Note as defined in sub-paragraph (ii)
above, except that such sub-paragraph shall have effect as though the date on which the
Note becomes due and payable were the Relevant Date. The calculation of the Amortised
Face Amount in accordance with this sub-paragraph will continue to be made (as well
after as before judgment) until the Relevant Date, unless the Relevant Date falls on or
after the Maturity Date, in which case the amount due and payable shall be the scheduled
Redemption Amount of such Note on the Maturity Date together with any interest which may
accrue in accordance with Condition 4(IV).
Where such calculation is to be made for a period of less than one year, it shall be made on
the basis of the Day Count Fraction shown on the face of the Note.
(j) Redemption upon Termination of the Trust
In the event that the Trust is terminated in accordance with the provisions of the RM Trust Deed
(as defined in the Notes Trust Deed), the Issuer shall redeem all (and not some only) of the Notes
at their Redemption Amount or (in the case of Zero Coupon Notes) Early Redemption Amount
together with interest accrued to the date fixed for redemption on any date on which interest is due
to be paid on such Notes or, if earlier, the date of termination of the Trust.
The Issuer shall forthwith notify the Notes Trustee, the Principal Paying Agent and (in accordance
with Condition 15) the Noteholders of the termination of the Trust.
(k) Cancellation
All Notes purchased by or on behalf of the Issuer or any of the related corporations of the Trust
may be surrendered for cancellation by surrendering each such Note together with all unmatured
Coupons and unexchanged Talon, if any, to the Principal Paying Agent at its specified office and,
if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith
(together with all unmatured Coupons and unexchanged Talon, if any, attached thereto or
surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold.
6. Payments
(a) Principal and Interest
Payments of principal and interest in respect of the Notes will, subject as mentioned below, be
made against presentation and surrender of the relevant Notes or Coupons, as the case may be,
at the specified office of the Principal Paying Agent by a cheque drawn in the currency in which
payment is due on, or, at the option of the holders, by transfer to an account maintained by the
payee in that currency with, a bank in the principal financial centre for that currency.
(b) Payments subject to law etc.
All payments are subject in all cases to any applicable fiscal or other laws, regulations and
directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall
be charged to the Noteholders or Couponholders in respect of such payments.
(c) Appointment of Agents
The Principal Paying Agent, the Non-CDP Paying Agent and their respective specified offices are
listed below. The Issuer reserves the right at any time to vary or terminate the appointment of the
Principal Paying Agent or the Non-CDP Paying Agent and to appoint additional or other paying
agents or non-CDP paying agents, provided that it will at all times maintain a paying agent having a
specified office in Singapore and a non-CDP paying agent having a specified office in Hong Kong.
Notice of any such change or any change of any specified office will promptly be given to the
Noteholders in accordance with Condition 15.
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The Agency Agreement may be amended by the Issuer, the Paying Agents and the Notes Trustee,
without the consent of any Noteholder, for the purpose of curing any ambiguity or of curing,
correcting or supplementing any defective provision contained therein or in any manner which the
Issuer, the Paying Agents and the Notes Trustee may mutually deem necessary or desirable and
which does not, in the opinion of the Issuer, the Paying Agents and the Notes Trustee, adversely
affect the interests of the Noteholders.
(d) Unmatured Coupons and Unexchanged Talons
(i) Fixed Rate Notes and Hybrid Notes should be surrendered for payment together with all
unmatured Coupons (if any) relating to such Notes (and, in the case of Hybrid Notes, relating
to interest payable during the Fixed Rate Period), failing which an amount equal to the face
value of each missing unmatured Coupon (or, in the case of payment not being made in full,
that proportion of the amount of such missing unmatured Coupon which the sum of principal
so paid bears to the total principal due) will be deducted from the Redemption Amount due
for payment. Any amount so deducted will be paid in the manner mentioned above against
surrender of such missing Coupon within a period of five years from the Relevant Date for
the payment of such principal (whether or not such Coupon has become void pursuant to
Condition 8).
(ii) Subject to the provisions of the relevant Pricing Supplement upon the due date for
redemption of any Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured
Coupons relating to such Note (and, in the case of Hybrid Notes, relating to interest payable
during the Floating Rate Period) (whether or not attached) shall become void and no
payment shall be made in respect of them.
(iii) Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note
(whether or not attached) shall become void and no Coupon shall be delivered in respect of
such Talon.
(iv) Where any Floating Rate Note, Variable Rate Note or Hybrid Note is presented for
redemption without all unmatured Coupons relating to it (and, in the case of Hybrid Notes,
relating to interest payable during the Floating Rate Period) and where any Note is presented
for redemption without any unexchanged Talon relating to it, redemption of such Note shall
be made only against the provision of such indemnity as the Issuer may require.
(v) If the due date for redemption or repayment of any Note is not a due date for payment of
interest, interest accrued from the preceding due date for payment of interest or the Interest
Commencement Date, as the case may be, shall only be payable against presentation (and
surrender if appropriate) of the relevant Note.
(e) Talons
On or after the Interest Payment Date for the final Coupon forming part of the Coupon sheet issued
in respect of any Note, the Talon forming part of such Coupon sheet may be surrendered at the
specified office of the Principal Paying Agent on any business day in exchange for a further Coupon
sheet (but excluding any Coupons which may have become void pursuant to Condition 8) and, if
necessary, another Talon for a further Coupon sheet.
(f) Non-business days
Subject as provided in the relevant Pricing Supplement or subject as otherwise provided in these
Conditions, if any date for the payment in respect of any Note or Coupon is not a business day, the
holder shall not be entitled to payment until the next following business day and shall not be entitled
to any further interest or other payment in respect of any such delay.
(g) Default Interest
If on or after the due date for payment of any sum in respect of the Notes, payment of all or any
part of such sum is not made against due presentation of the Notes or, as the case may be, the
Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day
of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after
32
as before judgment) at a rate per annum determined by the Principal Paying Agent to be equal
to two per cent. per annum above (in the case of a Fixed Rate Note or a Hybrid Note during the
Fixed Rate Period) the Interest Rate applicable to such Note, (in the case of a Floating Rate Note
or a Hybrid Note during the Floating Rate Period) the Rate of Interest applicable to such Note
or (in the case of a Variable Rate Note) the variable rate by which the Agreed Yield applicable to
such Note is determined or, as the case may be, the Rate of Interest applicable to such Note, or
in the case of a Zero Coupon Note, as provided for in the relevant Pricing Supplement. So long as
the default continues then such rate shall be re-calculated on the same basis at intervals of such
duration as the Principal Paying Agent may select, save that the amount of unpaid interest at the
above rate accruing during the preceding such period shall be added to the amount in respect of
which the Issuer is in default and itself bear interest accordingly. Interest at the rate(s) determined
in accordance with this paragraph shall be calculated on the Day Count Fraction shown on the
face of the Note and the actual number of days elapsed, shall accrue on a daily basis and shall be
immediately due and payable by the Issuer.
7. Taxation
All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear
of, and without deduction or withholding for or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected, withheld or
assessed by or within Singapore or any authority thereof or therein having power to tax, unless
such withholding or deduction is required by law. In such event, the Issuer shall pay such additional
amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts
as would have been received by them had no such deduction or withholding been required, except
that no such additional amounts shall be payable in respect of any Note or Coupon presented for
payment:
(a) by or on behalf of a holder who is subject to such taxes, duties, assessments or
governmental charges by reason of his being connected with Singapore otherwise than by
reason only of the holding of such Note or Coupon or the receipt of any sums due in respect
of such Note or Coupon (including, without limitation, the holder being a resident of, or a
permanent establishment in, Singapore);
(b) more than 30 days after the Relevant Date except to the extent that the holder thereof would
have been entitled to such additional amounts on presenting the same for payment on the
last day of such period of 30 days; or
(c) by or on behalf of a holder who would be able to lawfully avoid (but has not so avoided) such
deduction or withholding by making a declaration or any other statement including, but not
limited to, a declaration of residence or non-residence, but fails to do so.
As used in these Conditions, Relevant Date in respect of any Note or Coupon means the date
on which payment in respect thereof first becomes due or (if any amount of the money payable
is improperly withheld or refused) the date on which payment in full of the amount outstanding
is made or (if earlier) the date falling seven days after that on which notice is duly given to the
Noteholders in accordance with Condition 15 that, upon further presentation of the Note or Coupon
being made in accordance with the Conditions, such payment will be made, provided that payment
is in fact made upon presentation, and references to principal shall be deemed to include any
premium payable in respect of the Notes, all Redemption Amounts, Early Redemption Amounts
and all other amounts in the nature of principal payable pursuant to Condition 5, interest shall be
deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 4 and
any reference to principal and/or premium and/or Redemption Amounts and/or interest
and/or Early Redemption Amounts shall be deemed to include any additional amounts which
may be payable under these Conditions.
8. Prescription
The Notes and Coupons (which, for this purpose, shall not include Talons) shall become void
unless presented for payment within five years from the appropriate Relevant Date for payment.
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9. Events of Default
If any of the following events (Events of Default) occurs which has not been waived the Notes
Trustee at its discretion may, and if so requested by holders of at least 25 per cent. in principal
amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, give
notice to the Issuer that the Notes are immediately due and repayable, whereupon the Redemption
Amount of such Notes or (in the case of Zero Coupon Notes) the Early Redemption Amount of
such Notes together with accrued interest to the date of payment shall become immediately due
and payable:
(a) the Issuer does not pay any principal payable by it under any of the Notes when due or the
Issuer does not pay any other sum (other than principal) payable by it under any of the Notes
within five business days of its due date, in each case at the place at and in the currency in
which it is expressed to be payable;
(b) the Issuer does not perform or comply with any one or more of its obligations (other than
the payment obligation of the Issuer referred to in paragraph (a)) under any of the Issue
Documents (as defined in the Notes Trust Deed) or any of the Notes and if that default is
capable of remedy, it is not remedied within 30 days (or such longer period as the Notes
Trustee may permit, provided that nothing herein shall oblige the Notes Trustee to exercise
such discretion) of the Notes Trustee giving written notice to the Issuer of the failure to
perform or comply and requiring the same to be remedied;
(c) any representation, warranty or statement by the Issuer in any of the Issue Documents or
any of the Notes or in any document delivered under any of the Issue Documents or any of
the Notes is not complied with in any respect or is or proves to have been incorrect in any
respect when made or deemed repeated and, if that default is capable of remedy, it is not
remedied within 30 days (or such longer period as the Notes Trustee may permit, provided
that nothing herein shall oblige the Notes Trustee to exercise such discretion) of the Notes
Trustee giving written notice to the Issuer of such non-compliance or incorrect representation,
warranty or statement and requiring the same to be remedied;
(d) (i) any other indebtedness of the Issuer, the Trust or any of the subsidiaries of the Trust
in respect of borrowed moneys is or is declared to be due and payable prior to its
stated maturity by reason of any actual default, event of default or the like (however
described) or is not paid when due or, as a result of any actual default, event of default
or the like (however described) any facility relating to any such indebtedness is or is
declared to be cancelled or terminated before its normal expiry date or any person
otherwise entitled to use any such facility is not so entitled, in each case within any
originally applicable grace period in any agreement in relation to that indebtedness; or
(ii) the Issuer, the Trust or any of the subsidiaries of the Trust fails to pay when properly
called upon to do so any guarantee of indebtedness for borrowed moneys;
provided however that no Event of Default will occur under this paragraph (d) unless and until
the aggregate amount of the indebtedness in respect of which one or more of the events
mentioned above in this paragraph (d) has/have occurred equals or exceeds S$30,000,000
(or its equivalent in any other currency or currencies);
(e) the Issuer, the Trust or any of the subsidiaries of the Trust is (or is deemed by law or a court
to be) insolvent or unable to pay its debts, stops, suspends or threatens to stop or suspend
payment of all or any material part of (or of a particular type of) its indebtedness, proposes
or makes a general assignment or an arrangement or composition with or for the benefit of
the relevant creditors or a moratorium is agreed or declared in respect of all or any material
part of (or of a particular type of) the indebtedness of the Issuer, the Trust or any of the
subsidiaries of the Trust;
34
(f) a distress, attachment, execution or other legal process is levied, enforced or sued out on or
against all or any material part of the property, assets or revenues of the Issuer, the Trust or
any of the subsidiaries of the Trust and is not discharged or stayed within 45 days (or such
longer period as the Notes Trustee may permit, provided that nothing herein shall oblige the
Notes Trustee to exercise such discretion);
(g) any security on or over the whole or any material part of the property or assets of the Issuer,
the Trust or any of the subsidiaries of the Trust becomes enforceable or any step is taken to
enforce it (including the taking of possession or the appointment of a receiver, manager or
other similar person);
(h) (i) a notice has been given by the Issuer under the RM Trust Deed for the termination of
the Trust or (ii) any application is made, meeting is convened, order is made or effective
resolution is passed for the winding-up, termination or dissolution of the Issuer, the Trust
or any of the subsidiaries of the Trust (except (1) for the purpose of and followed by a
reconstruction, amalgamation, reorganisation, merger, restructuring or consolidation on
terms approved by the Noteholders by way of an Extraordinary Resolution before that
event occurs or (2) in the case of a subsidiary only, where such winding-up, termination or
dissolution does not involve insolvency and does not have a material adverse effect on the
Issuer) or (iii) any order is made or effective resolution is passed for the appointment of a
liquidator (including a provisional liquidator), receiver, manager, judicial manager, trustee,
administrator, agent or similar officer of the Issuer, the Trust or any of the subsidiaries of
the Trust or over the whole or any material part of the property or assets of the Issuer, the
Trust or any of the subsidiaries of the Trust or (iv) the appointment of a liquidator (including
a provisional liquidator), receiver, manager, judicial manager, trustee, administrator, agent
or similar officer of the Issuer, the Trust of any of the subsidiaries of the Trust or over the
whole or any material part of the property or assets of the Issuer, the Trust or any of the
Subsidiaries of the Trust is made;
(i) the Issuer, the Trust or any of the subsidiaries of the Trust ceases or threatens to cease to
carry on all or any material part of its business or (otherwise than as permitted by, and in
connection with, Clause 15.25 of the Notes Trust Deed) disposes or threatens to dispose
of the whole or any material part of its property or assets (except (i) on terms approved by
the Noteholders by way of an Extraordinary Resolution before that event occurs or (ii) in the
case of a subsidiary only, for the purposes of or pursuant to a reconstruction, amalgamation,
reorganisation, merger, restructuring or consolidation which does not involve insolvency and
which does not have a material adverse effect on the Issuer);
(j) all or any material part of the assets of the Group, taken as a whole, are seized, compulsorily
acquired, expropriated or nationalised by any person acting under the authority of any
national, regional or local government;
(k) any action, condition or thing (including the obtaining of any necessary consent) at any time
required to be taken, fulfilled or done for any of the purposes stated in Clause 14.6 of the
Notes Trust Deed is not taken, fulfilled or done, or any such consent ceases to be in full
force and effect without modification or any condition in or relating to any such consent is not
complied with (unless that consent or condition is no longer required or applicable);
(l) it is or will become unlawful for the Issuer to perform or comply with any one or more of its
payment or other material obligations under any of the Issue Documents or any of the Notes;
(m) any of the Issue Documents or any of the Notes ceases for any reason (or is claimed by the
Issuer not) to be the legal and valid obligations of the Issuer, binding upon it in accordance
with its terms;
(n) any litigation, arbitration or administrative proceeding (other than those of a frivolous or
vexatious nature which are being contested in good faith and by appropriate proceedings)
against the Issuer, the Trust or any of the subsidiaries of the Trust is current or pending (i)
to restrain the exercise of any of the rights and/or the performance or enforcement of or
35
compliance with any of the payment or other material obligations of the Issuer under any of
the Issue Documents or any of the Notes or (ii) which has or could have a material adverse
effect on the Issuer;
(o) any event occurs which, under the law of any relevant jurisdiction, has an analogous or
equivalent effect to any of the events mentioned in paragraph (e), (f), (g), (h) or (j);
(p) the Issuer or any of its subsidiaries is declared by the Minister of Finance to be a declared
company under the provisions of Part IX of the Companies Act, Chapter 50 of Singapore;
and
(q) (i)(1) the Trustee-Manager (as defined in the Notes Trust Deed) resigns or is removed; (2)
an order is made for the winding-up of the Trustee-Manager (other than the amalgamation,
reconstruction or reorganisation of the Trustee-Manager), a receiver, judicial manager,
administrator, agent or similar officer of the Trustee-Manager is appointed; and/or (3) there
is a declaration, imposition or promulgation in Singapore or in any relevant jurisdiction of a
moratorium, any form of exchange control or any law, directive or regulation of any agency or
the amalgamation, reconstruction or reorganisation of the Trustee-Manager which prevents or
restricts the ability of the Issuer to perform its obligations under any of the Issue Documents
to which it is a party or any of the Notes and (ii) the replacement or substitute trustee-
manager of the Trustee-Manager is not appointed in accordance with the terms of the RM
Trust Deed.
10. Enforcement of Rights
At any time after an Event of Default has occurred or after the Notes shall have become due
and payable, the Notes Trustee may, at its discretion and without further notice, institute such
proceedings against the Issuer as it may think fit to enforce repayment of the Notes, together with
accrued interest, and to enforce the provisions of the Issue Documents but it shall not be bound to
take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution
of the Noteholders or so requested in writing by Noteholders holding not less than 25 per cent. in
principal amount of the Notes outstanding and (b) it shall have been indemnified and/or secured
and/or pre-funded by the Noteholders to its satisfaction. No Noteholder or Couponholder shall be
entitled to proceed directly against the Issuer unless the Notes Trustee, having become bound to
do so, fails to do so within a reasonable period and such failure shall be continuing.
11. Meeting of Noteholders and Modifications
The Notes Trust Deed contains provisions for convening meetings of Noteholders of a Series to
consider any matter affecting their interests, including modification by Extraordinary Resolution of
the Notes of such Series (including these Conditions insofar as the same may apply to such Notes)
or any of the provisions of the Notes Trust Deed.
The Notes Trustee or the Issuer at any time may, and the Notes Trustee upon the request in writing
by Noteholders holding not less than one-tenth of the principal amount of the Notes of any Series
for the time being outstanding and after being indemnified and/or secured and/or pre-funded to
its satisfaction against all costs and expenses shall, convene a meeting of the Noteholders of that
Series. An Extraordinary Resolution duly passed at any such meeting shall be binding on all the
Noteholders of the relevant Series, whether present or not and on all relevant Couponholders,
except that any Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity
or redemption of the Notes of the relevant Series or any date for payment of interest or Interest
Amounts on the Notes of the relevant Series, (b) to reduce or cancel the principal amount of, or
any premium payable on redemption of, the Notes of the relevant Series, (c) to reduce the rate
or rates of interest in respect of the Notes of the relevant Series or to vary the method or basis of
calculating the rate or rates of interest or the basis for calculating any Interest Amount in respect of
the Notes of the relevant Series, (d) to vary any method of, or basis for, calculating the Redemption
Amount or the Early Redemption Amount including the method of calculating the Amortised Face
Amount of the Notes of the relevant Series, (e) to vary the currency or currencies of payment or
denomination of the Notes of the relevant Series, (f) to take any steps that as specified hereon
may only be taken following approval by an Extraordinary Resolution to which the special quorum
provisions apply or (g) to modify the provisions concerning the quorum required at any meeting of
36
Noteholders of the relevant Series or the majority required to pass the Extraordinary Resolution,
will only be binding if passed at a meeting of the Noteholders of the relevant Series (or at any
adjournment thereof) at which a special quorum (provided for in the Notes Trust Deed) is present.
The Notes Trustee may agree, without the consent of the Noteholders or Couponholders, to (i)
any modification of any of the provisions of the Notes Trust Deed which in the opinion of the Notes
Trustee is of a formal, minor or technical nature or is made to correct a manifest error or to comply
with mandatory provisions of Singapore law or is required by Euroclear, Clearstream, Luxembourg,
the Depository and/or any other clearing system in which the Notes may be held and (ii) any other
modification (except as mentioned in the Notes Trust Deed), and any waiver or authorisation of
any breach or proposed breach, of any of the provisions of the Notes Trust Deed which is in the
opinion of the Notes Trustee not materially prejudicial to the interests of the Noteholders. Any such
modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders
and, if the Notes Trustee so requires, such modification, authorisation or waiver shall be notified to
the Noteholders as soon as practicable.
In connection with the exercise of its functions (including but not limited to those in relation to any
proposed modification, waiver, authorisation or substitution) the Notes Trustee shall have regard to
the interests of the Noteholders as a class and shall not have regard to the consequences of such
exercise for individual Noteholders or Couponholders.
These Conditions may be amended, modified, or varied in relation to any Series of Notes by the
terms of the relevant Pricing Supplement in relation to such Series.
12. Replacement of Notes, Coupons and Talons
If a Note, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed it may be replaced,
subject to applicable laws, at the specified office of the Principal Paying Agent, or at the specified
office of such other Paying Agent as may from time to time be designated by the Issuer for the
purpose and notice of whose designation is given to Noteholders in accordance with Condition
15, on payment by the claimant of the fees and costs incurred in connection therewith and on
such terms as to evidence, undertaking, security and indemnity (which may provide, inter alia,
that if the allegedly lost, stolen or destroyed Note, Coupon or Talon is subsequently presented for
payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of
such Note, Coupon or Talon) and otherwise as the Issuer may require. Mutilated or defaced Notes,
Coupons or Talons must be surrendered before replacements will be issued.
13. Further Issues
The Issuer may from time to time without the consent of the Noteholders or Couponholders create
and issue further notes having the same terms and conditions as the Notes of any Series and so
that the same shall be consolidated and form a single Series with such Notes, and references in
these Conditions to Notes shall be construed accordingly.
14. Indemnification of the Notes Trustee
The Notes Trust Deed contains provisions for the indemnification of the Notes Trustee and for
its relief from responsibility, including provisions relieving it from taking proceedings to enforce
repayment unless indemnified and/or secured and/or pre-funded to its satisfaction. The Notes Trust
Deed also contains a provision entitling the Notes Trustee or any corporation related to it to enter
into business transactions with the Issuer, the Trust or any of its subsidiaries without accounting to
the Noteholders or Couponholders for any profit resulting from such transactions.
Each Noteholder shall be solely responsible for making and continuing to make its own independent
appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status
and nature of the Issuer and the Trust, and the Notes Trustee shall not at any time have any
responsibility for the same and each Noteholder shall not rely on the Notes Trustee in respect
thereof.
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15. Notices
Notices to the holders will be valid if published in a daily newspaper of general circulation in
Singapore (or, if the holders of any Series of Notes can be identified, notices to such holders will
also be valid if they are given to each of such holders). It is expected that such publication will be
made in The Business Times. Notices will, if published more than once or on different dates, be
deemed to have been given on the date of the first publication in such newspaper as provided
above. Couponholders shall be deemed for all purposes to have notice of the contents of any notice
to the holders in accordance with this Condition 15.
Until such time as any Definitive Notes are issued, there may, so long as the Global Note(s) is
or are held in its or their entirety on behalf of Euroclear, Clearstream, Luxembourg and/or the
Depository, be substituted for such publication in such newspapers the delivery of the relevant
notice to Euroclear, Clearstream, Luxembourg and/or (subject to the agreement of the Depository)
the Depository for communication by it to the Noteholders, except that if the Notes are listed on
the SGX-ST and the rules of such exchange so require, notice will in any event be published in
accordance with the previous paragraph. Any such notice shall be deemed to have been given to
the Noteholders on the seventh day after the day on which the said notice was given to Euroclear,
Clearstream, Luxembourg and/or the Depository.
Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing
and given by lodging the same, together with the relative Note or Notes, with the Principal Paying
Agent or Non-CDP Paying Agent. Whilst the Notes are represented by a Global Note, such notice
may be given by any Noteholder to the Principal Paying Agent or, as the case may be, the Non-
CDP Paying Agent through Euroclear, Clearstream, Luxembourg and/or the Depository in such
manner as the Principal Paying Agent or, as the case maybe, the Non-CDP Paying Agent and
Euroclear, Clearstream, Luxembourg and/or the Depository may approve for this purpose.
Notwithstanding the other provisions of this Condition, in any case where the identity and addresses
of all the Noteholders are known to the Issuer, notices to such holders may be given individually by
recorded delivery mail to such addresses and will be deemed to have been given two days from
the date of despatch to the Noteholders.
16. Recourse against Issuer
(a) Recourse Limited to Trust Assets
The Issuer has entered into the Notes Trust Deed and has issued the Notes only in
its capacity as trustee-manager for the Trust and not in the Issuers personal capacity.
Accordingly, notwithstanding any provision of the Notes Trust Deed and the Notes, the
Issuer has assumed all obligations under the Notes Trust Deed and the Notes only in its
capacity as trustee-manager for the Trust and not in its personal capacity and any liability of
or indemnity given by the Issuer under the Notes Trust Deed and the Notes is limited to the
assets of the Trust over which the Issuer has recourse and shall not extend to any personal
or other assets of the Issuer. The foregoing shall not relieve or discharge the Issuer from any
negligence, wilful default, fraud or breach of trust and shall not restrict or prejudice the rights
or remedies of the Notes Trustee, the Noteholders and the Couponholders under law or
equity in connection with any negligence, wilful default, fraud or breach of trust of the Issuer.
(b) Obligations
The Issuers obligations under the Notes Trust Deed and the Notes are solely the corporate
obligations of the Issuer (only in its capacity as trustee-manager for the Trust and not in its
personal capacity) and there shall be no recourse against the shareholders, directors, officers
or employees of the Issuer for any claims, losses, damages, liabilities or other obligations
whatsoever in connection with any of the transactions contemplated by the provisions of the
Notes Trust Deed and the Notes. The foregoing shall not relieve or discharge the Issuer from
any negligence, wilful default, fraud or breach of trust and shall not restrict or prejudice the
rights or remedies of the Notes Trustee, the Noteholders and the Couponholders under law
or equity in connection with any negligence, wilful default, fraud or breach of trust of the
Issuer.
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(c) Proceedings
For the avoidance of doubt, any legal action or proceedings commenced against the Issuer
whether in Singapore or elsewhere pursuant to the Notes Trust Deed and the Notes shall be
brought against the Issuer in its capacity as trustee-manager and not in its personal capacity.
The foregoing shall not relieve or discharge the Issuer from any negligence, wilful default,
fraud or breach of trust and shall not restrict or prejudice the rights or remedies of the Notes
Trustee, the Noteholders and the Couponholders under law or equity in connection with any
negligence, wilful default, fraud or breach of trust of the Issuer.
17. Contracts (Rights of Third Parties) Act
No person shall have any right to enforce any term or condition of the Notes under the Contracts
(Rights of Third Parties) Act, Chapter 53B of Singapore.
18. Governing Law and Jurisdiction
(a) Governing Law
The Notes, the Coupons and the Talons are governed by, and shall be construed in
accordance with, the laws of Singapore.
(b) Jurisdiction
The courts of Singapore are to have jurisdiction to settle any disputes that may arise out
of or in connection with the Notes Trust Deed, the Notes, the Coupons or the Talons and
accordingly any legal action or proceedings arising out of or in connection with the Notes
Trust Deed, the Notes, the Coupons or the Talons may be brought in such courts. The Issuer
has in the Notes Trust Deed irrevocably submitted to the jurisdiction of such courts.
Principal Paying Agent
Deutsche Bank AG, Singapore Branch
One Raffles Quay
#17-00 South Tower
Singapore 048583
Non-CDP Paying Agent
Deutsche Bank AG, Hong Kong Branch
Level 52, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
39
RISK FACTORS
Prior to making an investment or divestment decision, prospective investors or existing Noteholders
should carefully consider all the information set forth in this Information Memorandum including the risk
factors set out below.
The investment considerations and risk factors set out below do not purport to be complete or
comprehensive of all the investment considerations and risk factors that may be involved in the business,
financial condition, results of operations or prospects of the Issuer, Trust and the subsidiaries of the
Trust or the properties owned by the Group or any decision to purchase, own or dispose of the Notes.
Additional investment considerations and risk factors which the Issuer is currently unaware of may also
impair the Issuers, the Trusts and/or the Groups business, financial condition, results of operations or
prospects. If any of the following investment considerations or risk factors develops into actual events,
the business, financial condition, results of operations or prospects of the Issuer, the Trust and/or the
Group could be materially and adversely affected. In such cases, the ability of the Issuer to comply with
its obligations under the Notes Trust Deed and the Notes may be adversely affected. Further, the market
price of the Notes could decline, and investors may lose all or part of their investments in the Notes. The
investment considerations and risk factors discussed below also include forward-looking statements and
the Issuers, the Trusts and the Groups actual results may differ substantially from those discussed in
these forward-looking statements. Sub-headings are for convenience only and investment considerations
and risk factors that appear under a particular sub-heading may also apply to one or more other sub-
headings.
Limitations of this Information Memorandum
This Information Memorandum does not purport to nor does it contain all information that a
prospective investor in or existing holder of the Notes may require in investigating the Issuer, the
Trust or the Group.
Neither this Information Memorandum nor any document or information (or any part thereof) delivered or
supplied under or in relation to the Programme or the Notes (or any part thereof) is intended to provide
the basis of any credit or other evaluation and should not be considered as a recommendation by the
Issuer, either of the Arrangers or any of the Dealers that any recipient of this Information Memorandum
or any such other document or information (or such part thereof) should subscribe for or purchase or sell
any of the Notes.
This Information Memorandum is not, and does not purport to be, investment advice. A prospective
investor should make an investment in the Notes only after it has determined that such investment is
suitable for its investment objectives. Determining whether an investment in the Notes is suitable is a
prospective investors responsibility, even if the investor has received information to assist it in making
such a determination. Each person receiving this Information Memorandum acknowledges that such
person has not relied on the Issuer, the Trust and the subsidiaries and/or the associated companies of the
Trust, either of the Arrangers, any of the Dealers or any person affiliated with each of them in connection
with its investigation of the accuracy or completeness of the information contained herein or of any
additional information considered by it to be necessary in connection with its investment or divestment
decision. Any recipient of this Information Memorandum contemplating subscribing for or purchasing or
selling any of the Notes should determine for itself the relevance of the information contained in this
Information Memorandum and any such other document or information (or any part thereof) and its
investment or divestment should be, and will be deemed to be, based solely on its own independent
investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the
Issuer, the Trust and the Group, the terms and conditions of the Notes and any other factors relevant to
its decision, including the merits and risks involved. A prospective investor should consult with its legal,
tax and financial advisers prior to deciding to make an investment in the Notes.
RISKS RELATING TO NOTES
Limited Liquidity of the Notes issued under the Programme.
There can be no assurance regarding the future development of the market for the Notes issued under
the Programme or the ability of the Noteholders, or the price at which the Noteholders may be able, to
sell their Notes. The Notes may have no established trading market when issued, and one may never
40
develop. Even if a market for the Notes does develop, it may not be very liquid. Therefore, investors
may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to
similar investments that have a developed secondary market. This is particularly the case for Notes that
are especially sensitive to interest rate, currency or market risks, are designed for specific investment
objectives or strategies or have been structured to meet the investment requirements of limited categories
of investors. These types of Notes generally would have a more limited secondary market and more price
volatility than conventional debt securities.
Liquidity may have a severely adverse effect on the market value of the Notes. Although the issue of
additional Notes may increase the liquidity of the Notes, there can be no assurance that the price of such
Notes will not be adversely affected by the issue in the market of such additional Notes.
Fluctuation of the Market Value of the Notes.
Trading prices of the Notes are influenced by numerous factors, including the results of operations and/
or financial condition of the Issuer, the Trust and the subsidiaries and/or the associated companies of
the Trust (if any), political, economic, financial and any other factors that can affect the capital markets,
the shipping industry, the Issuer, the Trust and the subsidiaries and/or the associated companies of the
Trust (if any) generally. Adverse economic developments, in Singapore as well as countries in which the
Issuer, the Trust and the subsidiaries and/or the associated companies of the Trust (if any) operate or
have business dealings, could have a material adverse effect on the business, financial condition, results
of operations and prospects of the Issuer, the Trust and the subsidiaries and/or the associated companies
of the Trust (if any).
Global financial turmoil has resulted in substantial and continuing volatility in international capital markets.
Any further deterioration in global financial conditions could have a material adverse effect on worldwide
financial markets, which may also adversely affect the market price of the Notes.
Interest Rate Risk.
Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in
interest rates may cause a fall in bond prices, resulting in a capital loss for the Noteholders. However,
the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when
interest rates fall, bond prices may rise. The Noteholders may enjoy a capital gain but interest payments
received may be reinvested at lower prevailing interest rates.
Inflation Risk.
Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders who have
an anticipated rate of return based on expected inflation rates on the purchase of the Notes may find that
an unexpected increase in inflation could reduce its actual returns.
Singapore Tax Risk.
The Notes to be issued from time to time under the Programme during the period from the date of this
Information Memorandum to 31 December 2013 and, pursuant to the MAS Circular FSD Cir 02/2013
entitled Extension and Refinement of Tax Concessions for Promoting the Debt Market issued by the
MAS on 28 June 2013, during the period from 1 January 2014 to 31 December 2018, are intended to be
qualifying debt securities for the purposes of the ITA, subject to the fulfillment of certain conditions more
particularly described in the section Singapore Taxation herein.
However, there is no assurance that such Notes will continue to enjoy the tax concessions in connection
therewith should the relevant tax laws or MAS circulars be amended or revoked at any time.
The Notes may not be a suitable investment for all investors.
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes,
the merits and risks of investing in the relevant Notes and the information contained or incorporated
by reference in this Information Memorandum or any applicable supplement to this Information
Memorandum;
41
(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the relevant Notes and the impact such investment
will have on its overall investment portfolio;
(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the
relevant Notes, including Notes with principal or interest payable in one or more currencies, or
where the currency for principal or interest payments is different from the potential investors
currency;
(iv) understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any
relevant indices and financial markets; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks.
Some Notes may be complex financial instruments. Sophisticated institutional investors generally do not
purchase complex financial instruments as standalone investments. They purchase complex financial
instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition
of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial
instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes
will perform under changing conditions, the resulting effects on the value of such Notes and the impact
this investment will have on the potential investors overall investment portfolio.
Performance of contractual obligations by the Issuer is dependent on other parties.
The ability of the Issuer to make payments in respect of the Notes may depend upon the due performance
by the other parties to the Programme Agreement, the Notes Trust Deed, the Agency Agreement and the
Agent Bank Agreement of their obligations thereunder including the performance by the Notes Trustee,
the Paying Agents and/or the Agent Bank of their respective obligations. Whilst the non-performance of
any relevant parties will not relieve the Issuer of its obligations to make payments in respect of the Notes,
the Issuer may not, in such circumstance, be able to fulfill its obligations to the Noteholders and the
Couponholders.
The Notes Trustee may request Noteholders to provide an indemnity and/or security and/or pre-
funding to its satisfaction.
In certain circumstances (pursuant to Condition 10), the Notes Trustee may (at its sole discretion)
request Noteholders to provide an indemnity and/or security and/or pre-funding to its satisfaction before
it takes action on behalf of Noteholders. The Notes Trustee is not obliged to take any such action if not
indemnified and/or secured and/or pre-funded to its satisfaction. Negotiating and agreeing to an indemnity
and/or security and/or pre-funding can be a lengthy process and may impact on when such actions can
be taken. The Notes Trustee may not be able to take action, notwithstanding the provision of an indemnity
or security or pre-funding to it, in breach of the terms of the Notes Trust Deed and in circumstances
where there is uncertainty or dispute as to the applicable laws or regulations and, to the extent permitted
by the agreements and the applicable law, it will be for the Noteholders to take such action directly.
The Notes may be subject to optional redemption by the Issuer.
An optional redemption feature is likely to limit the market value of Notes. During any period when the
Issuer may elect to redeem Notes, the market value of such Notes generally will not rise substantially
above the price at which they can be redeemed. This also may be true prior to any redemption period.
The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on
the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at
an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able
to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other
investments available at that time.
42
The Notes may be issued at a substantial discount or premium.
The market values of securities issued at a substantial discount or premium from their principal amount
tend to fluctuate more in relation to general changes in interest rates than do prices for conventional
interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price
volatility as compared to conventional interest-bearing securities with comparable maturities.
Exchange rate risks and exchange controls may result in Noteholders receiving less interest or
principal than expected.
The Issuer will pay principal and interest on the Notes in the currency specified in the relevant Pricing
Supplement. This presents certain risks relating to currency conversions if Noteholders financial activities
are denominated principally in a currency or currency unit (the Investors Currency) other than such
specified currency. These include the risk that exchange rates may significantly change (including changes
due to devaluation of the currency in which the Notes are denominated or revaluation of the Investors
Currency) and the risk that authorities with jurisdiction over the Investors Currency may impose or modify
exchange controls. An appreciation in the value of the Investors Currency relative to the currency in which
the Notes are denominated would decrease (i) the Investors Currency equivalent yield on the Notes,
(ii) the Investors Currency equivalent value of the principal payable on the Notes and (iii) the Investors
Currency equivalent market value of the Notes. Government and monetary authorities may impose (as
some have done in the past) exchange controls that could adversely affect an applicable exchange rate.
As a result, investors may receive less interest or principal than expected, or no interest or principal. This
risk is in addition to any performance risk that relates to the Issuer or the type of Note being issued.
Provisions in the Notes Trust Deed and the Terms and Conditions of the Notes may be modified.
The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to
consider matters affecting their interests generally. These provisions permit defined majorities to bind all
Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders
who voted in a manner contrary to the majority.
The Terms and Conditions of the Notes also provide that the Notes Trustee may agree, without the
consent of Noteholders or Couponholders, to (i) any modification of any of the provisions of the Notes
Trust Deed which is in the opinion of the Notes Trustee is of a formal, minor or technical nature or is
made to correct a manifest error or to comply with mandatory provisions of Singapore law or is required
by Euroclear, Clearstream, Luxembourg, the Depository and/or any other clearing system in which the
Notes may be held and (ii) any other modification (except as mentioned in the Notes Trust Deed), and
any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Notes
Trust Deed which is in the opinion of the Notes Trustee not materially prejudicial to the interests of the
Noteholders.
Variable Rate Notes may have a multiplier or other leverage factor.
Notes with variable interest rates can be volatile investments. If they are structured to include multipliers
or other leverage factors, or caps or floors, or any combination of those features or other similar related
features, their market values may be even more volatile than those for securities that do not include those
features.
The Issuers ability to comply with its obligation to repay the Notes may be dependent upon the
earnings of, and distributions by, members of the Group and future performance of the Trust and
the Group.
The Issuers ability to comply with its obligation to repay the Notes may depend on the earnings of the
Trust and the Group and the distribution of funds amongst the Trust and the members of the Group,
primarily in the form of dividends. Whether or not members of the Group can make distributions to the
Trust will depend on distributable earnings, cash flow conditions, restrictions that may be contained in the
debt instruments of its members, applicable law and other arrangements. These restrictions could reduce
the amount of distributions that the Trust receives from the members of the Group, which would restrict
the Groups ability to fund its business operations and the Issuers ability to comply with its payment
obligations under the Notes.
43
Further, the ability of the Issuer to make scheduled principal or interest payments on its indebtedness,
including the Notes, and to fund the Trusts growth aspirations, will depend on the Trust and the Groups
future performance and its ability to generate cash, which to a certain extent is subject to general
economic, financial, competitive, legislative, legal, regulatory and other factors, as well as other factors
discussed in this section Investment Considerations, many of which are beyond the control of the Issuer.
If the Trusts future cash flow from operations and other capital resources are insufficient for the Issuer to
pay its debt obligations, including the Notes, or to fund its other liquidity needs, it may be forced to sell
assets, attempt to restructure or refinance its existing indebtedness. No assurance can be given that the
Issuer would be able to accomplish any of these measures on a timely basis or on satisfactory terms or
at all.
Notes issued under the Programme have no current active trading market and may trade at a
discount to their initial offering price and/or with limited liquidity.
Notes issued under the Programme will be new Notes which may not be widely distributed and for which
there is currently no active trading market (unless in the case of any particular Tranche, such Tranche
is to be consolidated with and form a single series with a Tranche of Notes which is already issued). If
the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price,
depending upon prevailing interest rates, the market for similar Notes, general economic conditions and
the financial condition of the Issuer. If the Notes are trading at a discount, investors may not be able to
receive a favourable price for their Notes, and in some circumstances investors may not be able to sell
their Notes at their fair market value or at all.
Although an application has been made for the Notes issued under the Programme to be admitted to
listing on the SGX-ST, there is no assurance that such application will be accepted, that any particular
Tranche of Notes will be so admitted or that an active trading market will develop. In addition, the market
for investment grade and crossover grade debt has been subject to disruptions that have caused volatility
in prices of notes similar to the Notes to be issued under the Programme. Accordingly, there is no
assurance as to the development or liquidity of any trading market, or that disruptions will not occur, for
any particular Tranche of Notes.
Risks Relating to the Trusts Industry
The shipping industry is highly volatile in nature and subject to cyclical fluctuations, which may
have a material adverse effect on the Trusts business, financial condition, results of operations
and prospects.
The shipping industry is both cyclical and volatile in terms of charter hire rates, vessel values and
profitability, resulting from changes in the supply of and demand for shipping capacity. The demand for
shipping capacity and the associated level of charter rates are largely driven by and generally follow
global patterns of economic development, growth and activity. Changes in demand and rates are also
influenced by developments and changes in seaborne and other transportation patterns, changes in
weather patterns, environmental concerns, political conditions, armed conflicts, changes to regulatory
regimes, canal and port closures, increases and decreases in fuel and lubricant prices, foreign exchange
fluctuations, embargoes and strikes. A decrease in fuel price could drive the container liner shipping
companies to increase the average speed of their vessels, the effect of which would be an increase in the
supply of ship capacity.
The global supply of shipping capacity is determined by the number and capacity of vessels in the
existing fleet, the deployment of vessels around the world, the impact of port congestion, the delivery
of new ships, the conversion of ships to other uses and the loss of vessels, whether due to retirement,
repair or disaster. Such supply may also be affected by regulation of maritime transportation practices
by governmental and international authorities, including, but not limited to, changes in environmental and
other regulations that may limit the useful lives of ships. Almost all of the factors influencing the supply
of and demand for shipping capacity are outside the Trusts control, and the nature, timing and degree of
changes in industry conditions are unpredictable.
Except for 2009, the container shipping industry has enjoyed demand growth in the past few years, largely
driven by global economic growth and the shift of manufacturing operations to China and other countries
where operating costs are low. Historically, industry participants have responded to such periods of high
demand by investing in vessels and containers to increase their capacity, as has occurred in the past few
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years. These investments eventually drive charter rates down as newly-available capacity catches up with
demand. Further, as containerships generally have estimated economic lives of approximately 30 years
and must be ordered in advance, there can be periods of excess or deficit capacity relative to the demand
for shipping volumes. As a result of the lengthy construction process and need for advance orderings, it
may take several years to correct a market imbalance. Thus, there can be no assurance that there will be
sufficient demand for container shipping capacity to absorb the delivery of newbuildings that will operate
in the container shipping market in the near future.
Decreases in the demand for container shipping services or increases in the supply of capacity could
lead to delayed recovery of charter rates, reduced volume or a combination of the two, as well as declines
in the market values of the Trusts vessels, which could have a material adverse effect on the Trusts
business, financial condition, results of operations and prospects.
The Trust operates in a highly competitive industry, which may have a material adverse effect on
the Trusts business, financial condition, results of operations and prospects.
The container shipping industry is highly fragmented among many global and regional shippers, owners
and operators of containerships and is characterised by intense competition. One of the Trusts business
strategies is to place its vessels on long-term, fixed-rate time charters. The process of obtaining long-term
charters is highly competitive and involves an intensive bidding and selection process. Competition for
charters is based on a variety of factors, which may include, but are not limited to:
charter hire or contract rates;
relationships with charterers and others;
willingness to accept operational risks pursuant to the charter, such as allowing termination for
force majeure events;
vessel availability and the size, age and condition of the vessel;
the ability to finance containerships at competitive rates;
the quality, experience and reputation of the ship manager;
the financial stability of the ship operator; and
relationships with shipyards.
Any of these factors could limit the Trusts ability to retain existing and attract new customers for its
vessels. The failure to do so could have a material adverse effect on the Trusts business, financial
condition, results of operations and prospects. Additionally, the Trust faces competition from a variety
of parties, including, but not limited to, regional and global shipowners, trading companies and other
ship investment entities and funds, many of which are larger and may have greater financial resources
than it has. These competitors may be able to operate larger fleets, offer better charter rates and devote
greater resources to the development, promotion and employment of their containerships than the Trust.
In addition, the entry of new competitors, a change in the level of marketing undertaken by competitors
or irrational behaviour by the Trusts competitors may result in increased competition and higher pressure
on margins which could also have a material adverse effect on the Trusts business, financial condition,
results of operations and prospects.
Disruptions in global financial markets and economic conditions or changes in lending practices
in the future may harm the Trusts ability to obtain financing on acceptable terms, which could
hinder or prevent the Trust from meeting capital needs.
Globally, the financial markets and economic conditions have been volatile and have faced disruption
in recent years. It has been generally difficult to obtain financing and the cost of any available financing
increased significantly due to the exceedingly distressed debt and equity markets. If there is significant
deterioration of global financial markets and economic conditions in the future, the Trust may be unable
to obtain adequate funding under the present credit facilities due to reluctance from or the inability of
lenders to meet funding obligations, market disruption events or increased costs, which may lead to an
45
inability to obtain funds at the interest rate agreed in the Trusts credit facilities. Such deterioration may
also cause lenders to be unwilling to provide the Trust with new financing to the extent required to fund
ongoing operations and growth. In addition, in recent years, the number of lenders for shipping companies
has decreased and ship-funding lenders have generally lowered their loan-to-value ratios and shortened
loan terms and accelerated repayment schedules. These factors may hinder the Trusts ability to access
financing.
If financing or refinancing is not available when needed, or is available only on unfavourable terms, the
Trust may be unable to meet obligations as they come due or be unable to implement growth strategies,
complete acquisitions or otherwise take advantage of business opportunities or respond to competitive
pressures, any of which could harm the Trusts business, financial condition, results of operations and
prospects.
Containership values may fluctuate substantially and result in volatility to the Trusts financial
condition and results of operations.
Containership values generally experience a certain degree of volatility. The value of the Trusts vessels
may fluctuate substantially over time due to a number of different factors, including, but not limited to:
supply and demand for similar types of containerships;
prevailing economic conditions in the markets in which the Trusts vessels operate;
a substantial or extended decline in world trade;
competition from other shipping companies;
the age and condition of the Trusts vessels;
the fuel efficiency of the Trusts vessels;
increases in the supply of containership capacity;
the cost of retrofitting or modifying existing vessels as a result of technological advances in vessel
design or equipment, changes in applicable environmental or other regulations or standards, or
otherwise; and
the availability and costs of other modes of transportation.
These factors will affect the Trusts ability to renew or obtain charters as well as the rates it will be able to
charge for such charters at the termination of the existing charters and the price of its vessels at the time
of sale.
The Trust regularly reviews the carrying amount of its vessels to determine whether there is any indication
of impairment. Indicators of such impairment include the Trusts ability to renew or obtain charters as well
as the rates it will be able to charge for such charters. If the Trust is unable to renew or obtain charters,
or if the rates that it is able to charge decrease, the Trust will have to estimate the recoverable amount
of the relevant ships and will recognise an impairment loss whenever the carrying amount exceeds its
recoverable amount. Conversely, the Trust reverses an impairment loss in relation to a vessel if there has
been a change in the estimates used to determine the recoverable amount, including a renewal or the
entry into a new charter or if the rates that it is able to charge increases. See Note 2.8(b) to the notes
to the Trusts 2012 annual report for further details. As a result, the Trusts financial condition and results
of operations could be volatile. For example, the Trust recognized a write-back of vessel impairment of
US$7.3 million in 2010 and US$2.9 million in 2011, but incurred a provision for vessel impairment of
US$4.5 million in 2012.
In addition, if for any reason, including, but not limited to, the Trusts inability to re-charter a vessel at
favourable rates at the termination of its charter, the Trust elects to dispose of a vessel, it will be subject
to prevailing market rates. The Trusts inability to dispose of any vessel at a reasonable price could result
in a loss and have a material adverse effect on its business, financial condition, results of operations and
prospects.
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The Trust operates in a highly regulated industry that may limit its ability to do business or require
it to incur substantial costs in meeting existing and new regulations.
The container shipping industry is highly regulated, and the Trusts operations are affected by extensive
and evolving environmental protection laws and other regulations in the form of international conventions,
national, state and local laws and national and international regulations in force in the jurisdictions in
which its vessels operate, as well as in the countries in which such vessels are registered. Compliance
with such laws and regulations may entail significant expenses, including, but not limited to, expenses for
ship modifications and changes in operating procedures.
The operating certificates and licences of the Trusts vessels are renewed periodically during each
vessels required annual survey. However, government regulation of vessels may change in the future and
may require the Trust to incur significant capital expenditures on its vessels to keep them in compliance
with the relevant governmental regulation. In addition, the Trust is required by various governmental and
quasi-governmental bodies to obtain permits and licences required for the operation of its business. These
permits may become costly or impossible to obtain or renew on acceptable terms.
The Trust may also incur substantial costs in order to comply with existing and future environmental
and health and human safety requirements, including, inter alia, obligations relating to air emissions,
maintenance and inspection, development and implementation of emergency procedures and insurance
coverage. As an example, the Trusts vessels have to operate within the rules, international conventions
and regulations adopted by the International Maritime Organisation (IMO), an agency of the United
Nations, as well as the environmental protection laws, health and safety regulations, manning regulations
and other marine protection laws in each of the jurisdictions in which its vessels operate. Since the
International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (the
ISM Code) became effective in 1998 and the International Ship and Port Facility Security Code (the
ISPS Code) became effective in 2004, shipping companies and individual vessels have been required
to establish extensive safety systems and have them certified by standardisation bodies. In complying
with IMO regulations and other existing or future regulations, the Trust may be required to incur additional
costs in meeting new maintenance and inspection requirements, in developing contingency arrangements
for potential contamination by vessels, in obtaining insurance coverage or in modifying existing or
acquiring new equipment. The Trust could also face substantial liability for penalties, fines, damages and
remediation costs associated with hazardous substance spills or other discharges into the environment
involving its vessels under such laws and regulations. As such conventions, laws and regulations are often
revised, and because the related costs of compliance are often impossible to assess until the extent of
the Trusts obligations under such conventions, laws and regulations are clearly determinable, the Trust is
unable to predict the nature of or the long-term costs of compliance. Additional laws and regulations may
also be adopted that could affect its operations and could have a material adverse effect on its business,
financial condition, results of operations and prospects.
The Trust is also subject to the risk of unilateral governmental action and regulation in the territories
in which its vessels operate. Such risks include, but are not limited to, sanctions that prohibit trade in
particular areas, restrictive actions such as vessel arrest, limitations on vessel operations or local
ownership requirements, loss of contractual rights and requisition. Requisition occurs when a government
takes control of a ship and becomes the owner or takes control of a ship and effectively becomes the
charterer at dictated rates. The impact of any of these events may increase the costs of operating the
Trusts vessels, decrease the revenues from its vessels or even preclude the operation of vessels in
certain trade routes, any of which could have an adverse impact on its charters and consequently, its
business, financial condition, results of operations and prospects if the Trust or its charterers are unable
to meet their respective obligations under the charter agreements.
The Trust operates in an industry that is subject to increasing inspection procedures and new
security regulations which may cause disruption to its business and result in additional expenses.
The international maritime industry is subject to increasing security and customs inspections and related
procedures in countries of origin, destination, and trans-shipment points as a result of increased fear of
terrorism, illegal immigration and movement of narcotics.
Existing and future security and customs inspection procedures can result in cargo seizure, delays in
trade schedules, delays in the loading, off-loading, trans-shipment or delivery of containers and the
levying of customs duties, civil or criminal fines or other penalties against exporters, importers and, in
some cases, charterers.
47
It is unclear what further changes to the existing inspection procedures will ultimately be proposed or
implemented, which party will bear the costs of implementing these changes or how any such changes
will affect the maritime transport industry. It is possible that such changes could impose additional
financial and legal obligations, including, but not limited to, additional responsibilities for inspecting and
recording the contents of containers. Changes to the inspection procedures and cargo security could
result in additional costs and obligations on carriers and could, in certain cases, render the shipment of
certain types of goods uneconomical or impractical. Additional costs may arise from current inspection
procedures or future proposals that may not be fully recoverable from customers through higher rates or
security surcharges. An increase in security and customs inspections and related procedures could have
a material adverse effect on the Trusts business, financial condition, results of operations and prospects.
A prolonged global economic downturn could have a material adverse effect on the Trusts
business, financial condition, results of operations and prospects.
The market uncertainty that started in 2008 from the U.S. residential market further expanded to other
markets such as those for leveraged finance, collateralised debt obligations, other structured products
and sovereign debt. In September and October 2008, liquidity and credit concerns and increased volatility
in the global credit and financial markets increased significantly with the bankruptcy or acquisition of, and
government assistance to, several major U.S. and European financial institutions, including the bankruptcy
filing of Lehman Brothers. These developments have resulted in reduced liquidity, greater volatility,
widening of credit spreads and a lack of price transparency in the United States and global credit and
financial markets.
In Europe, the sovereign debt crisis in Greece and other peripheral Eurozone countries that emerged
in late 2009 led to the sovereign ratings of these countries to be downgraded by the major international
rating agencies. The crisis resulted in a wave of anti-austerity protests and strikes in Greece and Italy,
sell-offs in global markets and changes in the political leadership in Greece and Italy. The European
sovereign debt crisis could deteriorate further, and spread from peripheral countries to core economies
in the European Union. Prospects remain uncertain and such countries may be unable to restore fiscal
stability or refinance sovereign debt. Additional European countries may succumb to similar crises.
In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as a
consequence of liberal monetary policy and/or excessive foreign fund inflow or both. Geopolitical instability
in various parts of the world, including in North Africa, the Middle East and Asia, could also contribute to
economic instability in those and other regions.
Economic stability in Europe, the United States of America and China is a key ingredient for a recovery in
the shipping market. If the downturn in these major economies persists, it would have an adverse effect
on container shipping. The Trusts business, financial condition, results of operations and prospects would
likely be materially and adversely affected by a prolonged global economic downturn.
A prolonged global economic downturn could have a material adverse effect on the ability of banks to
meet their financial obligations, including, the repayment of their customers deposits. To the extent any
of the Trusts cash have been deposited with any of such banks, the Trust may lose all or part of its cash
deposits, which would have a material adverse effect on the Trusts business, financial condition, results
of operations and prospects.
The business and activity levels of many of the Trusts customers and related parties and
their respective abilities to fulfil their obligations under agreements with the Trust, including
payments for the charter of the Trusts vessels, may be hindered by any declines in world trade or
deterioration in the credit markets.
The Trusts current vessels are primarily chartered to customers under long-term fixed rate time
charters. Payments under those charters currently, and are expected to continue to, account for nearly
all of the Trusts revenue. Many of the Trusts customers finance their activities through cash flow from
operations, the incurrence of debt or the issuance of equity. During the recent financial and economic
crises, there occurred a significant decline in the credit markets and the availability of credit. There was
also a slowdown in the global economy, leading to a decline in world container trade volume in 2009.
Additionally, the equity value of many of the Trusts customers substantially declined during that period.
The combination of a reduction of cash flow resulting from declines in world trade, a reduction in
borrowing bases under reserve-based credit facilities and the limited or lack of availability of debt or equity
48
financing potentially reduced the ability of the Trusts customers to make charter payments. The Trust has
experienced delayed charter payments in the past and there can be no assurance that any one or more
of the Trusts customers will not delay or fail to make any charter payments to the Trust in the future. The
prolonged continuation or any recurrence of the significant financial and economic disruption of the last
few years could result in similar effects on the Trusts customers or other third parties with which the Trust
does business, including the making of charter payments either punctually or at all, which in turn could
harm the Trusts business, financial condition, results of operations and prospects.
The Trusts vessels may be exposed to attacks by pirates or terrorists, be damaged or lost due to
natural calamities or be subject to theft and fraud.
The Trusts vessels may be attacked by pirates or terrorists. Therefore, the Trust may incur significant
costs in connection with the protection of its vessels against piracy attacks. Such protection may, from
time to time, include, but are not limited to, the engagement of armed guards onboard its vessels. Despite
the various levels of vessel protection, there can be no assurance that none of the Trusts vessels will be
captured and held ransom for an extended period of time.
Conflicts in the Middle East may lead to additional acts of terrorism, regional conflict or other armed
conflict around the world, which may contribute to further economic instability in the global financial
markets. Terrorist attacks targeted at sea-going vessels may in the future also negatively affect the
Trusts business and directly impact its vessels or its customers. Any of these occurrences, especially an
actual attack on one of the Trusts vessels, could have a material adverse effect on its business, financial
condition, results of operations and prospects.
The Trusts vessels are exposed to a variety of natural calamities during operations, including violent
storms, tidal waves, rogue waves and tsunamis. Any of these natural calamities could result in its vessels
grounding, sinking and colliding with other vessels or property, or the loss of life. If the Trusts vessels are
damaged or destroyed, whether by attack or natural calamity, hijacked or seized by pirates or subject to
terrorist attacks, nuclear or similar contamination of assets, resulting in damage or loss to its vessels, the
Trusts existing insurance policies may be insufficient to, or may not, cover any such resulting damage or
loss, which could adversely affect its business, financial condition, results of operations and prospects.
Political, economic and other risks in the markets where the Trust has operations may cause serious
disruptions to its business. The Trusts vessels operate in ports in various countries around the world,
including, but not limited to, emerging markets. Therefore, the Trust is subject to the political, economic
and social conditions of the countries where these ports are located. As an example, the Trust is
exposed to risks of political unrest, strikes, war and economic and other forms of instability, such as
natural disasters, epidemics, widespread transmission of communicable or infectious diseases, nuclear
contaminations, acts of God, terrorist attacks and other events beyond its control that may adversely
affect local economies, infrastructures and livelihoods. These events can result in disruption to the Trusts
or its customers businesses and seizure of, or damage to, the Trusts customers cargo. These events
could also cause the partial or complete closure of particular ports and sea passages, such as the Suez
or Panama canals, potentially resulting in higher costs, congestion of ports or sea passages, vessel
delays or cancellations on some trade routes. Furthermore, these events could lead to reductions in, or
in the growth rate of, world trade, which could reduce demand for the Trusts vessels and services. These
risks may cause serious disruptions to the Trusts operations, which could adversely affect its business,
financial condition, results of operations and prospects.
The Trusts vessels are also subject to theft of fixtures, fittings and equipment, misappropriations of assets
and fraudulent reporting, all of which would have an adverse effect on the Trusts business, its financial
conditions, results of its operations and its prospects.
The Trust may be exposed to actual and threatened litigation as a result of operating in the
container shipping industry.
The operation of vessels involves inherent risks to both persons and property. As an example, a collision
at sea could result in the loss of cargo or the loss of life. Defending private actions can be costly and
time consuming. If a judgment against the Trust were to be rendered, the Trust might be exposed to
substantial financial liabilities, which might not be covered by its insurance. In addition to private actions,
governmental and quasi-governmental agencies could bring a variety of actions against the Trust. Other
than the financial costs of defending these actions, governmental or quasi-governmental agencies may
49
impose penalties for failures to comply with maritime laws, rules or regulations. In addition to financial
penalties, the Trust could be sanctioned such that it is unable to operate its vessels or is forced to incur
substantial costs to comply with these maritime laws, rules and regulations. The costs associated with
litigation could adversely affect its business, financial condition, results of operations and prospects.
Rising lubricant oil prices will increase the Trusts expenses.
The Trusts lubricant oil costs accounted for approximately 10% of the Trusts vessel operating expenses
in 2010, 2011, 2012 and approximately 9% in the nine months ended 30 September 2013. Lubricant oil
costs are dependent on the price and availability of oil. The price and supply of oil is unpredictable and
fluctuates based on a variety of events outside the Trusts control, including, but not limited to, supply
and demand, geopolitical developments for oil, production disruptions, actions by the Organisation of
Petroleum Exporting Countries and other oil producers, war and unrest in oil-producing countries and
regions, regional production patterns and environmental concerns. In a time charter arrangement, while
the charterer pays for the bunker costs, the Trust is required to pay for the cost of lubricant oil and hence
the Trust will be subject to the risk of an increase in lubricant oil prices. By contrast, in a bareboat charter
arrangement, bunker costs and lubricant oil are borne by the charterers. In the event that lubricant oil
prices rise further, the Trusts business, financial condition, results of operations and prospects may be
materially and adversely affected.
Technological innovation could reduce the Trusts charter revenue and the value of its vessels.
The charter rates and the value and operational life of a vessel are determined by a number of factors
including, among other things, the vessels efficiency, operational flexibility and physical life. Efficiency
is related to speed, fuel economy and the ability to load and unload quickly. Flexibility is related to the
ability to enter harbours, utilise related docking facilities and pass through canals and straits. Physical
life is related to the original design and construction, maintenance and the impact of the stress of vessel
operations. If new containerships built were to be more efficient or flexible or have longer physical lives
than the Trusts vessels, these more technologically-advanced containerships could adversely affect the
amount of charter hire payments received for the Trusts vessels once the initial charters are terminated
as well as, ultimately, the resale value of the vessels. As a result, the Trusts business, financial condition,
results of operations and prospects could be adversely affected.
Risks Relating to the Trusts Operations
The Trusts business of operating a certain class of vessels may entail a higher level of risk
compared to other investment vehicles that have a more diverse scope of operations.
The Trusts business objective is to operate and charter containerships and its principal strategy is to
invest in containerships that are time-chartered on a long-term, fixed-rate basis to container liner shipping
companies. By concentrating its operations and investments in the global container shipping industry
and charter market, the Trust is susceptible to a downturn in those markets. This risk is heightened due
to the limited type and number of vessels the Trust operates. The Trust operates 16 vessels as of 30
September 2013, which consist of three 3,450 TEU vessels, twelve 4,250 TEU vessels and one 5,060
TEU vessel. All of these vessels compete in a similar niche of the container shipping market and a decline
in this particular market would have a disproportionate adverse effect on the Trust. This may lead to a
corresponding decline in charter revenue for such vessels in its portfolio or a decline in the capital value
of its portfolio, which would have an adverse impact on the Trusts business, financial condition, results of
operations and prospects.
The Trust may not be able to implement its investment strategy, and implementing its strategy may
subject it to risks.
The Trusts investment strategy is to invest on an accretive basis in container vessels of at least 3,450
TEU, with long-term, fixed-rate time charters in place at the time of acquisition. There can be no
assurance that the Trust will be able to implement its investment strategy successfully or that it will be
able to expand its portfolio, if at all, at any specified rate or to any specified size. The factors which may
affect its ability to successfully implement its strategy include, but are not limited to, its ability to:
maintain, expand and develop customer relationships;
identify suitable second-hand vessels or newbuildings for purchase and negotiate such purchases
on favourable terms to the Trust;
50
secure charters on terms consistent with its strategy;
obtain financing or access financial markets on terms favourable to the Trust;
hire, train and retain qualified personnel, including crew, to manage and operate its growing
business and fleet; and
identify additional new markets for expansion.
The Trusts failure to implement its strategy for any of the above reasons, or for any other reason not
currently anticipated, could result in:
a failure to realise anticipated benefits, such as new customer relationships, cost savings or cash
flow enhancements;
a decrease in its liquidity if the Trust has to use a significant portion of its available cash or
borrowing capacity to finance acquisitions;
a significant increase in its interest expense if the Trust increases its level of leverage to finance
acquisitions;
the incurrence or assumption of unanticipated liabilities, losses or costs associated with the vessels
acquired;
the incurrence of other significant charges, such as impairment of goodwill or other intangible
assets, asset devaluation or restructuring charges; or
an inability to make interest payments and principal repayments under its various indebtedness.
Consequently, if the Trust is unable to implement its strategy or its strategy as implemented does not
have the expected results, its business, financial condition, results of operations and prospects could be
materially and adversely affected.
The Trustee-Manager may change the Trusts strategy.
The Trusts policies with respect to certain activities, including, but not limited to, acquisitions and
operations of containerships, will be determined by the Trustee-Manager. While the Trustee-Manager
has stated its intention to invest primarily in container vessels with capacities of 3,450 TEU or greater
and with long-term, fixed-rate time charters in place at the time of acquisition, the RM Trust Deed gives
the Trustee-Manager wide powers of management and the Trustee-Manager may depart from the Trusts
objectives and policies.
There can be no assurance that the Trust has or can maintain sufficient insurance to cover losses
that may occur to its fleet or result from its operations due to the inherent operational risks of the
shipping industry.
The operation of sea-going vessels involves the inherent risks of sinking, grounding, collision and other
catastrophic maritime disasters, environmental pollution, leaks or spills, personal injury and loss of life,
losses due to mechanical failure, human error, political action, labour strikes, adverse weather conditions,
fire and other factors, which could result in the loss of charter revenue, increased costs or reputational
damage. The Trust procures insurance for its fleet against risks commonly insured against by vessel
owners and operators. The current insurance includes hull and machinery insurance, war risks insurance,
loss of hire insurance, deviation insurance and protection and indemnity insurance. However, no insurance
can compensate for all potential losses and there can be no assurance that the insurance coverage the
Trust has will be adequate or that its insurers will pay a particular claim. Even if the insurance coverage
is adequate to cover all losses, the Trust may not be able to provide its charterers with a replacement
vessel in a timely manner in the event of a loss, which could, in certain circumstances, lead to the
termination of the relevant charter. In addition, under the terms of the loan agreements, the Trust will
be subject to restrictions on the use of any proceeds it may receive from claims under its insurance
policies. Furthermore, in the future, the Trust may not be able to obtain adequate insurance coverage
at reasonable rates for the fleet, if at all. The Trust may also be subject to calls or premiums in amounts
51
based not only on its own claim records but also the claim records of all other members of the protection
and indemnity associations through which the Trusts special purpose companies receive indemnity
insurance coverage. Its insurance policies also contain deductibles, limitations and exclusions which,
although the Trust believes are standard in the shipping industry, may nevertheless increase its costs or
which may result in the Trusts claims not being honoured to the extent of losses or damages suffered by
the Trust.
The Trusts insurance policies also do not cover risks arising from the damage caused by wear and tear,
or the damage caused by wilful misconduct of a ships crew or officers. Accordingly, any loss or damage
to a vessel or extended vessel off-hire, due to any reason, could have a material adverse effect on its
business, financial condition, results of operations and prospects.
The Trust may be unable to retain existing charterers, maintain existing charter hire rates upon
their expiration or attract new charterers.
All of the Trusts customers maintain their own fleets of vessels and the Trusts business is based on
the customers need to source additional vessel capacity from third-party sources. No assurance can
be given that the Trusts customers will not expand their own existing fleets and thereby eliminate their
need to charter the Trusts vessels in the future. In addition, due to the volatility of charter hire rates, the
Trust cannot be certain that it will be able to re-charter its vessels at the same or higher rates, or at all,
when its existing charters expire. Further, as the current charters are long-term in nature, even if charter
hire rates rise, the Trust may be unable to effectively take advantage of such increases as it can only
increase its charter hire rates after existing charter agreements expire. Upon their expiration, there can be
no assurance that the Trusts customers will renew charters or that suitable replacement charters will be
found. Any failure to re-charter a ship or a significant decrease in charter hire rates may have a material
adverse effect on the Trusts business, financial condition, results of operations and prospects.
The Trusts right of first offer may not be triggered and even if triggered, is subject to terms to be
agreed.
The Trust has been granted rights of first offer with respect to certain vessels by the Rickmers Group.
However, the right of first offer is triggered and becomes exercisable by the Trust only with respect to
containerships of at least 3,450 TEU that are ordered or acquired and are, or become, subject to a charter
of more than one year, or if the Rickmers Group proposes to offer to dispose of such containerships.
Even if the right of first offer is triggered and exercised, the actual sale of the relevant containerships will
be subject to terms to be mutually agreed between the parties. In addition, because such acquisitions
are interested party transactions, Unitholders approval may be required in order to authorise such
transactions in most circumstances. No assurance can be given that the Trust would be able to agree
on terms with the selling party or if such terms are agreed, that such transactions would be approved by
Unitholders.
There may be conflicts of interest between the Trust and the Rickmers Group.
As of 30 September 2013, members of the Rickmers Group hold 280,458,000 Units (representing in
aggregate 33.10% of the total number of Units). In addition, under the convertible loan due to Polaris,
Polaris has the right to convert such loan into a maximum of up to 181,263,067 Units, representing in
aggregate 17.62% of the total number of Units on a fully diluted basis. The Trustee-Manager is also a
wholly-owned subsidiary of the Sponsor.
As a result of the above, the Rickmers Group may exercise influence over the Trusts activities through its
holdings of the Units or through the Trustee-Manager. There can be no assurance that the Trusts interests
will not conflict with that of the Rickmers Group or its affiliates or that the interests of the Rickmers Group
or its affiliates will be aligned with those of its creditors or Unitholders.
Pursuant to the omnibus agreement dated 24 April 2007 entered into between the Trust and the Rickmers
Group, the Rickmers Group has agreed not to compete with the Trust. However, this agreement is subject
to certain exceptions and as a result of these exceptions, the Rickmers Group operates a competing fleet
of containerships.
52
The Trust may incur significant capital expenditures in connection with its future plans, but may
not achieve a corresponding increase in revenues.
The acquisition of additional vessels is capital intensive. In order to be competitive, the Trust may have to
continually expand and review its fleet, which involves substantial capital expenditures. The Trusts ability
to fund capital expenditures in the future will depend upon its future operating performance, which is
subject to prevailing economic conditions, levels of interest rates and financial, business and other factors,
many of which are beyond the Trusts control, and upon its ability to obtain additional external financing.
Factors that could affect the Trusts ability to procure financing include any impairment of financial systems
in the event of another downturn in financial markets and market disruption risks, which could adversely
affect the liquidity, interest rates and availability of any third party funding sources. If the capital and credit
markets experience volatility and the availability of funds is restricted, credit spreads could widen, which
would increase financing costs. Moreover, it is possible that the Trusts ability to access the capital and
credit markets may be limited at a time when it would like or need to do so, which could have a material
adverse effect on the Trusts ability to grow its business, refinance maturing debt, pay distributions, secure
or maintain credit ratings or react to changing economic and business conditions. Furthermore, future
credit facilities may contain covenants that limit the Trusts operating and financing activities and require
the creation of security interests over assets.
In addition, the Trust can only incur additional financing in compliance with the terms of its debt
agreements, including the terms of the Notes. Accordingly, there is no assurance that the Trust will have
sufficient capital resources to improve or expand its fleet to the extent necessary to remain competitive
in the containership chartering market, the absence of which would have a material adverse effect on its
business, financial condition, results of operations and prospects.
Also, if any additional vessels are ordered directly from shipyards, any pre-delivery instalment payments
would have to be made in advance of increased revenue. However, no assurance can be given that the
Trusts revenue will increase after the delivery of these vessels. The Trusts failure to increase its revenue
after such capital expenditures could reduce its profitability and adversely impact its business, financial
condition, results of operations and prospects.
The Trust may be adversely affected if there is any significant downtime of vessels or equipment.
Normal wear and tear on the Trusts vessels is a natural consequence of operations in its industry. Normal
wear and tear results from exposure to the elements, including, but not limited to, storms and salt water,
the breakdown of equipment, and the dangers inherent to loading and unloading containers at ports. As
a result, the Trusts vessels will require periodic downtime for repairs and maintenance. In addition, if any
extraordinary or extensive repairs to its vessels or equipment are required, due to any catastrophic event
or otherwise, the Trusts vessels could require significant dry-docking time during which such vessels
would not be available for hire. While insurance proceeds may cover the costs associated with such
repairs, they would only compensate for the loss of hire to a limited degree. In the event of any such
extraordinary or extensive repairs, the Trusts operations could experience major disruptions. The loss of
the Trusts vessels or the inability to use its vessels could adversely affect its business, financial condition,
results of operations and prospects.
Restrictive covenants in the bank loans and the Notes Trust Deed will impose financial and other
restrictions on the Trust.
Under the bank loans and the Notes Trust Deed, the Trust is required, among other things, to meet
specified financial ratios and comply with other covenants, which may limit the Trusts operating and
financing activities. Some of these restrictions include, but are not limited to, a specified value-to-loan
ratio, a specified interest coverage ratio and minimum liquidity amount. In addition, the Trust has granted
to its lenders under the bank loans security interests over its vessels to secure such indebtedness. To
the extent that the Trust is not able to satisfy these requirements, it would be in default and if the default
is not cured within the prescribed period of time, amounts owed under the bank loans would become
immediately due and payable and may result in the enforcement of the security granted in respect of such
loans. In addition, the Trust may be required to prepay amounts borrowed under the bank loans in certain
circumstances, including a change of control of the Trustee-Manager.
53
Therefore, the Trust may need to seek permission from its lenders and holders of Notes of any other Series
in order to engage in particular actions. The interests of its lenders and such holders may be different from
the Trust and it cannot guarantee that it will be able to obtain such consent when needed. If the Trust does
not comply with the restrictions and covenants in the bank loans or under the Notes, it may not be able
to finance its future operations, make acquisitions or pursue business opportunities. Furthermore, in the
event that the Trust breaches these covenants and does not receive a waiver or consent, the outstanding
amounts due under the bank loans could become immediately due and payable and may result in the
enforcement of the security granted in respect of such loans. A default in one bank loan may also result in
cross-defaults under other bank loans or the Notes, and could result in the outstanding amounts due under
the bank loans or the Notes becoming immediately due and payable. This could have a material adverse
effect on its business, financial condition, results of its operations and prospects.
Increase in interest rates may increase the Trusts interest expense.
The Trusts bank loans are subject to variable interest rates based on 3-month US$ LIBOR plus a fixed
margin. The Trust has entered into interest rate swap agreements to partially hedge the floating interest
rates of these bank loans. The fixed interest rate swaps vary from 3.50% to 4.99% per annum, with
maturity before 1 July 2015. However, no hedging activity can completely insulate the risks associated
with changes in interest rates.
Further, if the Trust decides to refinance amounts due for repayment at the maturity of the bank loans
and, if prevailing interest rates, margins or other factors at the time of refinancing result in higher interest
rates on refinancing, the interest expense relating to such refinanced indebtedness would increase, which
could have a material adverse effect on the Trusts business, financial condition, results of its operations
and prospects.
The Trusts significant indebtedness could adversely affect its financial health, and the restrictions
imposed by the terms of its debt instruments may limit its ability to plan for or respond to
changes in its business.
The Trust has and will continue to have substantial indebtedness. As of 30 September 2013, the Trusts
total outstanding indebtedness was US$456.1 million, excluding the proceeds of the sale of any Notes
under the Programme. The Trust is not subject to any maximum gearing limit under the Business Trusts
Act. Subject to the restrictions under the Trusts debt agreements and the Notes, it may incur additional
indebtedness from time to time for capital expenditures or for other purposes.
The Trusts substantial indebtedness will have important consequences. As a result of this substantial
indebtedness, the Trust will require substantial cash flow to meet its obligations under its current and
anticipated indebtedness. Therefore, a substantial part of the Trusts cash flow from operations will not be
available for its business. In addition, its substantial indebtedness also has the following consequences:
the Trusts exposure to adverse general economic conditions could increase;
the Trust may have difficulty satisfying their obligations under the Notes and, if it fails to comply with
these requirements, an event of default could result;
the Trusts compliance with certain provisions in its debt instruments may not be entirely within its
control;
financial and other restrictive covenants in the Trusts debt instruments limit the amount of additional
funds it can borrow and its ability to consummate asset sales;
the Trusts flexibility in planning for, or reacting to, changes in its business and industry may be
limited and it may be placed at a competitive disadvantage against any less leveraged competitors;
the Trust may be required to dedicate a substantial portion of its cash flow to required payments on
indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures
and other general corporate activities; and
certain of the Trusts borrowings, including borrowings under its senior credit facilities, are at
variable rates of interest, exposing it to the risk of increased interest rates. See Increase in
interest rates may increase the Trusts interest expense for further information.
54
There cannot be any assurance that the Trusts substantial indebtedness and these restrictions will not
materially and adversely affect the Trusts ability to finance its future operations or capital needs or to
engage in other business activities, or otherwise adversely affect its business, financial condition, results
of operations and prospects. For a description of the Trusts external financing, see Description of
Material Indebtedness.
In addition, the Trusts ability to service current and future debt, including the principal of, and interest
on, the Notes, will depend upon its future performance, which, in turn, depends on the successful
implementation of its strategy and on financial, competitive, regulatory, technical and other factors,
general economic conditions, a recovery in demand for, and time-charter rates and values of its vessels,
and other factors specific to the shipping industry, many of which are beyond its control. The Trust
could face difficulties making debt service payments and may be required to refinance indebtedness,
including the Notes, if its liquidity, cash flows or operations deteriorate in the future and it cannot generate
sufficient cash flow from operations to meet its debt service requirements. The Trusts ability to refinance
indebtedness will depend upon its financial condition at the time, the restrictions in the agreements
governing its indebtedness and other factors, including general market and economic conditions. There is
no assurance that the Trust will be able to refinance its indebtedness on commercially acceptable terms
or at all.
There can be no assurance that the Trust will be able to refinance any future indebtedness
incurred under the current bank loans.
While the Trust may plan to refinance amounts drawn under the current bank loans with the net proceeds
of future debt (including the Notes) or equity offerings, there can be no assurance that it will be able to do
so at an interest rate or on terms that are favourable to it, if at all. If the Trust is not able to refinance these
amounts with the net proceeds of debt and equity offerings at an interest rate or on favourable terms to it,
if at all, it will have to dedicate a portion of its cash flow from operations to pay the principal and interest
of such indebtedness. If it is not able to satisfy these obligations, it may have to undertake alternative
financing plans or consider a sale of its vessels. The actual or perceived credit quality of its charterers,
any defaults by them, and the market value of its fleet, among other things, may materially affect its ability
to obtain alternative financing. If the Trust is unable to meet its debt obligations, or if it otherwise defaults
under the bank loans or an alternative financing arrangement, its lenders could declare the debt, together
with accrued interest and fees, and any outstanding interest rate swap contracts, to be immediately due
and payable and foreclose on its fleet, which could result in the acceleration of other indebtedness that it
may have at such time and the commencement of similar foreclosure proceedings by other lenders.
The Trust derives all of its revenues from a limited number of charterers, and the loss of any one
of these charterers or any charter could result in a significant loss of revenues and cash flow.
The Trust is dependent on a limited number of charterers. The Trusts customer base comprises CMA
CGM, Hanjin Shipping Co., Ltd., Italia Marittima S.p.A. (part of Evergreen Group), Mediterranean Shipping
Company S.A. and Mitsui O.S.K. Lines, Ltd. These charterers hire payments are the Trusts sole source of
operating cash flow. There can be no assurance that the charterers will be able to make their scheduled
charter payments to the Trust on time, if at all. If the charterers are unable to make charter payments,
the Trusts business, financial condition, results of its operations and prospects will be materially and
adversely affected.
The Trust could lose a charterer or the benefits of a charter if, among other reasons:
the charterer fails to make charter payments because of its financial inability, or otherwise, or due
to disagreements with the Trust; or
the charterer exercises certain specific limited rights to terminate the charter.
If the Trust loses a charter, it may be unable to re-deploy the related vessel on terms that are as
favourable as under the previous charter, if at all. In the worst case, it may not receive any revenues from
that vessel, but would be required to pay expenses necessary to maintain the vessel in proper operating
condition. The loss of any of the Trusts charterers or charters, or a decline in payments under its charters,
could have a material adverse effect on its business, financial condition, results of its operations and
prospects.
55
Existing charterers of the Trust may become insolvent or may for other reasons be unable to make
their scheduled charter payments or try to renegotiate existing charter rates.
Chartering is liquidity-intensive and there have already been cases of insolvencies in maritime carriers
(charterers) over the past years and some maritime carriers (charterers) have undertaken or are still
undergoing financial restructuring programmes. Accordingly, there can be no assurance that the Trusts
existing or future charterers will be able to make their scheduled charter payments to the Trust on time,
if at all. Moreover, even under on-going charter agreements, there is no guarantee that the charterer will
not try to renegotiate the conditions of the charter agreement or try to force the Trust into renegotiations
by paying less that the agreed charter rate. Should charterers become insolvent or for other reasons
unable to make charter hire payments on time to the Trust, or should the Trust lose charter payments
or charterers for reasons of insolvency or default on payment, this could lead to liquidity restraints and
unexpected financing costs for the Trust and could thus have a material adverse effect on the Trusts
business, financial condition, results of operations and prospects.
The Trust depends on the Trustee-Manager and the Ship Manager to operate its business.
Pursuant to the RM Trust Deed, the Trustee-Manager provides the Trust with certain strategic
management, administrative management and ship management services (including, but not limited to,
vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory
compliance and financial services). Ship management services are currently subcontracted by the Trustee-
Manager to the Ship Manager. Therefore, its operational success and ability to execute its strategy will
depend significantly upon the satisfactory performance of these services by the Trustee-Manager and the
Ship Manager, or the effective management of the Ship Manager by the Trustee-Manager to ensure that
these services are performed in a timely and satisfactory manner. The Trusts business will be harmed if
the Trustee-Manager or the Ship Manager fails to perform these services satisfactorily. In addition, if the
Trustee-Manager were to be terminated as the trustee-manager, the terms of service as set out in the RM
Trust Deed were to be modified or amended, the Trustee-Manager does not comply with the provisions
of agreements to which it is a party (including but not limited to the ship management agreement, the
charter party agreements and the loan agreements) or the Ship Manager were to be terminated or were
to resign, the Trust may not be able to immediately replace such services, which may have a material
adverse effect on the Trusts business, financial condition, results of operation and prospects. Even if
replacement services were to be immediately available, the terms offered may be less favourable than the
ones currently offered.
As the Trustee-Manager expands the business, it may need to improve its operating and financial
systems. If the Trustee-Manager or the Ship Manager is unable to grow the Trusts financial and operating
systems in line with the growth in the Trusts operations, the Trusts business, financial condition, results of
operations and prospects may be materially and adversely affected.
It is more difficult to replace or remove a trustee-manager of a registered business trust than a
director of a public company.
Under the Business Trusts Act, a trustee-manager of a registered business trust may be removed by way
of a resolution approved by not less than three-fourths of the voting rights of all the unitholders of the
registered business trust present and voting. In comparison, the Companies Act requires the removal of
a director of a public company to be by way of an ordinary resolution approved by more than 50% of the
voting rights of all the shareholders of the company present and voting. Under the terms of the RM Trust
Deed, the Trustee-Manager may be removed without cause only with the approval of three-fourths of the
voting rights of all Unitholders. For so long as the Rickmers Group holds more than 25% of the Units,
it may be impossible for the Trustee-Manager (being a wholly-owned subsidiary of the Sponsor) to be
replaced or removed without cause.
The Trusts success is closely related to the success of the Rickmers Group.
The Trusts ability to compete for and to enter into new charters and expand its relationships with its
charterers will depend largely on the reputation and relationships of the Rickmers Group in the container
shipping industry. If the Rickmers Group suffers material damage to its reputation or relationships, or if
the Rickmers Group disposes of its interest in the Trust, it may harm the Trusts ability to, amongst other
things:
renew existing charters upon their expiration;
56
obtain new charters on commercially attractive terms;
successfully interact with shipyards;
maintain satisfactory relationships with customers and suppliers; or
successfully execute the Trusts growth strategy.
If the Trusts ability to do any of the things described above is impaired, it could have a material adverse
effect on its business, financial condition, results of its operations and prospects.
Maritime claimants could arrest the Trusts vessels, which could interrupt its cash flow.
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may
be entitled to a maritime lien against a vessel and/or the bunkers onboard a vessel for unsatisfied debts,
claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel
through foreclosure proceedings. The arrest or attachment of one or more of its vessels could interrupt
cash flow and require the Trust to pay large sums to have the arrest lifted. Any such maritime lien, even
one without merit, could result in substantial costs and diversion of resources and could materially and
adversely affect its business, financial conditions, results of operation and prospects. In addition, in some
jurisdictions, such as South Africa, under the sister ship theory of liability, a claimant may arrest both
the vessel that is subject to the claimants maritime lien and any associated vessel, which is any vessel
owned or controlled by the same owner. Claimants could try to assert sister ship liability against one
vessel in the Trusts fleet for claims relating to another of its vessels. A maritime lien that results in the
foreclosure of a vessel could have a material adverse effect on the Trusts business, financial condition,
results of its operations and its prospects.
The aging of the Trusts fleet may result in increased operating costs in the future which could
adversely affect its earnings.
In general, the cost of maintaining a vessel in good operating condition increases with the age of the
vessel. As the fleet ages, the Trust will incur increased costs. Older vessels are more costly to maintain
than more recently constructed vessels due to the normal wear and tear that occurs over the life of a
vessel as well as improvements in technology that newer vessels benefit from. Cargo insurance rates
are higher and fuel efficiency is lower, making older vessels less desirable to charterers. Governmental
regulations and safety or other equipment standards relating to the age of vessels may also require
expenditures for alterations, or the addition of new equipment, to the vessels and may restrict the type of
activities in which the vessels may engage. There can be no assurance that, as the vessels age, market
conditions will justify those expenditures or enable the Trust to operate its vessels profitably during the
remainder of their useful lives.
Unless the Trust has funds available for vessel replacement at the end of a vessels useful life, the
Trusts revenue will decline.
Unless the Trust has funds available for vessel replacement, the Trust will be unable to replace the vessels
in the fleet upon the expiration of their remaining useful lives. The Trusts cash flows and income primarily
depend upon the revenues earned by the chartering of the vessels to customers. If the Trust is unable
to replace the vessels in the fleet upon the expiration of their useful lives, the Trusts business, financial
condition, results of operations, and prospects will be harmed.
The Trust may have more difficulty entering into long-term, fixed-rate charters if a more active
short-term or spot container shipping market develops.
One of the Trusts principal strategies is to enter into long-term, fixed-rate time charters. Its customers
choose to enter into long-term, fixed-rate time charters because of the certainty it gives them in managing
their operations, given the volatile pricing of short-term charters. Pricing for short-term charters tends to
react more closely to changing supply of and demand for containership capacity. In a case of a limited
supply of containership capacity, short-term charters tend to be priced higher than they would be were
an adequate amount of capacity be available. As more vessels become available for the spot or short-
term charter market, the Trust may have difficulty entering into long-term, fixed-rate time charters for its
vessels due to the increased supply of vessels and possibly cheaper rates in the spot market and, as a
result, its cash flow may be subject to instability in the long-term after the expiry of the charters in respect
57
of the current fleet. A more active short-term or spot market may require the Trust to enter into shorter-
term charters based on changing market prices, as opposed to long-term, fixed-rate charters, which could
ultimately result in a decrease in cash flow in periods when the market price for container shipping is
depressed or insufficient funds are available to cover the financing costs for related vessels. A more active
short-term or spot container shipping market may have a material adverse effect on the Trusts business,
financial condition, results of its operations and prospects.
Compliance with safety and other vessel requirements imposed by classification societies may be
costly.
The hull and machinery of every commercial vessel must be classed by a classification society authorised
by its country of registry. The classification society certifies that a vessel is safe and seaworthy in
accordance with the applicable rules. All the vessels in the fleet are enrolled with Germanischer Lloyd
AG, a classification society, and have obtained ISM Code certification.
A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special
survey, a vessels machinery may be on a continuous survey cycle, under which the machinery would be
surveyed periodically over a five-year period. Each of the vessels in the fleet is on a special survey cycle
for hull inspection and a continuous survey cycle for machinery inspection. These vessels have qualified
within their respective classification for dry-docking once every five to seven-and-half years for inspection
of the underwater parts of such vessels.
If any of the vessels in the fleet does not maintain its class or fails any annual survey, intermediate survey
or special survey, such vessel will be unable to trade between ports and will be unemployable, and the
Trust could be in violation of certain covenants in its bank loans which may result in the acceleration of
the loans and the enforcement of security under such loans. This would negatively impact its business,
financial condition, results of its operations and prospects.
The Trust depends upon two executive officers and the loss of either or both of them may
adversely affect the Trusts operations.
The Trusts performance and future success depends to a significant extent upon the service and
performance of the two executive officers of the Trustee-Manager. These persons are crucial to the
development of the Trusts business strategy and to the growth and development of its business. Any
diminution or loss of their services would have a material adverse effect on the Trusts business. No
assurance can be given that these persons will not leave the Trustee- Manager in the future, or join a
competitor or form a company to compete with the Trust. The loss of either or both of these individuals
and the failure to recruit replacements with equivalent talent and experience could have a material
adverse effect on the Trusts business, financial condition, results of its operations and prospects.
The Trustee-Manager is a wholly-owned subsidiary of the Sponsor and there is little or no publicly
available information about the Trustee-Manager or the Rickmers Group.
The ability of the Trustee-Manager to provide services for the Trusts benefit will depend in part on its
own financial strength as well as on the financial strength of the Rickmers Group of which it is a member.
Circumstances beyond the control of the Trustee-Manager could impair its financial strength as well as
that of the Rickmers Group. However, because the Rickmers Group is privately held, information about
its financial strength is not generally available. As a result, Noteholders may have little advance warning
of problems affecting the Rickmers Group which may also affect the Trustee-Manager, even though these
problems could have a material adverse effect on the Trust.
Any latent design defect discovered in a particular class of vessel will likely affect all of the Trusts
vessels in that class, and any equipment defect discovered will likely affect all of its vessels.
All of the twelve 4,250 TEU vessels and all of the three 3,450 TEU vessels of the Trust are based on
standard designs and are uniform in all material respects. As a result, any latent design defect discovered
in one vessel will likely affect all of the other vessels in that class. Although the oldest of the 3,450 TEU
vessels has been operating since February 2006 with no evidence of any material defects, there can be
no assurance that latent defects will not be discovered in these or other vessels. In addition, all of the
vessels have the same or similar equipment. As a result, any equipment defect discovered may affect all
its vessels. Any disruptions in the operation of the Trusts vessels resulting from any such defect could
adversely affect its receipt of revenues under time charters for the vessels affected. In addition, if the
58
Trust needs to find alternative vessels, there cannot be any assurance that it would be able to lease
or purchase vessels within a reasonable time frame or at comparable prices. The Trust also cannot
provide assurance that any replacement vessel would have the same operating advantages as its current
vessels. In addition, the Trust may incur substantial transition costs and may also have to compensate its
charterers.
The Trusts operating expenses could rise significantly in the future.
Pursuant to the master ship management agreement, the Trust will pay the Ship Manager for the operating
expenses associated with its vessels. In respect of the current fleet, the Trust will pay the Ship Manager
a fixed amount for a substantial part of these expenses until 31 December 2015, and thereafter the Trust
will be required to pay actual operating expenses incurred. Furthermore, at all times, the Trust incurs
costs in respect of other operating expenses, which comprise the cost of lubricant oil, certain amounts
not reimbursed by its hull and machinery insurance and that exceed US$100,000 per vessel per year,
and all unforeseen and extraordinary costs (such as costs for upgrading a vessel due to new legislation
or extraordinary repairs), which exposes the Trust to increased operating costs on the vessels. The Trusts
operating expenses could rise significantly once it is required to pay the actual costs incurred in respect
of the currently fixed portion. If the Trusts operating expenses increase significantly, its business, financial
condition, results of operations and prospects may be materially and adversely affected.
The laws, regulations and accounting standards in Singapore to which the Trust is subject may
change.
The Trust may be affected by the introduction of new or revised legislation, regulations or accounting
standards. There can be no assurance that any such changes will not have an adverse effect on the
ability of the Trustee-Manager to carry out its investment strategy or on the Trusts results of operations
and financial condition. In particular, the Trust has been awarded the Maritime Sector Incentive (MSI)
(previously known as the Maritime Finance Incentive), which allows the Trust to enjoy Singaporean income
tax exemption on its foreign-sourced dividend income from wholly-owned special purpose companies,
which hold and charter the vessels to ship operators. The income tax exemption is applicable throughout
the useful life of qualifying vessels acquired by the Trust during the tenure of the incentive. The incentive
is for a period of 10 years with effect from the date of the initial public offering of the Trust. If the MSI is
revoked or if it expires and is not extended, the Trust will not be able to enjoy income tax exemption on
income covered under the incentive. This may increase the Trusts costs of operations significantly. The
Trust may also not be able to comply with any new legislation which differs materially from existing laws
and regulations. The occurrence of any of the above could have a material adverse effect on the Trusts
business, financial condition, results of operations and prospects.
The Trusts business depends on IT systems and financial models
The Trust outsources its IT systems to Rickmers Group and third party service providers. The Trust relies
on their service levels but the Trust may not have management control over these providers and they may
not perform as anticipated.
Furthermore, there can be no assurance that all data centres and their systems will not be simultaneously
damaged or destroyed in the event of a major disaster. Both the main IT systems as well as the
backup systems may be vulnerable to damage or interruptions in operation due to fire, power loss,
telecommunications systems failures, physical break-ins, hacker break-ins, a significant breakdown in
internal controls, fraudulent activities by employees, terrorist acts, failure of security and anti-terrorism
measures or backup systems, human failure or other events beyond the Trusts control. Any such failure
of the Trusts IT systems would have a material adverse effect on its business, financial condition, results
of operations and prospects.
In addition, the Trustee-Manager uses a variety of financial models to monitor and project its financial
performance. Such models are subject to various estimates and assumptions, as well as to data
corruption and errors including but not limited to, formula errors and data entry errors. Such estimates
and assumptions may not be realised and are inherently subject to significant business, economic,
competitive, industry, regulatory, market and financial uncertainties and contingencies, many of which
are beyond the Trusts control. Accordingly, there can be no assurances that the Trust would be able
to achieve the projections in its financial models. In addition, such errors may result in misleading data
output that could have a material adverse effect on the Trusts business, financial condition , results of
operations and prospects.
59
THE TRUST
Overview
The Trust is a Singapore business trust formed to operate a containership chartering business. The Trusts
business objective is to own containerships and charter them to container liner shipping companies
under long-term, fixed-rate time charters. Since the Trusts establishment in 2007, the Trusts fleet has
grown through accretive acquisitions. As of 30 September 2013, the Trusts fleet comprises 16 vessels
with a combined capacity of 66,410 TEU and an average age of 6.0 years. The Trusts fleet has in place
time charters with an average remaining charter of approximately 2.5 years and a remaining committed
revenue of US$372.1 million as of 30 September 2013. See The Trusts Fleet for further details of
the Trusts fleet. The Trusts revenue was US$144.3 million in the year ended 31 December 2012 and
US$107.1 million in the nine months ended 30 September 2013, while the Trusts net profit after tax was
US$27.6 million in the year ended 31 December 2012 and US$31.5 million in the nine months ended
30 September 2013.
The Trusts ship operations are managed by Rickmers Shipmanagement (Singapore) Pte. Ltd. (the Ship
Manager), a wholly-owned subsidiary of the Sponsor. The Trustee-Manager has entered into a master
ship management agreement with the Ship Manager pursuant to which the Ship Manager will provide the
Trust with ship management services, which comprise technical and commercial management services
as well as crewing. The Ship Manager may subcontract parts of the ship management services to third
parties. See Certain Agreements Relating to The Trusts Business Ship Management Agreement for
more details.
The Trustee-Manager intends to make further accretive acquisitions to grow the Trusts containership fleet.
The container shipping industry has, over the past 20 years, experienced an increasing trend towards
chartering-in capacity where container liner shipping companies are chartering a larger portion of
their vessels from third parties as opposed to purchasing vessels. According to the report of Clarkson
Research Services Limited, as of 1 November 2013, chartered-in vessels accounted for 47.6% of the
container liner shipping companies total fleet capacity. If this trend continues, the Trustee-Manager
believes that, as a containership chartering company, the Trust is well positioned to grow its fleet in the
future.
The Trustee-Managers customer selection process is targeted at well-established container liner shipping
companies that are expanding their liner operations, growing the number of trade routes in which they
operate, and chartering-in vessels on a long-term basis as part of their strategy of expanding transport
capacity. The Trusts fleet (other than Kaethe C. Rickmers) is currently under long-term, fixed-rate time
charters with Mitsui O.S.K. Lines, CMA CGM, Italia Marittima and Hanjin Shipping, which are all leading
companies in the global container shipping.
The Trust is the exclusive vehicle of the Rickmers Group for acquiring, owning and operating
containerships of at least 3,450 TEU that are subject to charters of more than one year, and, in
furtherance of the Trusts growth strategy, the Rickmers Group has agreed not to compete with the Trust,
subject to certain limited exceptions. The Rickmers Group has granted to the Trustee-Manager rights of
first offer to purchase (i) any containerships of at least 3,450 TEU that it has ordered or owns and that
become subject to charters of more than one year and (ii) any containerships of at least 3,450 TEU that it
owns and that have charters of more than one year that it intends to dispose of, subject to certain limited
exceptions. The Rickmers Group has also agreed to provide the Trustee-Manager with an opportunity
to negotiate with and acquire from third parties, ahead of all other Rickmers Group members, any
containerships of at least 3,450 TEU that have charters of more than one year. See Certain Agreements
Relating to The Trusts Business Omnibus Agreement.
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Group Structure
The chart below sets forth the Trusts group structure as of 30 September 2013.
The Trusts Fleet
The Trustee-Manager invests in vessels that are constructed by reputable shipbuilders with established
operating track records to ensure quality and consistency in the design and build of the Trusts vessels.
Each of the vessels comprising the Trusts fleet has been built based on modern standard designs by
Hanjin Heavy Industries & Construction or Hyundai Mipo Dockyard of South Korea or Dalian Shipyard or
Jiangsu New Yangzijiang Shipbuilding of China. The designs of the vessels have been customised by the
Rickmers Group in consultation with the charterers of the vessels and the classification societies.
As of 30 September 2013, the Trusts fleet comprised 16 vessels with a combined capacity of 66,410
TEU. The Trusts entire fleet is also relatively young. As of 30 September 2013, the average age of the
Trusts fleet is approximately 6.0 years. Container vessels in general are expected to have useful lives of
approximately 30 years. As of 1 November 2013, the average age of a vessel in the global container fleet
had an average age of 10. 9 years, according to the report of Clarkson Research Services Limited.
The Trustee-Manager purchased the Trusts fleet from various subsidiaries of the Trusts Sponsor. The
purchase consideration was financed through a combination of equity and bank debt. In 2008, the Trustee-
Manager had entered into various memoranda of agreement with Polaris and the various subsidiaries
of Polaris to purchase seven vessels. Polaris is a wholly-owned subsidiary of Rickmers Second , which
in turn is a wholly-owned subsidiary of Rickmers Holding . As a result of the global financial crisis and
slowdown following the collapse of Lehman Brothers in September 2008, the Trustee-Manager was
unable to raise sufficient debt and equity to complete the purchase. The Trustee-Manager subsequently
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entered into a settlement and convertible loan agreement dated 9 June 2010 with Polaris and such
subsidiaries, which has been amended from time to time (as amended, the Settlement and Convertible
Loan Agreement), to terminate these memoranda of agreement.
As part of the Settlement and Convertible Loan Agreement, the Trustee-Manager agreed to pay
compensation amounting to a total of US$64.0 million to discharge the Trusts obligation to purchase the
seven vessels, of which the Trustee-Manager paid US$15.0 million to Polaris in 2010 and the remaining
US$49.0 million was converted into an interest bearing loan convertible into the Trusts Common Units. If
the loan is not repaid in full by 31 March 2014, Polaris has the option to convert any part of the outstanding
loan amount into the Trusts Common Units on 1 April 2014 up to a specified maximum number of
Common Units, subject to adjustment. Such maximum number was 181,263,067 Common Units as of
1 July 2013. The specified exercise price of the option is subject to adjustment and, as of 1 July 2013,
is S$0.399385 per unit. The prevailing exercise price upon conversion will be converted into U.S. dollars
using the mid spot rate of exchange at the close of business in Singapore at the latest practicable date
before 1 April 2014. If the option to convert any outstanding amount of the loan into the Trusts Common
Units is not exercised, the Trustee-Manager will be required to repay the outstanding amount in quarterly
instalments commencing on the earlier of (i) 1 February 2015; and (ii) the last day of the calendar quarter
following the date the Trust is able to meet the conditions to exit from debt restructuring with a consortium
of banks, provided no repayment shall be made earlier than 30 June 2014. See also Note 20 to the Trusts
2012 annual report and Note 1.b(ii) to the Trusts unaudited consolidated financial statements as of and for
the nine months ended 30 September 2013 for further details.
As of 30 September 2013, the Trust does not have any vessels on order or subject to any purchase
agreement.
Key Information on the Trusts Vessels
The Trusts fleet consists of the following vessels as of 30 September 2013:
Vessel
Capacity
(TEU) Shipyard Built Charterer
Time
Charter
Duration
(months)
5,060 TEU
Kaethe C. Rickmers 5,060 Hanjin, South Korea December 2004 Mediterranean Shipping
Company (MSC)
12 + 6 + 6
(1)
4,250 TEU
ANL Warringa 4,250 Dalian, China January 2007 CMA CGM 96
ANL Windarra 4,250 Dalian, China March 2007 CMA CGM 96
ANL Warrain 4,250 Dalian, China October 2007 CMA CGM 96
CMA CGM Azure 4,250 Dalian, China July 2007 CMA CGM 96
CMA CGM Jade 4,250 Dalian, China December 2007 CMA CGM 96
CMA CGM Onyx 4,250 Dalian, China December 2007 CMA CGM 96
MOL Dominance 4,250 Dalian, China June 2008 Mitsui O.S.K. Lines 120
MOL Dedication 4,250 Dalian, China September 2008 Mitsui O.S.K. Lines 120
MOL Delight 4,250 Dalian, China November 2008 Mitsui O.S.K. Lines 120
MOL Destiny 4,250 Dalian, China January 2009 Mitsui O.S.K. Lines 120
MOL Devotion 4,250 Dalian, China March 2009 Mitsui O.S.K. Lines 120
Hanjin Newport 4,250 Yangzijiang, China April 2009 Hanjin Shipping 86
3,450 TEU
Ital Fastosa 3,450 Hyundai, South Korea February 2006 Italia Marittima
( 2)
96
Ital Festosa 3,450 Hyundai, South Korea April 2006 Italia Marittima
( 2)
96
Ital Fiducia 3,450 Hyundai, South Korea January 2007 Italia Marittima
( 2)
96
(1) Commencement of time charter on 25 March 2012 for 12 months at a fixed daily net charter hire of US$7,600, with MSC
extending the charter for 6 months at a fixed daily net charter hire of US$5,700 and a further 6 months at a fixed daily net
charter hire of US$6,650.
( 2) Italia Marittima is part of the Evergreen Group.
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The table below sets forth the initial vessel cost, the 2012 net book value and the net daily charter rate of
the Trusts fleet as of 30 September 2013:
THE TRUSTS VESSELS IN OPERATION
Vessel
Capacity
(TEU)
Initial Vessel Cost
(US$ million)
2012 Net Book
Value (US$ million)
Net Daily Charter
Rate (US$)
Kaethe C. Rickmers 5,060 80 61
( 2)
6,650
(1)
ANL Warringa 4,250 72 60 25,000
ANL Windarra 4,250 72 60 25,000
ANL Warrain 4,250 83 69 25,000
CMA CGM Azure 4,250 75 63 25,000
CMA CGM Jade 4,250 83 70 27,000
CMA CGM Onyx 4,250 83 70 27,000
MOL Dominance 4,250 72 62 26,850
MOL Dedication 4,250 72 62 26,850
MOL Delight 4,250 72 63 26,850
MOL Destiny 4,250 72 63 26,850
MOL Devotion 4,250 72 63 26,850
Hanjin Newport 4,250 69 61 25,950
Ital Fastosa 3,450 64 53 25,870
Ital Festosa 3,450 64 53 25,870
Ital Fiducia 3,450 76 64 25,870
Total 66,410 1,181 997
(1) From 25 September 2013, the charter was extended for 6 months at a fixed daily net charter hire of US$6,650.
( 2) After a provision for vessel impairment of US$4.5 million in 2012.
The table below sets forth certain operating statistics of the Trusts fleet for the periods indicated.
Year Ended 31 December
Nine Months Ended
30 September
Operating Statistics: 2010 2011 2012 2012 2013
Utilisation rate
(1)
(%) ................................................... 99.9% 99.9% 98.9% 98.6% 99.7%
Number of ownership days ........................................ 5,840 5,840 5,856 4,384 4,368
Number of scheduled off-hire days
(2)
......................... 15.5 33.4 60.3 46.5 47.8
Number of unscheduled off-hire/idle days ................. 6.9 5.6 67.0 63.5 11.2
(1) Calculated by the number of ownership days less the number of unscheduled off-hire days divided by the number of
ownership days.
(2) Comprises scheduled dry-docking days (including the number of days required to position the vessels for dry-docking).
Dry-docking of merchant vessels is a regulatory requirement and is carried out in five year intervals
to allow maintenance of the vessels underwater areas. In 2011, four vessels completed their first
scheduled dry-docking after five years in service, resulting in 33.4 scheduled off-hire days compared
with 15.5 scheduled off-hire days in 2010, when the Trust had only one vessel scheduled for dry-docking.
In 2012, five vessels completed their first scheduled dry-docking after five years in service, resulting in
60.3 scheduled off-hire days. In the nine months ended 30 September 2013, four vessels completed
their first scheduled dry-docking, resulting in 47.8 scheduled off-hire days. The Trustee-Manager has also
scheduled dry-docking for the Trusts remaining two ships in 2014, which it estimates will result in 24
scheduled off-hire days in 2014. By the end of 2014, all of the Trusts vessels would have undergone their
first scheduled dry-docking.
All 16 vessels will participate in an extended dry-docking trial programme in which the next scheduled
dry-docking for vessel maintenance will be extended from 5 years to 7.5 years subject to successful
underwater class surveys after respectively 2.5 years and 5 years.
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In 2010 and 2011, the Trust had unscheduled off-hire days of 6.9 days and 5.6 days, respectively,
principally for unforeseen repairs to certain of the Trusts ships. In 2012, the number of unscheduled
off-hire days increased to 67.0 days, including 29.4 days due to Kaethe C. Rickmers being idle before
entering her new charter to MSC after her prior charter to CSAV expired.
The Trusts Competitive Strengths
The Trustee-Manager believes that the Trust possesses a number of competitive strengths that allow
the Trust to capitalise on the opportunities in the containership industry. The Trusts principal competitive
strengths are set forth below.
Platform for growth.
The Trust is the exclusive vehicle of the Rickmers Group for acquiring, owning and operating
containerships of at least 3,450 TEU that are subject to charters of more than one year, subject to certain
exceptions. The Trustee-Manager intends to actively pursue purchases of other containerships with the
goal of expanding the Trusts containership fleet. In furtherance of this growth strategy, the Rickmers
Group has agreed not to compete with the Trust, subject to certain limited exceptions, and has granted
to the Trust rights of first offer to purchase (i) any containerships of at least 3,450 TEU that it has ordered
or owns and that become subject to charters of more than one year and (ii) any containerships of at
least 3,450 TEU that it owns and that have charters of more than one year that it intends to dispose of.
The Rickmers Group has also agreed to provide the Trustee-Manager with an opportunity to negotiate
with and acquire from third parties, ahead of all other Rickmers Group members, any containerships of
at least 3,450 TEU that have charters of more than one year. See Certain Agreements Relating to the
Trusts Business Omnibus Agreement for further details.
Being a business trust listed on the SGX-ST allows the Trust to access the capital market to finance
future growth.
Long-term, fixed-rate time charters.
All of the vessels in the Trusts fleet (other than Kaethe C. Rickmers) are subject to long-term, fixed-
rate time charters with leading container liner shipping companies. As a result, so long as the Trusts
vessels are subject to these charters, the Trusts revenues will be more stable than they would be if the
Trusts vessels were subject to short-term charters or were chartered at prevailing rates in the volatile
spot market. This relative stability results in more predictable distributable cash flow.
Uniformly built fleet.
The Trusts fleet consists exclusively of vessels that have been built by reputable shipbuilders using
standard vessel designs customised by the Rickmers Group in consultation with both the potential
charterers of the vessels and the classification societies. Each of the Trusts twelve 4,250 TEU vessels
and each of the Trusts three 3,450 TEU vessels are sister ships, uniform in all material respects, having
the same or similar equipment. As a result, the Trust enjoys operating efficiencies and economies of scale
in operations, maintenance and crewing, enabling the Trustee-Manager to provide the Trusts customers
with efficiencies in stowage and scheduling, leading to further operating cost advantages. The average
age of the Trusts fleet as of 30 September 2013 is approximately 6.0 years. The Trustee-Manager
believes that this relatively young age profile provides the Trust with competitive advantages, as young
vessels usually require fewer off-hire days, less downtime for repairs and maintenance, and have greater
operating cost efficiencies, as compared to older vessels.
Strong reputation for operating excellence.
The Trust benefits from its close relationship with the Rickmers Group to leverage on its brand and
extensive network within the shipping industry. The Rickmers name has immediate recognition among
the Trusts target customers as a first class vessel operator with high quality, reliable and safe operating
standards. This brand recognition is especially important in acquiring and retaining as customers major
container liner shipping companies that are looking for a reliable and responsive container shipping
operator to meet their exacting standards for vessel chartering and day-to-day operation.
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Significant customer relationships.
The Rickmers Group has long-standing relationships with leading container liner shipping companies
such as Maersk Line, CMA CGM, Mitsui OSK Line (MOL), Mediterranean Shipping Company (MSC),
Neptune Orient Lines (NOL), Evergreen, Orient Overseas Container Line (OOCL), Nippon Yusen
Kaisha Line (NYK), Hamburg Sd and Hapag-Lloyd. These relationships enhance the Trusts ability to
identify and pursue future growth opportunities with customers with established track records and proven
abilities to fulfil their charter obligations in a timely manner.
Full-service chartering solutions.
The Trustee-Manager provides integrated solutions for customers that desire to add multiple vessels to
their fleets, which they might wish to do to enter new trade routes or expand their operations in existing
trade routes. The Trustee-Manager leverages on the skills, expertise and established global network
of the Rickmers Group, which allow the Trust to provide the Trusts customers with access to a full
range of services such as ship design, drawing approval, construction supervision, ship management
and brokering services. The Trustee-Manager believes that this ability to provide full-service chartering
solutions benefits the Trusts customers in the form of lower operating and maintenance costs and
improved service levels.
Experienced management.
The Trusts business affairs are conducted on the Trusts behalf by the Trustee-Manager, which has a team
of five directors and two executive officers, most of whom are experienced in vessel investments and
management. In particular, the Trusts chairman, Mr. Bertram R. C. Rickmers, has extensive experience
in the shipping industry, including as founder, sole shareholder and chairman of the Sponsor. Mr. Thomas
Preben Hansen, chief executive officer of the Trustee-Manager since January 2007, has over 18 years
of experience in the container shipping industry, having worked in a senior management position for a
leading shipbroker before joining the Trust. In addition, the Ship Manager, a member of the Rickmers
Group, conducts the technical and commercial management of the Trusts vessels, including providing
crewing services. The Ship Manager also leverages on the long history and significant experience of the
Rickmers Group and its predecessors in operating vessels.
The Trusts Business Strategies
The Trustee-Manager has adopted the business strategies set forth below.
Focus on high growth markets.
The Trustee-Manager focuses on the global container shipping market as it believes that this market
continues to be one of the fastest growing in the world. The growth in container shipping has been
driven by the relocation of manufacturing facilities from Europe and North America to Asia in order to
take advantage of the lower operating costs there. Furthermore, as a result of an increasing number of
intra-Asia free trade agreements, coupled with a rapidly growing middle class, the growth in intra-Asia
trade has experienced significant and sustainable growth. As a result, the Trustee-Manager believes that
container liner shipping companies will also experience an increase in trade flows to, from and within
Asia. By locating the Trusts operations in Singapore, the Trustee-Manager has greater geographic access
to these customers and benefit from better insight into overall regional shipping trends.
Strategically expand the size of the Trusts fleet.
The Trustee-Manager intends to grow the size of the Trusts fleet through selective accretive acquisitions
from the Rickmers Group and other third parties of newbuildings and second-hand vessels with long-
term, fixed-rate time charters. The Trustee-Manager intends to focus on enhancing the Trusts fleet by
diversifying the Trusts asset base in the containership market that range in all sizes from 1,000 TEU
feeder vessels to ultra-large post-panamax vessels. The Trustee-Manager has a right of first offer on all
Rickmers Group vessels with a capacity of at least 3,450 TEU that have charters of more than one year.
This right of first offer provides a foundation to create an attractive growth platform within the container
shipping industry. The Trustee-Manager monitors market developments and conditions in order to be
prepared for an acquisition of additional vessels that it believe will be accretive to the Trusts business.
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Secure additional long-term, fixed-rate charters and offer competitive charter rates.
The Trustee-Manager intends to secure additional long-term, fixed-rate time charters with a variety of
leading charterers with established operating track records. By focusing on long-term, fixed-rate time
charters, the Trustee-Manager will be able to ensure more stable operating cash flows than the Trust
would otherwise have if the Trustee-Manager were to charter the Trusts vessels under short-term charters
or at prevailing rates in the volatile spot market. Being listed on the SGX-ST, the Trust has greater access
to capital, which the Trustee-Manager believes allows the Trust to offer its potential customers more
competitive charter rates. This will assist the Trust in executing the Trusts strategy of expanding the Trusts
fleet and business through accretive acquisitions.
Maintain a high quality vessel fleet.
The Trust maintains a fleet of high quality vessels that meets rigorous industry standards and its
customers requirements. By operating a highly efficient organisation out of Singapore, the Trustee-
Manager believes the Trust will be able to sustain lower operating costs relative to its peers and attract
and retain leading container liner shipping companies as customers. As of 30 September 2013, the Trusts
fleet has an average age of approximately 6.0 years. Any vessel purchase could be sourced directly from
shipyards or well-maintained second-hand vessels available in the market.
Continue to capitalise on the established reputation and relationships of the Rickmers Group.
The Trustee-Manager intends to continue to capitalise on the established reputation and expertise of
the Rickmers Group. Before entering into a charter, global liner companies will typically consider the
reputation and past performance record of a vessel owner. The Rickmers family has a history of 179
years in shipping and relationships with many of the worlds leading container liner shipping companies.
The Trustee-Manager expands these customer relationships to identify and acquire new charterers for
the Trusts vessels. In addition, shipyards and financial institutions also consider the reputation of a vessel
owner as an indicator of creditworthiness. As the Trustee-Manager seeks to expand the Trusts fleet,
the extensive network of contacts and relationships of the Rickmers Group with shipyards and financial
institutions will be helpful in identifying, negotiating and financing newbuildings and the purchase of
second-hand vessels.
Time Charters
General
A time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. Under
a time charter, the vessel owner provides crewing and other services related to the vessels operation, the
cost of which is included in the daily hire rate. The charterer has to pay for substantially all of the vessel
voyage costs, including fuel oil but excluding lubricants.
Each of the vessels in the Trusts fleet (other than Kaethe C. Rickmers) is subject to a long-term, fixed-rate
time charter. The charter agreements are each in the form of New York Produce Exchange Time Charter
published by The Association of Ship Brokers & Agents (U.S.A.), Inc. with certain riders specifying further
details of the charters. The common terms and conditions of the charter agreements are summarised
below. For details of the Trusts vessels and the respective charter hire rates of the Trusts vessels, see
The Trusts Fleet.
Duration of the Charters
The initial term of a time charter commences on the vessels delivery to the charterer. Under all of the
time charters in respect of the Trusts fleet, the charterer may also extend the term for periods in which
the vessel is off-hire, as described below.
Other than Kaethe C. Rickmers, the Trusts fleet is currently under long-term, fixed-rate time charters
with leading companies in the global container shipping market. Prior to February 2010, the Trusts ship
Kaethe C. Rickmers was subject to an eight-year charter to Maersk which could be terminated after five
years. Upon the termination of such charter in February 2010 and following a scheduled dry-docking
thereafter, the Trust subsequently chartered Kaethe C. Rickmers to CSAV on a short-term charter of 12
months with an option to extend for a further 12 months. The time charter with CSAV in relation to Kaethe
C. Rickmers expired on 24 February 2012, after which the ship was chartered to MSC on a 12-month
66
fixed-rate time charter commencing on 25 March 2012. MSC subsequently extended the charter twice,
each time for a period of six months, and Kaethe C. Rickmers is scheduled for redelivery to the Trust in
March 2014. The charter periods of the Trusts fleet as of 30 September 2013 are set out below.
Hire Rate
Hire rate refers to the payment by the charterer for the use of a vessel. Under all of the Trusts time
charters, the hire rate is payable in U.S. dollars, as specified in the charter. Under the time charters (other
than the time charters with MOL), the hire rate is payable every 15 days/semi-monthly in advance at the
applicable daily rate. Under the time charters with MOL, the hire rate is payable every month in advance
at the applicable daily rate.
Operations, Maintenance and Expenses
The Trust is responsible for the ship management of the vessels, which includes, among other things,
crewing, technical management, repairs, maintenance, dry-docking, commercial management, and
insurance of the vessels. Under the master ship management agreement and the respective individual
ship management agreements, the Ship Manager provides the Trust with these services and act as the
Trusts agent. The Trustee-Manager pays the operating expenses and dry-docking expenditures for the
vessels. See Certain Agreements Relating to the Trusts Business Ship Management Agreement
for details. The charterer generally pays the voyage expenses, which include all expenses relating to
particular voyages, including any fuel oil expenses, port fees, cargo loading and unloading expenses,
canal tolls, agency fees and commissions.
Off-hire
Under the Trusts time charters, when the vessel is off-hire, or not available for service, the charterer
generally is not required to pay the hire rate, and the Trust will be responsible for all costs, including the
cost of bunkers, unless the charterer is responsible for the circumstances giving rise to the lack of vessel
availability. A vessel generally will be considered to be off-hire if there is an occurrence preventing the full
working of the vessel due to, among other things:
operational deficiencies related to fuel consumption and vessel speed;
dry-docking for repairs, maintenance or inspection;
equipment breakdowns;
67
delays due to accidents;
crewing strikes, labour boycotts, certain vessel detentions or similar problems; or
the Trusts failure to maintain the vessel in compliance with its specifications and contractual
standards or to provide the required crew.
Termination and Suspension
The Trust is entitled to withdraw the vessel from service to the charterer if the charterer defaults in its
payment obligations, without prejudice to other claims for hire against the defaulting charterer. Under the
time charters with CMA CGM and Italia Marittima, if a vessel consistently fails to perform to a guaranteed
speed or the amount of fuel consumed to power the vessel under normal circumstances exceeds a
guaranteed amount, and the Trust is unable to rectify the situation within 60 days, the charterer will have
the right to terminate the time charter with respect to that vessel.
Change of Control and Sale of Vessels
Under each of the time charters with CMA CGM and Italia Marittima, the charterer will have a right of
first refusal to purchase the vessel in the event that the Trustee-Manager decides to sell the vessel to any
third party in which the Rickmers Group does not hold any shares. Under the time charters with Hanjin,
the charterers prior approval is required in the event that the Trustee-Manager decides to sell the vessel
to any third party in which the Rickmers Group does not hold any shares. Under the time charter with
MSC, the charterers prior approval is required in the event that the Trustee-Manager decides to sell the
vessel. Under the time charters with MOL, the Trust is only allowed to change ownership of the vessels as
long as the vessels remain within the Rickmers Group.
Sub-letting
Other than Kaethe C. Rickmers, which may not be sub-let without the Trusts consent, the other vessels
may be sub-let without the Trusts consent. However, the charterer who is party to the charter agreement,
and not the sub-lessee, remains liable for all obligations under the charter agreement.
Redelivery
At the expiration of the relevant charter period, each vessel must be redelivered by the charterer to the
Trust at a safe port or a place stated in the relevant charter agreement. Each vessel must be redelivered
to the Trust in good order and condition, ordinary wear and tear excepted.
Indemnity
Each charterer will indemnify the Trust against any loss, damage or expense incurred by the Trust
arising out of or in relation to claims or liens against the charterer in respect of the Trusts vessels. If
a vessel is arrested or otherwise detained by such claims or liens against the charterer in respect of
the Trusts vessels, the charterer must at its own expense, take all reasonable steps to secure that
within a reasonable period of time the vessel is released, including by the provision of bail, if necessary.
Each charterer will also indemnify the Trust against all consequences or liabilities arising from any
inconsistency between the charter and any bills of lading or waybills signed by the charterer or its agents
or by the captain at their request. If a vessel is arrested or otherwise detained by reason of a claim or
claims against the Trust, the Trustee-Manager will at the Trusts own expense, take all reasonable steps
to secure that within a reasonable period of time the vessel is released, including by the provision of bail,
if necessary. In such circumstances, the Trustee-Manager will indemnify the charterer against any loss,
damage or expense incurred by the charterer (including hire paid under the charter agreement) as a
direct consequence of such arrest or detention.
Governing Law and Dispute Resolution
Each charter agreement is governed by and construed in accordance with the laws of England. All
disputes arising out of or in connection with a charter agreement will be referred to and finally resolved by
arbitration.
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Charterers
The Trusts customer selection process is targeted at well-established container liner shipping companies
that are expanding their liner operations, growing the number of trade routes in which they operate,
and chartering-in vessels on a long-term basis as part of their strategy of expanding transport capacity.
Certain details of the charterers of the Trusts fleet are set forth below.
Italia Marittima is part of the Evergreen Group in Taiwan, and a wholly-owned subsidiary of
Evergreen Marine Corp (Evergreen). Evergreen is the worlds fourth largest container liner
shipping company in terms of current capacity, according to Alphaliner, with a market capitalisation
of approximately US$2. 0 billion as at 1 November 2013, according to Bloomberg.
CMA CGM is a privately owned French liner company and the worlds third largest container liner
shipping company in terms of current capacity, according to Alphaliner.
Mitsui O.S.K. Lines is a public listed Japanese transport company that is the worlds tenth largest
container liner shipping company in terms of current capacity, according to Alphaliner, with a market
capitalisation of approximately US$5. 0 billion as at 1 November 2013, according to Bloomberg.
Hanjin Shipping is a public listed Korean shipping and logistics company and the worlds eighth
largest container liner shipping company in terms of current capacity, according to Alphaliner,
with a market capitalisation of approximately US$ 0.8 billion as at 1 November 2013, according to
Bloomberg.
Mediterranean Shipping Company is a privately owned shipping line based in Geneva and the
worlds second largest container liner shipping company in terms of current capacity, according to
Alphaliner.
Sales and Marketing
The Trustee-Manager leverages on the established network of the Rickmers Group and the extensive
relationships of the chief executive officer of the Trustee-Manager to source for potential accretive vessel
acquisitions and charters. The Trustee-Manager may also engage third party ship brokers for such
purpose.
Competition
The container shipping industry is highly fragmented with many shippers, owners and operators of vessels
and is characterised by intense competition. The industry is affected by developments in the major world
economies that influence trade patterns.
Competition for providing new containership service comes from a number of experienced shipping
companies. Many of the Trusts competitors have significantly greater financial resources than it does,
and can therefore operate larger fleets and may be able to offer lower charter rates. This competition may
cause greater price competition for time charters. See Appendix V The Container Vessel Market for a
discussion on time charter rates.
Risk of Loss and Liability Insurance
General
The operation of any container vessel includes risks such as mechanical failure, collision, property loss,
cargo loss or damage and business interruption due to political circumstances in foreign countries,
piracy, hostilities and labour strikes. In addition, there is always an inherent possibility of marine disaster,
including oil spills and other environmental mishaps, and the liabilities arising from owning and operating
vessels in international trade. The U.S. Oil Pollution Act of 1990, which imposes virtually unlimited
liability upon owners, operators and bareboat charterers of vessels trading in the United States exclusive
economic zone for certain oil pollution accidents in the United States, has made liability insurance more
expensive for ship owners and operators trading in the United States market.
The Trustee-Manager maintains hull and machinery insurance, war risk insurance, loss of hire insurance,
protection and indemnity coverage, strike and delay, deviation and increased value insurance for the
Trusts fleet. The Trustee-Manager expects that the amount of insurance for each of the Trusts vessels
69
is adequate for covering any potential loss or liability in the event of any loss or damage to the Trusts
vessels or disruptions to the Trusts operations or both and is in line with similar companies operating in
the industry in which the Trust operates. However, the Trustee-Manager may not be able to maintain this
level of coverage at all times. Furthermore, while the Trustee-Manager believes that the Trusts insurance
coverage will be adequate, not all risks can be insured, and there can be no guarantee that any specific
claim will be paid, or that the Trustee-Manager will always be able to obtain adequate insurance coverage
at reasonable rates if at all.
Hull and Machinery, War Risks Insurance, Loss of Hire, Strike and Delay and Deviation Insurance
The Trustee-Manager maintains marine hull and machinery and war risks insurance, which cover, inter
alia, the risk of actual or constructive total loss, for all of the Trusts vessels. Each of the Trusts vessels
has been insured for an amount close to their respective book values. These insurance policies are
subject to certain deductibles per vessel per incident. The Trustee-Manager will also maintain increased
value coverage for each of the Trusts vessels. Under the terms of the Credit Facilities, the Trust is
required to assign any insurance proceeds from these insurance policies to the Trusts lenders.
The Trustee-Manager obtains loss-of-hire insurance covering the loss of revenue during extended off-hire
periods. The loss of hire insurance covers, under certain circumstances, the loss of charter hire, after
a deductible of 14 days per incident (meaning that Rickmers Maritime will only receive any insurance
payments after 14 continuous days of off-hire), for a period of up to 90 days but not more than 90 days
in total per year and per vessel (meaning insurance payments will be received for a maximum of 90 days
following the 14 days deductible).
The Trusts vessels are also covered by strike and delay insurance which covers loss of charter hire after
a deductible of three days for a period up to 14 days as a result of grounding or collision with a fixed or
floating object. In the event of necessary vessel deviation due to death, injury, illness, infection or accident
of any crew or passengers, the Trust is covered under the marine deviation insurance for the deviation
expenses incurred up to the sum insured of 175,000.
Protection and Indemnity Insurance
Protection and indemnity insurance is provided by mutual protection and indemnity (P&I) associations,
which insure a wide range of liabilities which may arise in connection with the Trusts shipping activities.
This insurance covers items such as third-party liability, crew liability and other related expenses resulting
from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, damage
to other third-party property, pollution arising from the discharge of oil or other substances and, if not
already covered under hull and machinery insurance, salvage, towing and other related costs, including
the removal of a damaged vessel. P&I insurance is a form of mutual indemnity insurance, extended by
P&I associations. Subject to the capping discussed below, the Trusts coverage, except for pollution, is
unlimited. The Trusts P&I insurance coverage for pollution is US$1 billion per vessel per incident, which
represents the standard maximum coverage amount typically used in the Trusts industry.
Intellectual Property
The Trust has been granted a licence by the Rickmers Group to use its trademark Rickmers and the
Rickmers flag logo for so long as the Sponsor maintains majority control of the Trustee-Manager and
the Trustee-Manager has not resigned or been removed under the terms of the RM Trust Deed. If such
events were to occur, the Trust may be required to cease using the Rickmers name and other Rickmers
trademarks, such as the flag logo in the Trusts business activities.
Legal Proceedings
The Trustee-Manager (on its own behalf or as trustee-manager of Rickmers Maritime) has not been and
is not currently involved in any material litigation or proceedings that may have, or have had, a significant
effect on the Trusts or its business, financial position, results of operations or prospects. To the best of
the Trustee-Managers knowledge, there have been no material litigation or proceedings that are pending
or threatened that may have a material effect on the Trusts or its business, financial position, results
of operations or prospects, including those relating to bankruptcy, receivership or similar proceedings.
From time to time, the Trust or the Trustee-Manager may be subject to legal proceedings and claims
in the ordinary course of business, principally related to personal injury and property casualty claims.
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The Trustee-Manager expects that these claims would be covered by insurance, subject to customary
deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and
managerial resources to defend against.
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CERTAIN AGREEMENTS RELATING TO THE TRUSTS BUSINESS
The Trust has entered into certain agreements relating to its business. The following is a summary of the
principal terms of the Trusts agreements, and may not contain all the information that may be important
to Noteholders.
Omnibus Agreement
The Trustee-Manager (acting on the Trusts behalf) entered into an omnibus agreement dated 24 April
2007 (the Omnibus Agreement) with Rickmers Holding and Mr. Bertram R.C. Rickmers. The Trustee-
Managers board makes all decisions for the Trust under the Omnibus Agreement. Each director that is
affiliated with the Rickmers Group is required to abstain from voting in respect of any matter relating to
the Omnibus Agreement.
Non-Competition Agreement
Each of Rickmers Holding and Mr. Bertram R.C. Rickmers has agreed, and will cause its controlled
affiliates (other than the Trustee-Manager, the Trust and the Trusts subsidiaries) to agree, not to, directly
or indirectly, engage in or otherwise acquire or invest in any business involved in the containership
business for so long as the Trustee-Manager is the Trusts trustee-manager under the RM Trust Deed,
and, if the Trustee-Manager is terminated or resigns as trustee-manager due to a breach by the Trustee-
Manager, for cause (as specified in the Omnibus Agreement) or at its option (unless such resignation was
for cause or upon a change of control), for two additional years following such termination or resignation
date.
Notwithstanding the foregoing, the non-competition agreement will not prevent the Rickmers Group from:
(1) ordering, acquiring, owning and operating containerships that are not subject to charters at the time
of acquisition of such containerships; provided that any such containership that is subsequently
chartered to a non-affiliated third party is offered to the Trust pursuant to the right of first offer
described below;
(2) owning and operating any containership that is offered to the Trust at the time it is first chartered
and which the Trust declines to acquire in accordance with the right of first offer described below;
(3) ordering, acquiring, owning and operating any containership that is chartered as at the time of
acquisition by the Rickmers Group and which the Trust declines to acquire or are unsuccessful in
acquiring prior to the time of such acquisition;
(4) acquiring, owning and operating any containership that the Trust elects not to purchase pursuant
to the terms of the option agreement entered into on 11 April 2007 pursuant to which the Trust has
been granted a purchase option on the vessel Ital Fiducia from a member of the Rickmers Group;
(5) providing ship management services to non-affiliated third parties with respect to containerships
generally or to affiliates with respect to containerships for which the Trust had, but did not exercise,
a right of first offer (as described below) or with respect to the existing vessels not originally sold by
the Rickmers Group to the Trust;
(6) providing chartering broker services through Harper Petersen & Co. GmbH & Cie. KG (in
which Rickmers Holding has a 50% equity interest) to non-affiliated third parties with respect to
containerships generally and affiliates with respect to containerships for which the Trust had, but
did not exercise, such right of first offer or with respect to such existing vessels;
(7) acquiring, owning and operating containerships as part of an acquired business if a majority of
the fair market value of the acquisition is not attributable to the containership business of such
business; provided that such containerships are offered to the Trust pursuant to such right of first
offer;
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(8) acquiring up to an aggregate of (i) 9.9% equity ownership, voting or profit participation in any
publicly traded entity that is engaged in the containership business or (ii) 14.9% equity ownership,
voting or profit participation in any privately held entity that is engaged in the containership business
or in excess of 14.9% with the consent of the independent directors of the Trustee-Managers board;
provided that such equity ownership does not give the investor the right to appoint any directors of
such privately held entity;
(9) acquiring any additional equity ownership. voting or profit participation in Harper Petersen & Co.
GmbH & Cie. KG; or
(10) building, owning and operating any of the 11 containerships described in the Omnibus Agreement
that will not be sold to the Trust.
If the Rickmers Group engages in, acquires or invests in any containership business pursuant to the
exception described in sub-paragraph (7) above, it may not subsequently expand the containership
business portion of such acquired business.
For the avoidance of doubt, and except as expressly permitted under the exceptions described above,
the Trust is to be the exclusive vehicle for the Rickmers Group for acquiring, owning and operating
containerships subject to charters. However, nothing in the Omnibus Agreement limits the right of any
member of the Rickmers Group to effect any transaction between or among any other member of the
Rickmers Group. Each of Rickmers Holding and Mr. Bertram R.C. Rickmers has agreed, and will cause
its controlled affiliates (other than the Trustee-Manager, the Trust and the Trusts subsidiaries) to agree, to
advise the Trust of any opportunities for acquisitions of any containerships, and the Trust has undertaken
to negotiate with the sellers of such containerships promptly and in a commercially reasonable manner.
The Trust has also agreed that if it is unsuccessful in acquiring any such containership with a seller or
decline to negotiate with a seller, the Rickmers Group is to be permitted to enter into negotiations with
such seller and acquire the relevant containership pursuant to the exception in sub-paragraph (3) above.
Right of First Offer Relating to Charters and Acquisitions
Each of Rickmers Holding and Mr. Bertram R.C. Rickmers has agreed, and will cause its controlled
affiliates (other than the Trustee-Manager, the Trust and its subsidiaries) to agree (each of the foregoing
parties, an Offering Party), to grant to the Trust a right of first offer to acquire, other than the existing
vessels not being sold to the Trust described in sub-paragraph (10) above under Non-Competition
Agreement:
(1) any containership that is ordered, acquired or owned by any Offering Party as permitted by the
exception described in sub-paragraph (1) above under Non-Competition Agreement and that the
Offering Party subsequently charters to an unaffiliated third party; and
(2) any containership that is subject to a charter to an unaffiliated third party acquired as part of an
acquisition of a business by any Offering Party from an unaffiliated third party as permitted by the
exception described in sub-paragraph (7) above under Non-Competition Agreement.
An event that is triggered under part (1) above will apply only the first time that an Offering Party enters
into a charter with an unaffiliated third party with respect to such containership, provided that such
containership is offered to the Trust in accordance with the right of first offer at that time. The right of
first offer will apply for so long as the Trustee-Manager is the Trusts trustee-manager under the RM
Trust Deed, and, if the Trustee-Manager is terminated or resigns as trustee-manager due to a breach
by the Trustee-Manager, for cause (as specified in the Omnibus Agreement) or at its option (unless such
resignation was for cause or upon a change of control), for two additional years following such termination
or resignation date (the ROFO Term). The right of first offer will not apply to any transaction among
members of the Rickmers Group.
The Trusts right of first offer will expire with respect to the relevant containership on the first day after the
later of (a) 20 business days following receipt of the relevant right of first offer notice and (b) 10 business
days following the final determination of the fair market value or cost, as applicable, of the containership
as agreed by the parties, or failing agreement, determined pursuant to the valuation procedure specified
in the Omnibus Agreement (or such later date as may be mutually agreed).
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If the Trust exercises its right of first offer, the Trust and the Offering Party are to enter into a binding
agreement for the purchase of the relevant containership as soon as commercially practicable. In relation
to a containership that has been ordered but not delivered to the Offering Party, the Trusts purchase
of such vessel is to occur immediately after such vessel has been delivered by the shipyard to such
Offering Party. After the expiry date, if the Trust has not exercised its right of first offer, the Offering
Party is free (i) to own and operate such containership or (ii) within a 180-day period after such expiry
date, to sell, transfer or otherwise dispose of such containership to an unaffiliated third party so long
as the terms of such sale, transfer or disposal are no more favourable to the Offering Party than the
terms pursuant to which such containership was offered to the Trust pursuant to the right of first offer. If
the relevant containership is not sold, transferred or otherwise disposed of within such 180-day period,
such containership will be subject to the right of first offer described in Right of First Offer Relating to
Dispositions below for any subsequent proposed sale in respect of such containership.
Right of First Offer Relating to Dispositions
Each of Rickmers Holding and Mr. Bertram R.C. Rickmers has agreed, and will cause its controlled
affiliates (other than the Trustee-Manager, the Trust and its subsidiaries) to agree, to grant the Trust a
right of first offer on any proposed sale, transfer or other disposition of any containerships by any Offering
Party. This right of first offer will apply only during the ROFO Term. Notwithstanding the foregoing, the
right of first offer will not apply to
(1) a sale, transfer or other disposition of a containership between any affiliated Offering Parties;
(2) a sale of a containership not subject to a charter; or
(3) the sale of a containership pursuant to a purchase option that was granted to an unaffiliated third
party at the time of chartering, which containership was either not subject to the right of first offer
or on which the Trust had a right of first offer but did not exercise it.
If the parties are unable to reach agreement on the terms of the transaction within a 30-day period from
when notice is given of the proposed transaction, the Offering Party will be entitled to sell, transfer or
otherwise dispose of the relevant containership to an unaffiliated third party within a 180-day period
following such 30-day period, so long as the terms of such sale, transfer or disposal are no more
favourable to the Offering Party than the terms pursuant to which such containership was offered to the
Trust pursuant to the right of first offer. If the relevant containership is not sold, transferred or otherwise
disposed of within such 180-day period, such containership will again be subject to the right of first offer.
Ship Management Agreement
The Trustee-Manager has outsourced the ship management services for the Trusts fleet to the Ship
Manager, a member of the Rickmers Group under a master ship management agreement since the
Trusts listing date. The Ship Manager may subcontract certain of the ship management services to third
parties. However, the Ship Manager will continue to have overall responsibility for ship management
services. Ship management services include, among other services, crewing, technical ship management
and vessel maintenance, dry-docking, commercial management and obtaining insurance.
Under the terms and conditions of the master ship management agreement, an individual ship
management agreement incorporating the terms, including the termination provisions, described below
is to be executed with respect to each of the Trusts vessels and will commence upon delivery, of the
respective vessel. The individual ship management agreement is an industry form of the standard ship
management agreement known as Shipman 98 issued by The Baltic and International Maritime Council.
The Ship Manager has agreed to supervise the operation of the Trusts fleet, and the fleets of other
entities in the Rickmers Group and any third parties. In return for providing ship management services,
the Trust has agreed to pay the Ship Manager a fixed ship management fee of US$10,283 per vessel per
month until 31 December 2013, after which the fixed ship management fee increases by 2% per annum.
The ship management fee covers the services provided by the Ship Manager such as crew management,
technical ship management and vessel maintenance, commercial management (which includes providing
voyage estimates and accounts and calculating hire, freights and appointing stevedores), provisioning
(providing for sufficient food and beverages), obtaining insurance, bunkering and dry-docking.
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Under the terms of the master ship management agreement, the Trustee-Manager has agreed to pay
the Ship Manager a fixed daily amount for certain of the fixed operating costs of the fleet. The Trustee-
Manager agreed on such fixed daily operating amount until 31 December 2015 with the Ship Manager
based on prevailing market conditions for the various cost items of the vessel operating expenses which
the fixed daily amount is intended to cover. The fixed daily vessel operating amount is calculated so as
to also provide coverage for possible price increases during the fixed fee period. This fixed daily amount
will vary each year depending on the size of the vessel and will cover a substantial part of the expenses
incurred in the normal course of operations, such as crewing expenses, costs for spares and vessel
maintenance. In addition to payment for services, the Trust is required to pay the operating expenses of
its vessels and reimburse the Ship Manager for actual costs incurred in respect of certain other operating
costs, which comprise initial start-up costs, the cost of lubricant oil, certain amounts not reimbursed
by the Trusts hull and machinery insurance and that exceeds US$100,000 per vessel per year, and
all unforeseen and extraordinary costs (such as costs for upgrading a vessel due to new legislation or
extraordinary repairs).
In addition, the Trust will be responsible for all its dry-docking costs, which the Trust expects will be
substantially capital expenditures and will not be part of its operating expenses.
In addition to the ship management services, the Ship Manager will also provide ship design, drawing
approval and construction supervision services to the Trust. The agreements and fee for these services
will be negotiated at the time when these services are required, and will be entered into on an arms
length basis reflecting market rates, for the scope of services provided.
The ship management agreement has no termination date and no renewal provisions but may be
terminated upon six months notice at any time without cause, or upon the occurrence of customary
termination events, including a default by the Trust or the Ship Manager in the performance of its
respective obligations under the agreement, the sale or total loss of a vessel, or winding up or bankruptcy
proceedings involving the Trust or the Ship Manager. Under the terms of the master ship management
agreement, the Ship Manager may also be terminated if it defaults in the performance of its professional
duties, such as providing sub-standard service. If the Ship Manager is terminated in accordance with the
terms of the ship management agreement, other than by reason of a default by the Ship Manager, or if
the vessel is lost, sold or otherwise disposed of, the fixed ship management fee per vessel per month
will continue to be payable by the Trust to the Ship Manager for a further period of three months from the
termination date. This is a standard industry clause in the Shipman 98 form as some of the obligations of
the Ship Manager under the ship management agreement do not cease immediately on termination, such
as their obligation towards suppliers and unwinding of crew employment contracts.
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RESTRUCTURING AND DESCRIPTION OF MATERIAL INDEBTEDNESS
Overview
In March 2008, the Trustee-Manager entered into various memoranda of agreement with Polaris and the
various subsidiaries of Polaris to purchase 13 vessels. Polaris is a wholly-owned subsidiary of Rickmers
Second , which in turn is a wholly-owned subsidiary of Rickmers Holding . In May 2008, the Trustee-
Manager obtained the approval of the Trusts Unitholders to raise up to US$650.0 million in equity in
order to finance the acquisition of the 13 vessels. The Trustee-Manager took delivery of six of the vessels
between June 2008 and April 2009. The six vessels were financed primarily by debt and, to a lesser
extent, by excess cash from the Trusts operations.
The global financial crisis and slowdown following the collapse of Lehman Brothers in September 2008
resulted in reduced liquidity, greater volatility, widening of credit spreads and lack of price transparency
in the United States and global credit and financial markets. This downturn lasted well into 2009 and
resulted in the Trustee-Manager encountering difficulties in raising capital to finance the acquisition of the
remaining vessels.
The Trusts market capitalisation declined substantially from approximately S$466.0 million on 5 May
2008 (being the date on which Unitholders approval was obtained for the acquisition of the vessels) to
approximately S$159.0 million as of 31 December 2009. In addition, the valuations of the Trusts vessels
decreased in 2008 as part of the Trustee-Managers review to determine whether there is any indication
of impairment. This led to a potential breach of the Trusts value-to-loan ratios. On 22 March 2010, the
Trust announced the disclaimer of opinion by its independent auditor in relation to the Trusts financial
statements as of and for the year ended 31 December 2009. The Trustee-Manager enlisted financial
advisers to assist its directors and management in their considerations and evaluations of all relevant
equity financing options. However, such options were not feasible at that time, and the Trusts lenders did
not want the Trustee-Manager to take delivery of the vessels until their respective loans had been reduced
and their respective value-to-loan ratios restored. With insufficient debt and equity financing available,
the Trustee-Manager was not able to acquire the remaining vessels, which represented a total capital
commitment of US$918.7 million at that time.
In order to restructure the Trusts obligations under the loan agreements and to enable the Trust to
continue operating as a going concern, the Trustee-Manager and the three syndicates of lending banks
entered into loan restructuring agreements (the Loan Restructuring Agreements) pursuant to which
the lending banks agreed, among other things, to:
convert the balance outstanding in a top-up facility that the Trust had at that time into a 5-year
amortising loan which would be amortised quarterly over a 5-year period based on an agreed
repayment schedule;
waive value-to-loan covenants in the loan agreements for up to three years;
increase the margins on all existing credit facilities to 1.75% per annum plus 3-month US$ LIBOR,
representing increases of between 0.55% and 1.05% over prevailing interest margins;
receive a restructuring fee of about US$5.4 million in connection with the restructuring of the loan
agreements; and
receive a prepayment of US$59.0 million for the loan agreements.
Pursuant to the Loan Restructuring Agreements, the Trustee-Manager amended and restated its three
facility agreements on 9 June 2010.
On 28 May 2013, the Trustee-Manager completed a one-for-one rights issue and issued an aggregate of
423,675,000 Units and received gross proceeds of S$101.7 million. The Trustee-Manager used all of the
net proceeds of the rights issue to prepay a portion of its bank loans, including the repayment in full of the
top up facility. As part of the waivers that the Trustee-Manager received from its lending banks to conduct
its rights issue, the Trustee-Manager also obtained a further waiver of its value-to-loan covenants in the
loan agreements for an additional 1.5 years, until 29 December 2014.
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Settlement and Convertible Loan Agreement
In order to terminate the Trustee-Managers obligations under the memoranda of agreement for the
remaining seven vessels, and for the Trust to continue operating as a going concern, Polaris and its
subsidiaries agreed to terminate the relevant memoranda of agreement in return for compensation on the
terms set out in the Settlement and Convertible Loan Agreement. The Settlement and Convertible Loan
Agreement has been amended from time to time, the latest of which occurred on 1 July 2013. As part
of the Settlement and Convertible Loan Agreement, the Trustee-Manager agreed to pay compensation
amounting to a total of US$64.0 million to discharge its obligation to purchase the seven vessels, of which
the Trustee-Manager paid US$15.0 million to Polaris in 2010 and the remaining US$49.0 million was
converted into an interest bearing loan convertible into the Trusts Common Units. As of 30 September
2013, the total outstanding principal amount under the convertible loan was US$49.0 million. Interest on
the convertible loan is payable quarterly in cash and is not convertible into Common Units.
The convertible loan may be repaid, in part or in full, at any time on or before the final maturity date of
31 March 2014. In such event, the interest rate on the amount repaid will be increased retroactively from
a margin of 1.25% per annum plus 3-month US$ LIBOR to a margin of 3.00% per annum plus 3-month
US$ LIBOR for the period from 1 April 2010 to the respective repayment date for the prepaid portion.
On 1 April 2014, Polaris has the option to convert the outstanding loan amount into the Trusts Common
Units, up to a specified maximum number of Common Units, at the conversion price, in each case subject
to adjustment.
The maximum number of Common Units that can be allotted and issued pursuant to the conversion was
initially 150,000,000 Common Units. However, the maximum is subject to adjustment in the event that the
conversion price is adjusted. Such maximum number was 181,263,067 Common Units as of 1 July 2013.
If the number of Common Units to be issued to Polaris on the conversion date exceeds the maximum,
the Trustee-Manager must allot and issue to Polaris such maximum number of Common Units and pay
Polaris in cash an amount in U.S. dollars for the difference, which will be calculated by multiplying the
number of Common Units in excess of the maximum by the conversion price.
The conversion price was initially set at S$0.482625 per Common Unit and, after taking into account
adjustments made in accordance with the terms of the convertible loan, was S$0.399385 per Common
Unit as of 1 July 2013. The prevailing exercise price upon conversion will be converted into U.S. dollars
using the mid spot rate of exchange at the close of business in Singapore at the latest practicable date
before 1 April 2014.
If Polaris does not exercise the option to convert, the outstanding convertible loan will be repayable in
cash the earlier of (i) 1 February 2015 and (ii) the last day of the calendar quarter following the date the
Trustee-Manager is able to meet the conditions to exit from debt restructuring with the consortium of
banks, provided no repayment needs to be made earlier than 30 June 2014. In such a case, the interest
rate will, from 1 April 2014, increase to a margin of 3.00% per annum plus 3-month US$ LIBOR and
the margin will further increase by 0.25% per annum every subsequent quarter until the outstanding
convertible loan is repaid in full, subject to a cap on the margin at 4.5% per annum.
Under the terms of the Settlement and Convertible Loan Agreement, the seven vessels became excluded
from the right of first offer under the terms of the Omnibus Agreement. Nevertheless, if the Trustee-
Manager seeks to purchase any of such vessels in the future and such vessel is, on the date of the offer
to purchase, still owned by an entity within the Rickmers Group and the relevant owner of such vessel is
willing to sell the vessel, the Trustee-Manager and such owner can negotiate the terms of the purchase in
good faith on the purchase price and whether any payment received by Polaris under the Settlement and
Convertible Loan Agreement is to be taken into consideration as part-payment of the purchase price of
any such vessel.
Loan Agreements
IPO Facility
Overview
The Trustee-Manager entered into a facility agreement dated 24 April 2007 (as amended from time
to time, the IPO Facility Agreement) for (a) a revolving credit facility of an aggregate amount not
exceeding US$360.0 million (Tranche A); and (b) a top-up term loan of an amount not exceeding
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US$128.7 million (Tranche B). The purpose of the facility was to fund part of the purchase of nineteen
vessels and to assist the Trustee-Manager with its general working capital requirements. The nineteen
vessels comprise Kaethe C. Rickmers, Ital Fastosa, Ital Festosa, ANL Warringa, ANL Windarra, CMA CGM
Azure, ANL Warrain, CMA CGM Jade, CMA CGM Onyx, Ital Fiducia, MOL Dominance, MOL Dedication,
MOL Delight, MOL Destiny, MOL Devotion, Hanjin Newport, Hanjin Milano, Hanjin Duesseldorf and Hanjin
Monte video. The obligations of the Trustee-Manager are guaranteed on joint and several basis by certain
ship owning subsidiaries of the Trust. On 9 June 2010 and 20 May 2013, the IPO Facility Agreement was
amended in accordance with an agreement with the lenders of the First Facility and the Second Facility
(each as defined below) pursuant to the Intercreditor Deed (as defined below). See Intercreditor Deed
below for a summary of the Intercreditor Deed.
The Tranche A loan is repayable in specified instalments at the end of every calendar quarter, with the
final payment due on 31 March 2017. The Tranche B loan is also repayable in specified instalments at the
end of every calendar quarter, with the final payment due on 31 March 2015. As of 30 September 2013,
the total outstanding principal amount under the Tranche A loan was US$276.4 million. Following the
completion of the rights issue in May 2013, Tranche B is fully paid as at 30 June 2013.
The loans under the IPO Facility Agreement bear interest at a floating rate of LIBOR plus a margin of
1.75% per annum.
Security
Security for the IPO Facility Agreement includes, among others:
a mortgage over each secured vessel;
an assignment of the insurances, earnings and requisition compensation of each secured vessel;
an assignment of the relevant charter for each secured vessel; and
a charge or pledge over each earnings account and all amounts from time to time standing to
the credit of various accounts, including the earnings account, the dry dock reserve account, the
retention account and the existing earnings account.
Security Cover
If the value of the security is less than 133% of the aggregate of the outstanding principal amount,
the accrued but unpaid interest and any other amount payable under the loan documents (the
Indebtedness), and more than 50% of the secured vessels are unemployed or subject to charters of
less than 12 months, the margin with respect to calculating the interest rate will increase by 0.1% per
annum until the security value exceeds 133%. In addition, the value of the security is less than (a) 125%
of the Indebtedness and more than 50% of the secured vessels are unemployed or subject to charters of
less than 12 months, or (b) 110% of the Indebtedness, the Trustee-Manager (at the agents request) is
required at the Trustee-Managers option to pay a cash deposit in the amount of the shortfall as additional
security, give other additional security in amount and form acceptable to the agent or prepay an amount
of Indebtedness so that the required percentage is met. The Trust has obtained a waiver for the security
cover until 29 December 2014.
Covenants
The Trustee-Manager must comply with various other covenants, including:
an EBITDA to Interest Expenses ratio of 1.68:1 (up to 9 June 2013) and 2.5:1 (from 10 June 2013),
Unitholders equity of US$100 million or more, free minimum consolidated liquidity of US$12 million
and a minimum credit balance as specified in the Intercreditor Deed;
except in the ordinary course of business, not incur any liability of a substantial nature other than
pursuant to the financing agreements relating to various additional vessels without consent;
procuring that there be no change in the legal or beneficial ownership or control of the Trustee-
Manager;
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procure the appointment of a first class international ship management company as technical
managers of each additional vessel;
various covenants with respect to insurance and the ownership or operations of each vessel; and
procure that no encumbrance is created or permitted to subsist over an additional vessel or other
assets without consent.
Events of Default
The IPO Facility Agreement contains various events of default, including curtailment of business, loss of
vessel, challenge to registration of a secured vessel, termination of the ship management agreement,
termination of or an event of default under the convertible loan facility agreement, and any event that is
likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness
of the Trust, a party to the security documents or a subsidiary of the Trust that owns a new ship.
First Facility
Overview
Five of the Trusts subsidiaries (collectively Borrowers) entered into a facility agreement dated 30 May
2008 (as amended from time to time, the First Facility Agreement) for a term loan facility of up to
US$236,810,625 to partially finance the acquisition cost of five 4,250 TEU container vessels, namely,
MOL Dominance, MOL Dedication, MOL Delight, MOL Destiny and MOL Devotion. The obligations of the
Borrowers are guaranteed by the Trust. On 9 June 2010 and 20 May 2013, the First Facility Agreement
was amended in accordance with an agreement with the lenders of the IPO Facility and the Second
Facility (as defined below) pursuant to the Intercreditor Deed (as defined below). See Intercreditor
Deed below for a summary of the Intercreditor Deed.
The facility was made available in five tranches with each tranche used to finance a single vessel. Each
tranche is to be repaid in quarterly specified instalments, with the final repayment date for each of the
tranches being 5 June 2018, 28 August 2018, 27 November 2018, 6 January 2019, and 25 March 2019
respectively. As of 30 September 2013, the total outstanding principal amount under the First Facility
Agreement was US$151.3 million.
The loans under the First Facility Agreement bear interest at a floating rate of LIBOR plus a margin of
1.75% per annum.
Security
Security for the First Facility Agreement includes, among others:
a mortgage over each secured vessel;
an assignment of the insurances, earnings and requisition compensation of each secured vessel;
an assignment and novation of the relevant charter for each secured vessel; and
a charge or pledge over each earnings account and all amounts from time to time standing to
the credit of various accounts, including the earnings account, the dry dock reserve account, the
retention account and the existing earnings account.
Security Cover
If lender serves a notice on the Borrowers that (a) the aggregate fair market value of the vessels; plus (b)
the net realisable value of any additional security previously provided as security cover is below 110% of
the total loan, the Borrowers must within one month thereafter either provide additional security which has
a net realisable value at least equal to the shortfall or prepay such part of the loan as will eliminate the
shortfall. The Trust has obtained a waiver for the security cover until 29 December 2014.
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Covenants
The Borrowers must comply with various covenants, including:
an EBITDA to Interest Expenses ratio of 1.68:1 (up to 9 June 2013) and 2.5:1 (from 10 June 2013),
Unitholders equity of US$100 million or more, free minimum consolidated liquidity amounting to an
aggregate of US$1.2 million multiplied by the number of vessels in the Trusts fleet, and a minimum
credit balance as specified in the Intercreditor Deed;
not incur any liability or obligation other than pursuant to the financing agreements relating to
various additional vessels, in the ordinary course of business or the financing of ships to be owned
by the Trust;
procure that no encumbrance is created or permitted to subsist over its respective assets without
consent;
various covenants with respect to insurance and the ownership or operations of each vessel; and
assign all its rights and interest in any builders warranty relating to its vessel.
In addition, the Trust has agreed to comply with various covenants, including:
an EBITDA to Interest Expenses ratio of 1.68:1 (up to 9 June 2013) and 2.5:1 (from 10 June 2013),
Unitholders equity of US$100 million or more, free minimum consolidated liquidity amounting to an
aggregate of US$1.2 million multiplied by the number of vessels in the Trusts fleet, and a minimum
credit balance as specified in the Intercreditor Deed;
remain the legal and beneficial owner of the entire issued share capital of each Borrower, free from
any security interest;
procuring that the Trustee-Manager remains as the trustee-manager of the Trust; and
procure that no encumbrance is created or permitted to subsist over its assets without consent.
Events of Default
The First Facility Agreement contains events of default, including the inability to pay its debts as they
fall due, cessation or suspension of business, change in control of the Trust, the Trustee-Manager or
the approved ship manager (if Rickmers Ship management (Singapore) Pte. Ltd. is the approved ship
manager), termination of the ship management agreement, termination of or an event of default under
the convertible loan facility agreement, and any event occurs (including a change in the financial position,
state of affairs or prospects of, any accident or event involving any ship chartered by or operated by, and
any litigation commenced or threatened against, any Borrower, the Trust, the Trustee-Manager, Polaris,
the crew manager (Uniteam Marine Limited), Rickmers Ship management (Singapore) Pte. Ltd., and
any approved time charterer) such that the majority lenders consider that there is a significant risk that
such party is or will become unable to discharge its liabilities as they fall due or such event represents a
material adverse change to the business of such person.
Second Facility
Overview
India Navigation Limited (the Borrower) and Sui Tai Navigation Limited (the Outgoing Borrower)
entered into a facility agreement dated 30 September 2008 (as amended from time to time, the Second
Facility Agreement) for a term loan and revolving credit facility of US$46,310,000 to partially finance
the acquisition cost of Hanjin Newport, a 4,250 TEU container vessel. The obligations of the Borrower are
guaranteed by the Trustee-Manager. On 9 June 2010 and 20 May 2013, the Second Facility Agreement
was amended in accordance with an agreement with the lenders of the IPO Facility and the First Facility
(as defined below) pursuant to the Intercreditor Deed (as defined below). See Intercreditor Deed
below for a summary of the Intercreditor Deed.
80
The facility is to be repaid in quarterly specified instalments, with the final repayment date on 31 March
2021. As of 30 September 2013, the total outstanding principal amount under the Second Facility
Agreement was US$28.4 million.
The loan under the Second Facility Agreement bears interest at a floating rate of LIBOR plus a margin of
1.75% per annum.
Security Cover
If the lender serves a notice on the Borrower that the aggregate fair market value of the vessel plus the
net realisable value of any additional security previously provided as security cover is below 110% of
the total loan and the swap exposure, the Borrowers must within one month thereafter either provide
additional security which has a net realisable value at least equal to the shortfall or prepay such part
of the loan as will eliminate the shortfall. The Trust has obtained a waiver for the security cover until
29 December 2014.
Covenants
The Borrower must comply with various covenants, including:
an EBITDA to Interest Expenses ratio of 1.68:1 (up to 9 June 2013) and 2.5:1 (from 10 June 2013),
Unitholders equity of US$100 million or more, free minimum consolidated liquidity amounting to an
aggregate of US$1.0 million multiplied by the number of vessels in the Trusts fleet, and a minimum
credit balance as specified in the Intercreditor Deed;
not incur any liability or obligation other than pursuant to the financing agreements relating to
various additional vessels, in the ordinary course of business or the financing of ships to be owned
by the Trust;
procure that no encumbrance is created or permitted to subsist over its respective assets without
consent;
various covenants with respect to insurance and the ownership or operations of each vessel; and
assign all its rights and interest in any builders warranty relating to its vessel.
In addition, the Trust has agreed to comply with various covenants, including:
an EBITDA to Interest Expenses ratio of 1.68:1 (up to 9 June 2013) and 2.5:1 (from 10 June 2013),
Unitholders equity of US$100 million or more, free minimum consolidated liquidity amounting to an
aggregate of US$1.0 million multiplied by the number of vessels in the Trusts fleet, and a minimum
credit balance as specified in the Intercreditor Deed;
remain the legal and beneficial owner of the entire issued share capital of each Borrower, free from
any security interest;
procuring that the Trustee-Manager remains as the trustee-manager of the Trust; and
procure that no encumbrance is created or permitted to subsist over its assets without consent.
Events of Default
The Second Facility Agreement contains events of default, including the inability to pay its debts as they
fall due, cessation or suspension of business, change in control of the Trust, the Trustee-Manager or
the approved ship manager (if Rickmers Ship management (Singapore) Pte. Ltd. is the approved ship
manager), termination of the ship management agreement, termination of or an event of default under
the convertible loan facility agreement, and any event occurs, including a change in the financial position,
state of affairs or prospects of, any accident or event involving any ship chartered by or operated by,
and any litigation are commenced or threatened against, any Borrower, the Trust, the Trustee-Manager,
Polaris, and Rickmers Ship Management (Singapore) Pte. Ltd. such that the majority lenders consider
that there is a significant risk that such party is or will become unable to discharge its liabilities as they
fall due or such event represents a material adverse change to the business of such person.
81
Intercreditor Deed
Further to the loan restructuring agreements with the lenders of the Trusts three syndicate facilities, the
Trustee-Manager agreed to restructure the terms and conditions of the IPO Facility Agreement, the First
Facility Agreement and the Second Facility Agreement. See Overview above for a summary of the
terms of the loan restructuring agreements. In addition, the Trust also agreed to compensate Polaris in
exchange for Polaris agreeing to discharge the Trust from its obligations to purchase seven vessels with
an aggregate contract value of US$918.7 million. The compensation amounted to US$64.0 million, of
which US$15 million was paid in cash to Polaris and US$49.0 million was in the form of an interest-
bearing convertible loan.
As part of the restructuring with the Trusts bank lenders and the settlement with Polaris, the Trustee-
Manager and these parties entered into an intercreditor deed dated 9 June 2010 (as amended from
time to time, the Intercreditor Deed) to govern the ability of the Trust to pay, the amounts of various
repayments allowed and time and methods of payment under the IPO Facility, the First Facility, the
Second Facility and the Settlement and Convertible Loan agreement. Under the Intercreditor Agreement,
the Trust may not make any payment of any amount under the convertible loan other than the interest
and using any excess cash to make principal repayments. The Intercreditor Deed also sets forth payment
flows of cash received by the Trust into various accounts.
On 20 May 2013, the Intercreditor Deed was amended to give effect to certain amendments made to (a)
the IPO Facility Agreement, the First Facility Agreement and the Second Facility Agreement pursuant to
a request for consent and waiver letter in relation to the value-to-loan covenant from the Trust and (b) the
Settlement and Convertible Loan agreement. The Trust incurred a one-time debt processing fee of US$1.8
million for the waiver.
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THE TRUSTEE-MANAGERS MANAGEMENT
Board of Directors
The Trustee-Managers board of directors is responsible for corporate governance and overall strategy
of the Trust. The Trustee-Managers role includes reviewing business plans, monitoring key financial and
non-financial performance indicators, approving annual budgets, acquisitions and disposals. The Trustee-
Managers board of directors as of the Latest Practicable Date comprises five non-executive directors,
three of whom are independent, as follows.
Name Age Position
Mr. Bertram R. C. Rickmers ......................................... 60 Chairman and Non-executive Director
Dr. Ignace Van Meenen ............................................... 45 Non-executive Director
Mr. Lim How Teck ......................................................... 63 Lead Independent Director
Mrs. Lee Suet Fern ...................................................... 55 Independent Director
Mr. Raymundo A. Yu Jr. ................................................ 58 Independent Director
Mr. Bertram R. C. Rickmers is Chairman and a Non-executive Director of the Trustee-Manager. He was
appointed a member of the board of directors in February 2007. He is chairman of the board of Rickmers
Holding GmbH & Cie. KG and the deputy chairman of the supervisory board of container terminal group,
Eurokai KgaA. He is also in the advisory board of Hellmann Worldwide Logistics GmbH & Co. KG and the
chemical group Mankiewicz Gebr. & Co. Mr. Rickmers started his career as a sales manager responsible
for the planning of projects at the family-owned Rickmers Shipyard in Bremerhaven. In 1982, Mr. Rickmers
founded MCC Marine Consulting & Contracting GmbH in Hamburg, which specialises in shipbroking
and in 1984, he established Rickmers Reederei in Hamburg, which today is one of the worlds leading
container shipping companies. In 2000, Mr. Rickmers purchased back Rickmers Linie from Hapag-Lloyd,
to which the Rickmers family had sold the majority shareholding in 1974. After completion of schooling,
Mr. Rickmers spent his traditional year at sea, after which he commenced studying law at the University
of Hamburg and continued at the University of Freiburg where he received a diploma in economics.
Dr. Ignace Van Meenen is a Non-executive Director of the Trustee-Manager. He was appointed a member
of the board of directors in November 2011. He joined Rickmers Group as a chief financial officer in
September 2011. As deputy chief executive officer and chief financial officer of Rickmers Group, Dr. Van
Meenen is actively involved in refining the corporate processes and ensuring the smooth running of the
organisation. He is also the non-executive chairman and chief operating executive of SCALA IRP Capital
Partners s.a.r.l., a real estate investment and management services firm in Europe. A multi-linguist, Dr.
Van Meenen began his professional career in the investment division of Deutsche Bank AG in Germany
and USA. Thereafter, Dr. Van Meenen held leading management positions including director of finance
at the mining & chemical group, RAG AG (now Evonik Industries) and chief financial officer at the
international media company, RTL Group S.A. and real estate firm, DIC Group. Dr. Van Meenen read law
at Universiteit Gent and University of Osnabrck and currently resides in Germany.
Mr. Lim How Teck is Lead Independent Director of the Trustee-Manager. He was appointed a member of
the board of directors in February 2007. He is a shipping veteran with more than 20 years experience
in the industry. Mr. Lim is currently the deputy chairman and director of Tuas Power Ltd, chairman
and director of Redwood International (Pte) Ltd, Certis CISCO Security Pte. Ltd., Heliconia Capital
Management Pte. Ltd. and ARA-CWT Trust Management (Cache) Limited. He is also a director on the
boards of several public listed companies, including ARA Asset Management Ltd, Swissco Holdings
Limited and Mewah International Inc. Mr. Lim holds a Bachelor of Accountancy Degree from the then
University of Singapore and is a Fellow of the certified public/management accountancy bodies in
Singapore, Australia and UK. He is also a Fellow of the Singapore Institute of Directors and an Associate
of the Institute of Business Administration of Australia. Mr Lim graduated from the Harvard Graduate
School of Business Corporate Financial Management Course and Advanced Management Programme
in 1983 and 1989 respectively. Mr Lim was awarded The Public Service Medal, PBM (Pingkat Bakti
Masyarakat) National Day Award in 1999.
83
Mrs. Lee Suet Fern is an Independent Director of the Trustee-Manager. She was appointed a member
of the board of directors in February 2007. She is the senior partner of Stamford Law Corporation; her
practice focuses on mergers and acquisitions, equity and debt capital markets and corporate finance.
Mrs. Lee has been involved in many of Singapores most significant corporate transactions and has
been named a leading practitioner in numerous global professional publications including Chambers
Global Guide to the Worlds Leading Lawyers, Asia Law Leading Lawyers, The International Whos Who
of Business Lawyers and Corporate Governance Lawyers, The International Whos Who of Banking
Lawyers, PLC Which Lawyer?, Euromoney Worlds Leading M&A Lawyers, Euromoney Worlds Leading
Capital Markets Lawyers, PLC Cross-Borders Equity Capital Markets and The International Whos Who of
Capital Markets Lawyers. She is the chairman of the Asian Civilisations Museum Board, a member of the
National Heritage Board, a member of the advisory board to the Law School at Singapore Management
University and a trustee for Nanyang Technological University. She also serves on the boards of public
listed companies in Singapore and Europe, including Fortune Global 500 companies. Mrs. Lee graduated
from Cambridge University in 1980 with a double first in law and is a barrister-at-law at Grays Inn, London
and an advocate and solicitor of the Supreme Court of Singapore.
Mr. Raymundo A. Yu Jr. is an Independent Director of the Trustee-Manager. He was appointed a member
of the board of directors in May 2009. In October 2010, he was appointed chairman, Asia Pacific, of
Threadneedle Investments, a member of the Ameriprise Financial Group. As chairman, Mr. Yu spearheads
the businesses of Threadneedle and Ameriprise in Asia. Mr. Yu spent 27 years in wealth management,
global markets and investment banking with Merrill Lynch International where he held the position of
chairman of the Merrill Lynch Group, Asia Pacific from 2000 to 2008. During his tenure at Merrill Lynch,
Mr. Yu built and managed significant financial services franchises across the Asia Pacific region. He was
credited for driving the growth of the banks Global Private Client business across Europe, Middle East,
Africa and Asia Pacific regions and was instrumental in the expansion of the entire Merrill Lynch Group in
Asia. Mr. Yu was dubbed the Star of Asia by Business Week Magazine in July 2005, and at the time of
his retirement in 2008, he was the only Asian to be a chairman in a US investment bank in Asia Pacific.
Mr. Yu is a member of the Board of Fellows of the Thunderbird School of Global Management in Arizona,
USA, and is active in various charity organisations in the Philippines and Singapore. He is the founding
chairman of ABLE, a charity aligned to the physically challenged community in Singapore. Mr. Yu also
sits on the Board of Wildlife Reserves Singapore and is a member of AustralianSupers Asian Advisory
Committee and Bank Julius Baer & Cos Global Advisory Committee. Mr. Yu holds a Bachelor of Science
degree in Business Administration from Ateneo de Davao University in the Philippines and a Masters in
Business Administration in International Management from Thunderbird School of Global Management.
Committees of the Board of Directors
Audit Committee
The audit committee comprises three members, all of whom are independent directors. The chairman of
the audit committee is Mr. Lim How Teck and the members are Mrs. Lee Suet Fern and Mr. Raymundo
A. Yu Jr. The board of directors is of the view that the members of the audit committee have sufficient
financial management expertise and experience to discharge their responsibilities. The audit committee
is authorised to investigate any matter it deems appropriate within its terms of reference. It is entitled to
full access to and co-operation of the management and has full discretion to invite any director or senior
manager to attend its meetings. The audit committee has adequate resources to enable it to discharge its
responsibilities properly. The principal responsibilities of the audit committee include:
reviewing financial results and statements before recommending them to the board of directors for
approval;
reviewing external audit plans and the adequacy of external audits in respect of scope, costs and
performance;
reviewing results of the external audits and evaluating, with the assistance of auditors, the
adequacy of the systems of internal and accounting controls, risk management and compliance;
reviewing external audit reports to ensure that where deficiencies in internal controls have been
identified, appropriate remedial action is taken by the management;
84
reviewing the nature, extent and costs of non-audit services provided by the external auditors to the
Trust, so as to avoid an erosion of independence and objectivity of the external auditors;
recommending to the board of directors the nomination of the external auditors and their fees;
reviewing interested person transactions and monitoring the procedures established to regulate
interested person transactions;
reviewing procedures for managing potential conflict between the interest of the unitholders of the
Trust and the interest of the Trustee-Manager; and
reviewing policies and practices put in place by Trustee-Manager to ensure compliance with
applicable legislation, the Listing Manual of the SGX-ST and the Business Trusts Act.
Nominating and Remuneration Committee
The Trustee-Managers nominating and remuneration committee comprises four directors, of whom three
(including the Chairman) are independent directors. The chairman of the nominating and remuneration
committee is Mrs. Lee Suet Fern and the members are Mr. Bertram R. C. Rickmers, Mr. Lim How Teck
and Mr. Raymundo A. Yu Jr. The nominating and remuneration committee has adopted specific terms of
reference defining its scope and authority. Its duties with regard to nomination functions are:
reviewing and assessing nominations for appointment of new directors and re-appointment of
existing directors before recommending to the board of directors;
performing annual evaluation of the board of directors performance in reference to objective
performance criteria;
reviewing board structure, size and composition, having regard to the scope and nature of the
operations and the core competencies of the directors;
determining on an annual basis, the independence of independent directors; and
reviewing and recommending to the board of directors training and professional development
programs.
The nominating and remuneration committee also recommends to the board of directors internal
guidelines to address the competing time commitments faced by directors who serve on multiple boards.
As a guide, directors should not serve on more than nine principal boards. The principal remuneration
functions of the nominating and remuneration committee are:
reviewing and recommending to the board of directors the remuneration framework, including
specific remuneration package and terms of employment etc. for the key executives; and
reviewing and recommending long-term incentive schemes.
There are currently no option schemes or other long-term incentive scheme for employees or directors.
The remuneration payable to the Trustee-Manager is provided for under Clause 11 of the RM Trust Deed
constituting the Trust dated 30 March 2007. The fees paid to the Trustee-Manager for financial year ended
31 December 2012 are disclosed in the Trusts financial statements published in its 2012 annual report.
Finance Committee
The Trustee-Managers finance committee was re-constituted on 6 August 2012 to assist the board of
directors in reviewing the capital structure of the Trust and to resolve any potential conflicts of interest that
might arise in the course of discussions between the Trust and interested parties. The finance committee
comprises three members, all of whom are independent directors. The chairman of the finance committee
is Mr. Lim How Teck and the two members are Mrs. Lee Suet Fern and Mr. Raymundo A. Yu Jr. With the
completion of the structuring of the Trusts liabilities, the finance committee was dissolved with effect from
26 July 2013.
85
Internal Controls
The board of directors is mindful of the importance of maintaining a sound system of internal controls
to safeguard the interests of unitholders and the Trusts assets. The audit committee has reviewed
the internal controls within its terms of reference and those drawn to their attention by the external
auditors, during the course of their audit. Where applicable, management has implemented suggested
improvements. The board of directors believes that the existing system of internal controls provides
reasonable, but not absolute assurance against material financial misstatements or losses. The board of
directors recognises that in practice, no cost-effective internal control system can preclude and eradicate
each and every error and irregularity arising from material errors, poor judgement in decision-making,
human error losses and fraud, given that all internal control systems contain inherent limitations. The
board of directors notes that the objective of an internal control system should be to manage rather than
to eliminate the risk of failure. Based on the reports of the auditors and information furnished by the
management, the board of directors with the concurrence of the audit committee is of the view that the
existing internal controls are adequate to address the financial, operational, compliance and information
technology risks of the business.
Executive Officers
Name Age Position
Mr. Thomas Preben Hansen ......................................... 38 Chief Executive Ofcer
Mr. Gerard Low Shao Khang ........................................ 44 Chief Financial Ofcer
Mr. Thomas Preben Hansen is the chief executive officer of the Trustee-Manager and was appointed in
December 2006. Mr. Hansen has accumulated more than 18 years of experience in the shipping industry.
Prior to joining the Trustee-Manager, he was a director at Clarksons, the worlds leading provider of
integrated shipping services listed on the London Stock Exchange, where he was responsible for the
overall development and implementation of the firms container business strategy for the Asia Pacific
region. Mr. Hansen spent 3 years in Shanghai establishing Clarksons container footprint in the region.
Before joining Clarksons, Mr. Hansen worked for the Danish ship owning group, Knud I. Larsen (KIL)
where he held positions in the technical and commercial departments from 1995 to 1997 and was a
regional representative for KIL Singapore Pte. Ltd. from 1998 to 2000. Mr. Hansen serves as a non-
executive director of The Shipowners Mutual Strike Insurance Association and is elected vice-chairman of
Singapore Shipping Associations International Committee. He is also a member of the Singapore Institute
of Directors. Mr. Hansen holds a certificate in Maritime Law from Copenhagen Business School.
Mr. Gerard Low Shao Khang has been the chief financial officer of the Trustee-Manager since
15 February 2011. He has more than 20 years experience in business, investments, operations and
financial management across a wide range of industries. Before joining the Trustee-Manager, Mr. Low
was owner and managing partner of Berioza Associates, a provider of outsourced chief financial officer
and corporate advisory services. Between 2005 and 2008, he was group chief financial officer and
executive director at Delifrance Asia group, where he oversaw the financial reporting, corporate planning
and treasury management of the entire group. Before Delifrance, he spent close to a decade at Prudential
Asset Management Asia Limited (PAMA), one of the earliest private equity firms in Asia, where he was
responsible for direct investments and post-investment monitoring. Mr. Low also represented PAMA on
the boards of several investee companies. He started his career in audit at KPMG. Mr. Low graduated
from Singapores Nanyang Technological University with a Bachelor of Accountancy degree. He is a
Certified Public Accountant, a holder of the Chartered Financial Analyst designation, and a member of
the Singapore Institute of Directors.
86
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets out the Groups consolidated statement of financial position as at and for the
financial years ended 31 December 2010 (FY2010), 31 December 2011 (FY2011) and 31 December
2012 (FY2012) and the Groups unaudited first half financial statements as at and for the nine months
ended 30 September 2012 (9 Months 2012 or 9M2012) and 30 September 2013 (9 Months 2013
or 9M2013). The selected consolidated financial data for FY 2010, FY 2011 and FY 2012 in the table
below are derived from the historical consolidated financial statements of the Group, which have been
audited by the independent auditors, PricewaterhouseCoopers LLP. The audited financial statements of
the Group have been drawn up in accordance with the International Financial Reporting Standards. The
results of the Group for 9M2013 should not be considered indicative of the actual results of the Group as
of and for the financial year ending 31 December 2013.
Consolidated Income Statement for FY2010, FY2011, FY2012, 9 Months 2012 and 9 Months 2013
Audited Audited Audited Unaudited Unaudited
FY2010 FY2011 FY2012 9 Months 9 Months
2012 2013
US$000 US$000 US$000 US$000 US$000
Revenue 147,014 149,466 144,294 108,011 107,116
Other income 8,954 6,406 6,807 5,186 4,793
Other gains/(losses) - net ^ 85 73 (62) (67) 111
Write-back of/(provision for) vessel impairment 7,298 2,850 (4,521) 0 0
Depreciation (37,199) (37,868) (37,661) (28,247) (28,211)
Impairment of goodwill - (4,097) (2,070) 0 0
Amortisation of favorable charter contracts (512) (511) (512) (384) (384)
Vessel operating expenses (31,724) (33,048) (35,412) (26,621) (27,090)
Trustee-Manager fee (2,955) (3,035) (3,070) (2,298) (2,348)
Other trust expenses 322 (655) (619) (468) (482)
Transaction fees (1,408) - - - (148)
Compensation expense (64,000) - - - -
Finance expenses ^ (54,428) (39,251) (39,555) (29,734) (21,835)
(Loss)/profit before income tax (28,553) 40,330 27,619 25,378 31,522
Income tax (expense)/credit - (4) 4 4 0
Net (loss)/profit after income tax (28,553) 40,326 27,623 25,382 31,522
Distribution per unit (US cents) 2.31 2.40 2.40 1.80 1.50
(Loss)/earnings per Unit based on the weighted
average number of Units in issue (US cents)
Basic (5.62)* 7.93* 5.43* 4.99* 4.74
Diluted ^^ (5.62)* 6.02* 4.21* 3.84* 3.89
^ FY2010 and FY2011: Comparative figures have been reclassified within Other gains/(losses) net and Finance expenses to
conform to the changes in FY2012s presentation. The reclassification has been made to better reflect the changes in fair value
on the cash flow hedges and changes in fair value on ineffective portions of interest rate swaps. The restatement of the figures for
FY2010 is as follows:
* Restated to take into account effects of the rights issue.
^^ Based on the assumption that the maximum number of units of 181,263,067 will be issued. The gain/(loss) on fair value of the
derivative component of the convertible loan was deducted/added back and the interest expense on the convertible loan was added
back to the EPU computation to arrive at the diluted EPU.
As restated
As previously
disclosed
FY2010 FY2010
Consolidated Income Statement US$000 US$000
Other gains/(losses) net 85 (5,279)
Finance expenses (54,428) (49,064)
87
Statement of financial position as at 31 December 2010, 31 December 2011, 31 December 2012 and
30 September 2013
Audited Audited Audited Unaudited
As at As at As at As at
31/12/2010 31/12/2011 31/12/2012 30/09/2013
US$000 US$000 US$000 US$000
ASSETS
Current assets
Cash and cash equivalents 49,101 55,321 57,168 57,836
Trade and other receivables 288 836 679 1,985
Inventories 2,751 3,142 2,462 2,268
Prepayments 3 24 23 24
Total current assets 52,143 59,323 60,332 62,113
Non-current assets
Vessels 1,068,336 1,035,763 997,178 971,927
Intangible assets 49,677 45,069 42,487 42,103
Other non-current assets 453 - - -
Total non-current assets 1,118,466 1,080,832 1,039,665 1,014,030
Total assets 1,170,609 1,140,155 1,099,997 1,076,143
LIABILITIES
Current liabilities
Trade and other payables 3,037 3,604 3,296 2,947
Advanced charter hire received 3,786 2,166 4,726 3,174
Secured bank loans 32,877 43,167 69,580 48,765
Derivative financial instruments 855 16,679 6,299 1,098
Total current liabilities 40,555 65,616 83,901 55,984
Non-current liabilities
Other payables 1,785 892 - -
Deferred income from charter contracts 27,220 21,475 15,730 11,422
Secured bank loans 636,474 576,966 498,822 406,043
Convertible loan 48,808 49,198 49,595 50,417
Derivative financial instruments 63,743 38,478 28,597 19,191
Total non-current liabilities 778,030 687,009 592,744 487,073
Total liabilities 818,585 752,625 676,645 543,057
NET ASSETS 352,024 387,530 423,352 533,086
UNITHOLDERS FUNDS
Units in issue 431,435 431,435 431,435 512,086
Unit issue costs (10,122) (10,122) (10,122) (12,024)
Hedging reserve (52,293) (46,945) (28,578) (18,947)
(Accumulated losses)/distributable income (16,996) 13,162 30,617 51,971
Total Unitholders funds 352,024 387,530 423,352 533,086
88
Financial Review of Results of Operations
9M2013 Versus 9M2012
Revenue
The Group operates a fleet of sixteen containerships, which are all chartered out on fixed-rate time
charters with an average remaining charter period of 2.5 years.
For the nine months ended 30 September 2013, the Group achieved a utilisation rate of 99.9%. There
were 47.8 days of scheduled off-hire for dry-docking and 11.2 days of unscheduled off-hire. The Group
reported revenue of US$107.1 million for 9M2013, a decline of 0.83% as compared to US$108.0 million
reported in 9M2012.
Other income
Other income of US$4.8 million in 9M2013 comprising mainly amortisation of deferred income from
charter contracts (non-cash in nature) was US$0.4 million (7.58%) lower than US$5.2 million reported in
9M2012, due to a one-off recovery of an insurance claim in 9M2012.
Depreciation
There were no material changes in depreciation between 9M2013 and 9M2012.
Amortisation of favourable charter contracts
Favourable charter contracts relate to the excess of contracted charter income over the market value
of similar contracts that were initially recognised and subsequently carried at cost. The amortisation of
favourable charter contracts is a non-cash item. There was no change in 9M2013 and 9M2012.
Vessel operating expenses
Vessel operating expenses comprising vessels fixed operating expenses, lubricant oil expense and vessel
management fees, increased by 1.76% to US$27.1 million in 9M2013 from US$26.6 million in 9M2012.
The increase of US$0.5 million was due to a contractual increase of fixed operating expenses and vessel
management fees that took effect from 1 January 2013. This was offset by a reduction in bunker expense
arising from Kaethe C. Rickmers one-time positioning voyage to her new charter that was incurred in
9M2012 but not in 9M2013.
Trustee-Manager fee
There were no material changes in Trustee-Manager fee between 9M2013 and 9M2012.
Transaction fees
Transaction fees of US$0.1 million was incurred in 9M2013 for legal and professional fees relating to loan
documentation amendments.
Finance expenses
Finance expenses decreased from US$29.7 million in 9M2012 to US$21.8 million in 9M2013. The
decrease was due to reduced outstanding bank loans balances and expiry of interest rate swaps
contracts, offset by a one-time incurrence of debt processing fee of US$1.8 million paid to lending banks
to secure the extended value-to-loan covenant waiver.
Profit after income tax
Overall, the Group recorded a net profit after tax of US$31.5 million in 9M2013 compared to a profit of
US$25.4 million in 9M2012.
FY2012 Versus FY2011
Revenue
The Group operated a fleet of 16 containerships, which were all chartered out on fixed-rate time charters
during FY2012. The fleet had an average remaining charter period of 3.2 years as at 31 December 2012.
89
For the full year ended 31 December 2012, the Group achieved a vessel utilisation rate of 98.9% with
37.6 days of unscheduled off-hire and 29.4 days arising from the vessel M.V. Kaethe C. Rickmers being
idle before her employment with Mediterranean Shipping Company on 25 March 2012. Total revenue
generated in FY2012 was US$144.3 million, a decline of 3.46% compared to FY2011. The decrease was
mainly attributable to the vessel M.V. Kaethe C. Rickmers contracting a lower fixed net daily charter rate
of US$7,600 that took effect from 25 March 2012.
Other income
Other income comprising mainly interest income and amortisation of deferred income from charter
contracts (non-cash item) increased slightly by 6.26% from US$6.41 million to US$6.81 million in FY2012.
The increase was mainly due to an increase in interest income and insurance income in FY2012.
Other gains/(losses) net
Other gains/(losses) changed slightly from a gain of US$0.07 million in FY2011 to a loss of US$0.06
million in FY2012 due to changes in fair value of the derivative component of the Convertible Loan (non-
cash item).
Depreciation
There were no material changes in depreciation between FY2011 and FY2012.
Write-back of/(provision for) vessel impairment
During the financial year, a provision for vessel impairment of US$4.52 million (non-cash item) was
applied to the vessel M.V. Kaethe C. Rickmers to reflect the lower fixed net daily charter rate of US$5,700
for a further period of six months from the current charter that expired in March 2013. This is in contrast
with the write-back of vessel impairment of US$2.85 million for the same vessel in the prior year when the
fixed net daily charter rate was US$23,888.
Impairment of goodwill
The Group conducts regular assessments of its fleet for vessel and goodwill impairment. In FY2012,
a weighted average cost of capital (WACC) of 7.13% was adopted and an impairment of goodwill of
US$2.07 million (non-cash item) was made for three subsidiaries as the respective vessels carrying value
exceeded its recoverable amount.
In FY2011, an impairment of goodwill of US$4.10 million was made (based on a WACC of 7.04%) for a
subsidiary as its carrying value exceeded its recoverable amount.
Amortisation of favourable charter contracts
Favourable charter contracts relate to the excess of contracted charter income over the market value
of similar contracts that were initially recognised and subsequently carried at cost. The amortisation of
favourable charter contracts is a non-cash item. There were no material changes between FY2011 and
FY2012.
Vessel operating expenses
Vessel operating expenses which include fixed vessel operating expenses, lubricant oil expense and
vessel management fees, increased by 7.15% from US$33.05 million in FY2011 to US$35.41 million
in FY2012. The increase was due to (i) a contractual increase of fixed operating expenses and vessel
management fees that took effect from 1 January 2012, (ii) additional anti-piracy related expenses and
insurance, (iii) higher lubricant oil prices and (iv) bunker consumed during off-hire.
Trustee-Manager fee
There were no material changes in the Trustee-Manager fee between FY2011 and FY2012.
Other trust expenses
Other trust expenses comprising professional fees, audit, secretarial, investor relations and sundry
expenses decreased by 5.50% from US$0.66 million in FY2011 to US$0.62 million in FY2012 due to less
professional fees incurred.
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Transaction fees
No transaction fees were incurred in FY2011 and FY2012.
Compensation expense
No compensation expense was incurred in FY2011 and FY2012.
Finance expenses
Finance expenses in FY2012 were US$39.56 million, a slight increase of US$0.31 million from US$39.25
million in FY2011 due to higher fair value losses on interest rate swaps.
Net (loss)/profit after income tax
The Group recorded a net profit after income tax of US$27.62 million in FY2012 compared to a net profit
after income tax of US$40.33 million in FY2011 mainly due to the reduction of revenue, impairment of
vessel and goodwill, increase in vessel operating expenses, and increase in finance expenses.
FY2011 Versus FY2010
Revenue
The Group operated a fleet of 16 containerships, of which 15 were on long-term fixed-rate time charters
and one on a one-year time charter during FY2011. For the full year ended 31 December 2011, the Group
achieved a vessel utilisation rate of 99.9%. Total revenue generated in FY2011 was US$149.47 million, an
increase of 1.67% compared to FY2010. The increase was mainly attributable to the vessel M.V. Kaethe
C. Rickmers contracting a higher fixed net daily charter rate of US$23,888 that took effect from 25 March
2011 compared to the lower fixed net daily charter rate of US$8,288 contracted from 25 March 2010.
Other income
Other income comprising mainly interest income and amortisation of deferred income from charter
contracts (non-cash item) decreased by 28.46% from US$8.95 million in FY2010 to US$6.41 million in
FY2011. The decrease was due mainly to the accelerated amortisation of Kaethe C. Rickmers deferred
income from charter contract arising from its early redelivery in the first quarter of FY2010.
Other gains/(losses) net
Other gains decreased by 22.2% from US$0.09 million in FY2010 to US$0.07 million in FY2011 mainly
due to net currency translation loss.
Depreciation
There were no material changes in depreciation between FY2010 and FY2011.
Write-back of/(provision for) vessel impairment
In FY2011, a write-back of vessel impairment of US$2.85 million (FY2010: US$7.30 million) was taken as
the vessel M.V. Kaethe C. Rickmers started operating at a higher fixed net daily charter rate of US$23,888
from 25 March 2011 compared to the lower fixed net daily charter rate of US$8,288 from 25 March 2010.
Impairment of goodwill
The Group conducts regular assessments of its fleet for vessel and goodwill impairment. As at 30 June
2011, a higher WACC of 7.52% was adopted as compared to 31 December 2011 as a result of changes
in certain market base parameters. Consequently, an impairment of goodwill of US$4.10 million was
made for a subsidiary as its carrying value exceeded its recoverable amount as at 30 June 2011. As at
31 December 2011 and 31 December 2010, no impairment was required.
Amortisation of favourable charter contracts
Favourable charter contracts relate to the excess of contracted charter income over the market value
of similar contracts that were initially recognised and subsequently carried at cost. The amortisation of
favourable charter contracts is a non-cash item. There were no material changes in FY2010 and FY2011.
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Vessel operating expenses
Vessel operating expenses which include fixed vessel operating expenses, lubricant oil expense and
vessel management fees, increased by 4.17% from US$31.72 million in FY2010 to US$33.05 million
in FY2011. The increase was due to (i) a contractual increase of fixed operating expenses and vessel
management fees that took effect from 1 January 2011, (ii) additional anti-piracy related expenses and
insurance, and (iii) higher lubricant oil prices.
Trustee-Manager fee
There were no material changes in the Trustee-Manager fee between FY2010 and FY2011.
Other trust expenses
Other trust expenses comprising professional fees, audit, secretarial, investor relations and sundry
expenses were US$0.66 million in FY2011. In FY2010, other trust expenses recorded a credit balance
of US$0.32 million due to a reversal of provisions that were no longer required with the completion of the
loan restructuring and approval of the Settlement and Convertible Loan Agreement by Unitholders on
6 September 2010.
Transaction fees
A transaction fee of US$1.41 million was incurred in FY2010 for legal and professional fees in relation to
the finalisation of the Settlement and Convertible Loan Agreement with Polaris to discharge the Group of
its obligation to purchase seven vessels and finalisation of the agreement with its lending banks to revise
the tenure of its bank loans and waive the value-to-loan covenants for up to three years. No transaction
fees were incurred in FY2011.
Compensation expense
Compensation expense of US$64.00 million was incurred in FY2010 to discharge the Group from its
obligation to purchase seven vessels of which US$15.00 million was settled in cash and US$49.00 million
was settled by the issuance of an interest-bearing convertible loan. No compensation expense was
incurred in FY2011.
Finance expenses
Finance expenses in FY2011 were US$39.25 million, a reduction of US$15.18 million from US$54.43
million in FY2010. The decrease was due to (i) US$5.40 million of loan restructuring fee incurred in
FY2010 in relation to the revision of the terms of the loan facilities, (ii) write-off of prepaid finance cost of
US$1.10 million due to cancellation of two facilities in FY2010 and (iii) US$9.30 million due to fair value
gains on interest rate swaps, set off against the increase in cost of borrowing of US$0.62 million.
Net (loss)/profit after income tax
The Group recorded a net profit after tax of US$40.33 million in FY2011 compared to a net loss of
US$28.55 million in FY2010, mainly due to the abovementioned compensation expense.
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PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS
The net proceeds arising from the issue of each tranche of Notes under the Programme (after deducting
issue expenses) will be used to finance capital expenditures and for general corporate purposes, including
refinancing of borrowings and financing of working capital requirements of the Trust and the subsidiaries
of the Trust, and/or as set forth in the Pricing Supplement applicable to such Notes.
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CLEARING AND SETTLEMENT
Clearance and Settlement under the Depository System
In respect of Notes which are accepted for clearance by CDP in Singapore, clearance will be effected
through an electronic book-entry clearance and settlement system for the trading of debt securities
(Depository System) maintained by CDP. Notes that are to be listed on the SGX-ST may be cleared
through CDP.
CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of
Singapore and acts as a depository and clearing organisation. CDP holds securities for its accountholders
and facilitates the clearance and settlement of securities transactions between accountholders through
electronic book-entry changes in the securities accounts maintained by such accountholders with CDP.
In respect of Notes which are accepted for clearance by CDP, the entire issue of the Notes is to be held
by CDP in the form of a Global Note for persons holding the Notes in securities accounts with CDP
(Depositors). Delivery and transfer of Notes between Depositors is by electronic book-entries in the
records of CDP only, as reflected in the securities accounts of Depositors. Although CDP encourages
settlement on the third business day following the trade date of debt securities, market participants may
mutually agree on a different settlement period if necessary.
Settlement of over-the-counter trades in the Notes through the Depository System may only be effected
through certain corporate depositors (Depository Agents) approved by CDP under the Companies Act
to maintain securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves
and their clients. Accordingly, Notes for which trade settlement is to be effected through the Depository
System must be held in securities sub-accounts with Depository Agents. Depositors holding the Notes in
direct securities accounts with CDP, and who wish to trade Notes through the Depository System, must
transfer the Notes to be traded from such direct securities accounts to a securities sub-account with a
Depository Agent for trade settlement.
CDP is not involved in money settlement between Depository Agents (or any other persons) as CDP is
not a counterparty in the settlement of trades of debt securities. However, CDP will make payment of
interest and repayment of principal on behalf of issuers of debt securities.
Although CDP has established procedures to facilitate transfer of interests in the Notes in global form
among Depositors, it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Issuer, the Principal Paying Agent or any
other agent will have the responsibility for the performance by CDP of its obligations under the rules and
procedures governing its operations.
Clearance and Settlement under Euroclear and/or Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg each holds securities for their account holders and facilitates
the clearance and settlement of securities transactions between their respective account holders through
electronic book-entry changes in the accounts of such account holders, thereby eliminating the need
for physical movements of certificates and any risks from lack of simultaneous transfer. Euroclear and
Clearstream, Luxembourg provide to their respective account holders, among other things, services for
safekeeping, administration, clearance and settlement of internationally-traded securities and securities
lending and borrowing. Euroclear and Clearstream, Luxembourg each also deals with domestic securities
markets in several countries through established depositary and custodial relationships. The respective
systems of Euroclear and Clearstream, Luxembourg have established an electronic bridge between their
two systems which enables their respective account holders to settle trades with one another. Euroclear
and Clearstream, Luxembourg account holders are financial institutions throughout the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain
other organisations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to other
financial institutions, such as banks, brokers, dealers and trust companies which clear through or maintain
a custodial relationship with a Euroclear or Clearstream, Luxembourg account holder, either directly or
indirectly.
94
An account holders overall contractual relations with either Euroclear or Clearstream, Luxembourg are
governed by the respective rules and operating procedures of Euroclear or Clearstream, Luxembourg and
any applicable laws. Both Euroclear and Clearstream, Luxembourg act under those rules and operating
procedures only on behalf of their respective account holders, and have no record of, or relationship
with, persons holding any interests through their respective account holders. Distributions of principal
with respect to book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg
will be credited, to the extent received by the Principal Paying Agent or, as the case may be, the Non-
CDP Paying Agent, to the cash accounts of the relevant Euroclear or Clearstream, Luxembourg account
holders in accordance with the relevant systems rules and procedures.
95
SINGAPORE TAXATION
The statements below are general in nature and are based on certain aspects of current tax laws in
Singapore and administrative guidelines and circulars issued by the MAS in force as at the date of
this Information Memorandum and are subject to any changes in such laws, administrative guidelines
or circulars, or the interpretation of those laws, guidelines or circulars, occurring after such date, which
changes could be made on a retroactive basis. These laws, guidelines and circulars are also subject
to various interpretations and the relevant tax authorities or the courts could later disagree with
the explanations or conclusions set out below. Neither these statements nor any other statements
in this Information Memorandum are intended or are to be regarded as advice on the tax position of
any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on
any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The
statements made herein do not purport to be a comprehensive or exhaustive description of all the tax
considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes
and do not purport to deal with the tax consequences applicable to all categories of investors, some of
which (such as dealers in securities or financial institutions in Singapore which have been granted the
relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates. Prospective holders
of the Notes are advised to consult their own professional tax advisers as to the Singapore or other tax
consequences of the acquisition, ownership of or disposal of the Notes, including, in particular, the effect
of any foreign, state or local tax laws to which they are subject. It is emphasised that none of the Issuer,
the Arrangers and any other persons involved in the Programme accepts responsibility for any tax effects
or liabilities resulting from the subscription for, purchase, holding or disposal of the Notes.
Interest and Other Payments
Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments are deemed
to be derived from Singapore:
(a) any interest, commission, fee or any other payment in connection with any loan or indebtedness
or with any arrangement, management, guarantee, or service relating to any loan or indebtedness
which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent
establishment in Singapore (except in respect of any business carried on outside Singapore
through a permanent establishment outside Singapore or any immovable property situated outside
Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or
(b) any income derived from loans where the funds provided by such loans are brought into or used in
Singapore.
Such payments, where made to a person not known to the paying party to be a resident in Singapore for
tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld
for such payments (other than those subject to the 15.0 per cent. final withholding tax described below)
to non-resident persons (other than non-resident individuals) is currently 17.0 per cent. The applicable
rate for non-resident individuals is currently 20.0 per cent. However, if the payment is derived by a person
not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or
exercised by such person in Singapore and is not effectively connected with any permanent establishment
in Singapore of that person, the payment is subject to a final withholding tax of 15.0 per cent. The rate of
15.0 per cent. may be reduced by applicable tax treaties.
However, certain Singapore-sourced investment income derived by individuals from financial instruments
is exempt from tax, including:
(a) interest from debt securities derived on or after 1 January 2004;
(b) discount income (not including discount income arising from secondary trading) from debt securities
derived on or after 17 February 2006; and
(c) prepayment fee, redemption premium and break cost from debt securities derived on or after
15 February 2007,
96
except where such income is derived through a partnership in Singapore or is derived from the carrying
on of a trade, business or profession.
In addition, as the Programme as a whole is arranged by DBS Bank Ltd. and The Hongkong and
Shanghai Banking Corporation Limited, Singapore Branch, each of which is a Financial Sector Incentive
(Bond Market) (FSI-BM) Company (as defined in the ITA), any tranche of the Notes (the Relevant
Notes) issued as debt securities under the Programme during the period from the date of this
Information Memorandum to 31 December 2013 and, pursuant to the MAS Circular FSD Cir 02/2013
entitled Extension and Refinement of Tax Concessions for Promoting the Debt Market issued by the
MAS on 28 June 2013 (the MAS Circular), during the period from 1 January 2014 to 31 December
2018, would be qualifying debt securities (QDS) for the purposes of the ITA, to which the following
treatment shall apply:
(i) subject to certain prescribed conditions having been fulfilled (including the submission of a return
on debt securities in respect of the Relevant Notes in the prescribed format to the MAS and such
other relevant authorities as may be prescribed within such period as the relevant authorities may
specify and such other particulars in connection with the Relevant Notes as the relevant authorities
may require, and the inclusion by the Issuer in all offering documents relating to the Relevant Notes
of a statement to the effect that where interest, discount income, prepayment fee, redemption
premium or break cost from the Relevant Notes is derived by a person who is not resident in
Singapore and who carries on any operation in Singapore through a permanent establishment in
Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person
acquires the Relevant Notes using funds from that persons operations through the Singapore
permanent establishment), interest, discount income (not including discount income arising
from secondary trading), prepayment fee, redemption premium and break cost (collectively, the
Qualifying Income) from the Relevant Notes, paid by the Issuer and derived by a holder who is
not resident in Singapore and who (aa) does not have any permanent establishment in Singapore
or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but
the funds used by that person to acquire the Relevant Notes are not obtained from such persons
operation through a permanent establishment in Singapore, are exempt from Singaporean tax;
(ii) subject to certain conditions having been fulfilled (including the submission of a return on debt
securities in respect of the Relevant Notes in the prescribed format to the MAS and such other
relevant authorities as may be prescribed within such period as the relevant authorities may
specify and such other particulars in connection with the Relevant Notes as the relevant authorities
may require), Qualifying Income from the Relevant Notes paid by the Issuer and derived
by any company or body of persons (as defined in the ITA) in Singapore is subject to tax at a
concessionary rate of 10.0 per cent. (except for holders of the relevant Financial Sector Incentive(s)
who may be taxed at different rates); and
(iii) subject to:
(aa) the Issuer including in all offering documents relating to the Relevant Notes a statement
to the effect that any person whose interest, discount income, prepayment fee, redemption
premium or break cost derived from the Relevant Notes is not exempt from tax shall include
such income in a return of income made under the ITA; and
(bb) the submission of a return on debt securities in respect of the Relevant Notes in the
prescribed format to the MAS and such other relevant authorities as may be prescribed
within such period as the relevant authorities may specify and such other particulars in
connection with the Relevant Notes as the relevant authorities may require,
payments of Qualifying Income derived from the Relevant Notes are not subject to withholding of
tax by the Issuer.
The MAS Circular further states that, with effect from 1 January 2014, the relevant arrangement
requirements for QDS issued under a programme from 1 January 2014 to 31 December 2018 (including
programmes arranged prior to 1 January 2014) include that the programme must be wholly arranged
by Financial Sector Incentive Capital Market, Financial Sector Incentive Standard Tier or FSI-BM
companies.
97
Notwithstanding the foregoing:
(A) if during the primary launch of any tranche of Relevant Notes, the Relevant Notes of such tranche
are issued to fewer than four persons and 50.0 per cent. or more of the issue of such Relevant
Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such
Relevant Notes would not qualify as QDS; and
(B) even though a particular tranche of Relevant Notes are QDS, if, at any time during the tenure of
such tranche of Relevant Notes, 50.0 per cent. or more of the issue of such Relevant Notes is
held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying
Income derived from such Relevant Notes held by:-
(i) any related party of the Issuer; or
(ii) any other person where the funds used by such person to acquire such Relevant Notes are
obtained, directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption or concessionary rate of tax as described above.
The term related party, in relation to a person, means any other person who, directly or indirectly,
controls that person, or is controlled, directly or indirectly, by that person, or where he and that other
person, directly or indirectly, are under the control of a common person.
The terms prepayment fee, redemption premium and break cost are defined in the ITA as follows:
prepayment fee, in relation to debt securities and qualifying debt securities, means any fee
payable by the issuer of the securities on the early redemption of the securities, the amount of
which is determined by the terms of the issuance of the securities;
redemption premium, in relation to debt securities and qualifying debt securities, means any
premium payable by the issuer of the securities on the redemption of the securities upon their
maturity; and
break cost, in relation to debt securities and qualifying debt securities, means any fee payable
by the issuer of the securities on the early redemption of the securities, the amount of which is
determined by any loss or liability incurred by the holder of the securities in connection with such
redemption.
References to prepayment fee, redemption premium and break cost in this Singapore tax disclosure
have the same meaning as defined in the ITA.
Notwithstanding that the Issuer is permitted to make payments of interest, discount income, prepayment
fee, redemption premium and break cost (i.e. the Qualifying Income) in respect of the Relevant Notes
without deduction or withholding for tax under Section 45 or Section 45A of the ITA, any person whose
interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income)
derived from the Relevant Notes is not exempt from tax is required to include such income in a return of
income made under the ITA.
Under the Qualifying Debt Securities Plus Scheme (QDS Plus Scheme), subject to certain conditions
having been fulfilled (including the submission of a return on debt securities in respect of the QDS in
the prescribed format to the MAS and such other relevant authorities as may be prescribed within such
period as the relevant authorities may specify and such other particulars in connection with the QDS as
the relevant authorities may require), income tax exemption is granted on Qualifying Income derived by
any investor from QDS (excluding Singapore Government Securities) which:-
(a) are issued during the period from 16 February 2008 to 31 December 2013 and, pursuant to the
MAS Circular, during the period from 1 January 2014 to 31 December 2018;
(b) have an original maturity of not less than 10 years;
98
(c) cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue;
and
(d) cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date.
However, even if a particular tranche of the Relevant Notes are QDS which qualify under the QDS Plus
Scheme, if, at any time during the tenure of such tranche of Relevant Notes, 50.0 per cent. or more of the
issue of such Relevant Notes is held beneficially or funded, directly or indirectly, by any related party(ies)
of the Issuer, Qualifying Income from such Relevant Notes derived by:
(aa) any related party of the Issuer; or
(bb) any other person where the funds used by such person to acquire such Relevant Notes are
obtained, directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption under the QDS Plus Scheme as described above.
The MAS Circular states that, with effect from 28 June 2013, the QDS Plus Scheme will be refined to
allow QDS with certain standard early termination clauses (as prescribed in the MAS Circular) to
qualify for the QDS Plus Scheme at the point of issuance of such debt securities. The MAS has also
clarified that if such debt securities are subsequently redeemed prematurely pursuant to such standard
early termination clauses before the 10
th
year from the date of issuance of such debt securities, the tax
exemption granted under the QDS Plus Scheme to Qualifying Income accrued prior to such redemption
will not be clawed back. Under such circumstances, the QDS Plus status of such debt securities will be
revoked prospectively for such outstanding debt securities (if any), and holders thereof may still enjoy the
tax benefits under the QDS scheme if the QDS conditions continue to be met.
The MAS has stated that, notwithstanding the above, QDS with embedded options with economic value
(such as call, put, conversion or exchange options which can be triggered at specified prices or dates and
are built into the pricing of such debt securities at the onset) which can be exercised within ten years from
the date of issuance of such debt securities will continue to be excluded from the QDS Plus Scheme from
such date of issuance.
Capital Gains
Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable
in Singapore. However, any gains derived by any person from the sale of the Notes which are gains
from any trade, business, profession or vocation carried on by that person, if accruing in or derived from
Singapore, may be taxable as such gains are considered revenue in nature.
Holders of the Notes who apply or who are required to apply Singapore Financial Reporting Standard
39 (FRS 39) may, for Singaporean income tax purposes, be required to recognise gains or losses (not
being gains or losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with
FRS 39. Please see the section below on Adoption of FRS 39 Treatment for Singapore Income Tax
Purposes for further details.
Adoption of FRS 39 Treatment for Singaporean Income Tax Purposes
The Inland Revenue Authority of Singapore has issued a circular entitled Income Tax Implications Arising
from the Adoption of FRS 39 - Financial Instruments: Recognition and Measurement (the FRS 39
Circular). The ITA has since been amended to give effect to the FRS 39 Circular.
The FRS 39 Circular generally applies, subject to certain opt-out provisions, to taxpayers who are
required to comply with FRS 39 for financial reporting purposes.
Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult
their own accounting and tax advisers regarding the Singaporean income tax consequences of their
acquisition, holding or disposal of the Notes.
Estate Duty
Singapore has abolished estate duty with respect to all deaths occurring on or after 15 February 2008.
99
SUBSCRIPTION, PURCHASE AND DISTRIBUTION
The Programme Agreement provides for Notes to be offered from time to time through one or more
Dealers. The Programme Agreement further provides for the resignation of existing Dealers and
the appointment of additional Dealers. The price at which a Series or Tranche will be issued will be
determined prior to its issue between the Issuer and the relevant Dealer(s). The Issuer may also from
time to time agree with the relevant Dealer(s) that the Issuer may pay certain third party commissions
(including, without limitation, rebates to bank investors in the Notes). The obligations of the Dealers under
the Programme Agreement will be subject to certain conditions set out in the Programme Agreement.
Each Dealer (acting as principal) will subscribe for or procure subscribers for Notes from the Issuer
pursuant to the Programme Agreement.
Selling Restrictions
General
The selling restrictions below may be modified or supplemented from time to time by the agreement of
the Issuer and the Relevant Dealer(s). Any such modification or supplement will be set out in a Pricing
Supplement or in a supplement to this Information Memorandum. The Programme Agreement provides
that the restrictions relating to any specific jurisdiction (set out below) shall be deemed to be modified
to the extent (if at all) of any change(s) in, or change(s) in official interpretation of, applicable laws and
regulations governing any of such restrictions relating to any specific jurisdiction.
Each Dealer understands that no action has been taken in any jurisdiction that would permit a public
offering of any of the Notes, or possession or distribution of this Information Memorandum or any
other document or any Pricing Supplement, in any country or jurisdiction where action for that purpose
is required. Each Dealer has agreed that it will comply with all applicable securities laws, regulations
and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers Notes or
any interest therein or rights in respect thereof or has in its possession or distributes, this Information
Memorandum, any other document relating to the Notes or the Programme, or any Pricing Supplement.
United States
The Notes have not been and will not be registered under the Securities Act, and the Notes may not
be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in
certain transactions exempt from the registration requirements of the Securities Act. Terms used in this
paragraph have the meanings given to them by Regulation S under the Securities Act (Regulation S).
Each Dealer has agreed that, and each further Dealer appointed under the Programme will be required to
agree that, except as permitted by the Programme Agreement, it will not offer, sell or deliver the Notes, (i)
as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution
of an identifiable tranche of which such Notes are a part, as determined and certified to the Principal
Paying Agent or, as the case may be, the Non-CDP Paying Agent by such Dealer (or, in the case of
an identifiable tranche of Notes sold to or through more than one Dealer, by each of such Dealers with
respect to Notes of an identifiable tranche purchased by or through it, in which case the Principal Paying
Agent or, as the case may be, the Non-CDP Paying Agent shall notify such Dealer when all such Dealers
have so certified), within the United States or to, or for the account or benefit of, U.S. persons, and it will
have sent to each Dealer to which it sells Notes during the distribution compliance period a confirmation
or other notice setting out the restrictions on offers and sales of the Notes within the United States or to,
or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to
them by Regulation S.
In addition, until 40 days after the commencement of the offering of any identifiable tranche of Notes, an
offer or sale of Notes within the United States by any dealer that is not participating in the offering of such
Notes may violate the registration requirements of the Securities Act.
In addition, each Dealer has agreed, and each further Dealer appointed under the Programme will
be required to agree, that Notes having a maturity of more than one year are subject to U.S. tax law
requirements and may not be offered, sold or delivered within the United States or to United States
persons, except in certain transactions permitted by U.S. tax regulations. Accordingly, Notes having a
maturity of more than one year will be issued in accordance with the provisions of U.S. Treasury
100
Regulation 1.163-5(c)(2)(i)(D) (or any successor regulation for purposes of Section 4701 of the United
States Internal Revenue Code), unless the relevant Pricing Supplement specifies that Notes will be issued
in accordance with the provisions of U.S. Treasury Regulation 1.163-5(c)(2)(i)(C) (or any successor
regulation for purposes of Section 4701 of the United States Internal Revenue Code). Terms used in
this paragraph have the meanings given to them by the U.S. Internal Revenue Code and regulations
thereunder.
Hong Kong
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will
be required to represent and agree, that:
(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any
Notes other than (a) to professional investors as defined in the Securities and Futures Ordinance
(Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances
which do not result in the document being a prospectus as defined in the Companies Ordinance
(Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that
Ordinance; and
(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in
its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Notes, which is directed at, or the contents of which are
likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than with respect to Notes which are or are intended to be
disposed of only to persons outside Hong Kong or only to professional investors as defined in the
Securities and Futures Ordinance and any rules made under that Ordinance.
Singapore
Each Dealer has acknowledged that this Information Memorandum has not been registered as a
prospectus with the MAS. Accordingly, each Dealer has represented and agreed that it has not offered
or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or
purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation
for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this
Information Memorandum or any other document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore
other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant
to Section 275(1), or to any person pursuant to Section 275(1A), and in accordance with the conditions
specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provision of the SFA.
Note:
Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which
is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or
more individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and
interest (howsoever described) in that trust shall not be transferred within six months after that corporation
or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any
person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
101
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and
Debentures) Regulations 2005 of Singapore.
Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations and
directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the Notes
or any interest therein or rights in respect thereof and the consequences arising from a contravention
thereof should consult his own professional adviser(s) and should make his own inquiries as to the laws,
regulations and directives in force or applicable in any particular jurisdiction at any relevant time.
102
APPENDIX I
GENERAL AND OTHER INFORMATION
INFORMATION ON DIRECTORS
1. The name and position of each of the Directors are set out below:
Name Position
Mr Bertram R. C. Rickmers Chairman and Non-Executive Director
Dr Ignace Van Meenen Non-Executive Director
Mr Lim How Teck Lead Independent Director
Mrs Lee Suet Fern Independent Director
Mr Raymundo A. Yu Jr. Independent Director
2. No Director is or was involved in any of the following events:
(a) a petition under any bankruptcy laws filed in any jurisdiction against such person or any
partnership in which he was a partner or any corporation of which he was a director or an
executive officer;
(b) a conviction of any offence, other than a traffic offence, or judgment, including findings in
relation to fraud, misrepresentation or dishonesty, given against him in any civil proceedings
in Singapore or elsewhere, or being named subject to any pending proceedings which
may lead to such a conviction or judgment, or so far as such person is aware, any criminal
investigation pending against him; or
(c) the subject of any order, judgment or ruling of any court of competent jurisdiction, tribunal
or government body, permanently or temporarily enjoining him from acting as an investment
adviser, dealer in securities, director or employee of a financial institution and engaging in
any type of business practice or activity.
4. The interests of the Directors and the substantial Unitholders in the Units as at the Latest
Practicable Date are as follows:
Directors
Direct Interest Deemed Interest
Number of
Units
% Number of
Units
%
Mr Bertram R. C. Rickmers
(1)
- - 280,458,000 33.10
Mr Lim How Teck 1,600,000 0.19 200,000 0.02
Mrs Lee Suet-Fern 900,000 0.11 - -
Substantial Unitholders
Direct Interest Deemed Interest
Number of
Units
% Number of
Units
%
Mr Bertram R. C. Rickmers
(1)
- - 280,458,000 33.10
Rickmers Holding
(2)
- - 280,458,000 33.10
Polaris 132,364,000 15.62 - -
Rickmers Second
(3)
148,094,000 17.48 132,364,000 15.62
Capital Group
(4)
- - 54,840,000 6.47
(1) Mr. Bertram R.C. Rickmers holds 100% of Rickmers Holding. He is therefore deemed to be interested in the Units
held by Rickmers Holding.
103
(2) Rickmers Holding is the holding company of Rickmers Second, which in turn is the holding company of Polaris.
Rickmers Holding is therefore deemed to be interested in the Units held by Rickmers Second and Polaris .
(3) Rickmers Second is the holding company of Polaris and is therefore deemed to be interested in the Units held by
Polaris.
(4) Capital Group is deemed to be interested in the Units held by one or more of its affiliates.
SHARE CAPITAL
5. As at the date of this Information Memorandum, there is only one class of ordinary units in the
Trust. The rights and privileges attached to the Units of the Trust are stated in the RM Trust Deed.
6. The Units in issue of the Trust as at the Latest Practicable Date are as follows:
Unit Designation Number of Units in Issue
Common Units 847,350,000
BORROWINGS
7. Save as disclosed in Appendix IV , the Group had as at 30 September 2013 no other borrowings
or indebtedness in the nature of borrowings including bank overdrafts and liabilities under
acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire
purchase commitments, guarantees or other material contingent liabilities.
WORKING CAPITAL
8. The Directors are of the opinion that, after taking into account the present banking facilities and the
net proceeds of the issue of the Notes, the Issuer and the Trust will have adequate working capital
for their present requirements.
CHANGES IN ACCOUNTING POLICIES
9. There has been no significant change in the accounting policies of the Group since its audited
financial accounts for the financial year ended 31 December 2012.
LITIGATION
10. There are no legal or arbitration proceedings pending or threatened against the Issuer, the Trust
or any of the subsidiaries of the Trust the outcome of which may have or have had during the 12
months prior to the date of this Information Memorandum a material adverse effect on the financial
position of the Issuer, the Trust or the Group.
MATERIAL ADVERSE CHANGE
11. There has been no material adverse change in the financial condition or business of the Group
since 30 September 2013.
CONSENT
12. Each of PricewaterhouseCoopers LLP, Maersk Broker K/S and Clarkson Research Services Limited
has given and has not withdrawn its written consent to the issue of this Information Memorandum
with the references herein to its name and, where applicable, reports in the form and context in
which they appear in this Information Memorandum.
DOCUMENTS AVAILABLE FOR INSPECTION
13. Copies of the following documents may be inspected at the registered office of the Issuer at 8
Shenton Way #42-03, Singapore 068811 during normal business hours for a period of six months
from the date of this Information Memorandum:
(a) the Memorandum and Articles of Association of the Issuer;
104
(b) the RM Trust Deed;
(c) the Notes Trust Deed;
(d) the letters of consent referred to in paragraph 12 above; and
(e) the audited financial statements of the Group for the financial years ended 31 December
2011 and 31 December 2012 and the unaudited financial statements announcement of the
Group for the third quarter ended 30 September 2013.
FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE NOTES TRUSTEE
14. The functions, rights and obligations of the Notes Trustee are set out in the Notes Trust Deed.
105
APPENDIX II
AUDITED FINANCIAL STATEMENTS OF RICKMERS MARITIME AND ITS
SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011
The information in this Appendix II has been reproduced from the annual report of Rickmers Maritime for
the financial year ended 31 December 2011 and has not been specifically prepared for inclusion in this
Information Memorandum. Investors should read the consolidated financial data in conjunction with the
related notes.
106








RICKMERS MARITIME
(Registered in Singapore. Business Trust Registration Number: 2007003)
AND ITS SUBSIDIARIES


ANNUAL REPORT
For the financial year ended 31 December 2011



























107




RICKMERS MARITIME
(Registered in Singapore)
AND ITS SUBSIDIARIES

ANNUAL REPORT
For the financial year ended 31 December 2011




Contents


Page

Report of the Trustee-Manager 1

Statement by Trustee-Manager 5

Independent Auditors Report 6

Consolidated Statement of Comprehensive Income 7

Statements of Financial Position 8

Consolidated Statement of Changes in
Unitholders Funds
9

Consolidated Statement of Cash Flows 10

Notes to the Financial Statements 11






108
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2011




1
The directors of Rickmers Trust Management Pte. Ltd., the Trustee-Manager of Rickmers
Maritime (the Trust), are pleased to present their report to the unitholders of the Trust,
together with the audited financial statements of Rickmers Maritime and its subsidiaries
(the Group) for the financial year ended 31 December 2011 and the statement of
financial position of the Trust as at 31 December 2011.


Directors

The directors of the Trustee-Manager in office at the date of this report are as follows:

Mr Bertram R. C. Rickmers
Dr Ignace Adolf Julien Van Meenen (appointed on 14 November 2011)
Mrs Lee Suet Fern
Mr Lim How Teck
Mr Raymundo A. Yu Jr.


Arrangements to enable directors to acquire units and debentures

Neither at the end of nor at any time during the financial year was the Trust a party to any
arrangement whose object was to enable the directors of the Trustee-Manager to acquire
benefits by means of the acquisition of units in, or debentures of the Trust.


Directors interests in units or debentures

None of the directors holding office at the end of the financial year had any interest in
units, or debentures of the Trust, except as disclosed below.


Directors interests in units



Name of director
Direct Interests Deemed Interests
As at
1 January
2011 or date
of appointment
As at
31 December
2011
As at
1 January
2011 or date
of appointment
As at
31 December
2011

Mr Bertram R. C. Rickmers - - 140,229,000 140,229,000
Dr Ignace Adolf Julien Van Meenen - - - -
Mrs Lee Suet Fern 450,000 450,000 - -
Mr Lim How Teck 800,000 800,000 120,000 220,000
Mr Raymundo A. Yu Jr. - - - -


The directors interests in units as at 21 January 2012 were the same as at 31 December
2011.

109
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2011




2
Directors contractual benefits

Since the end of the previous financial year, no director has received or become entitled
to receive a benefit by reason of a contract made by the Trust or a related corporation
with the director or with a firm of which he is a member or with a company in which he
has a substantial financial interest, except as disclosed in the accompanying financial
statements

and in this report.

Options

On 6 September 2010, the Trust issued a convertible loan denominated in United States
Dollars (US dollar) with a nominal value of US$49.0 million to Polaris Ship management
Company Limited (Polaris) as part of the compensation expense to discharge the Group
from its obligation to purchase seven vessels. The convertible loan may be repaid by the
Trust, in part or in full, any time on or before 31 March 2014. If the convertible loan is not
repaid by 31 March 2014, Polaris has the option to convert any part of the outstanding
loan amount as at 31 March 2014 into common units of the Trust on 1 April 2014. If
Polaris does not exercise the option to convert any outstanding amount into common
units, the remaining outstanding amount will be repayable in ten equal quarterly
instalments commencing on 30 June 2014. The maximum number of units to be allotted
and issued by the exercise of the option is 150.0 million units.

No units have been issued during the financial year by virtue of exercising of options to
take up unissued units of the Trust.

The maximum number of unissued common units of the Trust under the option at the end
of the financial year is 150.0 million units. The exercise price of the option is S$0.482625
per unit. The price will be converted into US dollar using the mid spot rate of exchange at
close of business in Singapore at the latest practicable date before 1 April 2014.

The option does not provide Polaris with any rights to participate in any distributions
and/or offers of future securities made by the Trust unless and until the option is
exercised.

Audit Committee


The members of the Audit Committee at the end of the financial year were as follows:

Mr Lim How Teck (Chairman)
Mrs Lee Suet Fern
Mr Raymundo A. Yu Jr.

All members of the Audit Committee are independent and non-executive directors.

110
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2011




3
Audit Committee (continued)


The Audit Committee carried out its functions in accordance with Regulation 13(6) of the
Business Trusts Regulations 2005. In performing those functions, the Committee
reviewed:

with the auditor the audit plan and the auditors report of the Trust and any
recommendations on internal accounting controls of the Trustee-Manager arising
from the statutory audit;

the assistance given by the officers of the Trustee-Manager to the independent
auditor of the Trust, the accounting internal controls, the policies and practices
established by the Trustee-Manager to ensure statutory compliance and compliance
with the Trust Deed, procedures put in place by the Trustee-Manager for managing
conflicts of interests between unitholders and Trustee-Manager, including interested
person transactions, indemnification of expenses or liabilities incurred by the
Trustee-Manager and the setting of fees or charges payable out of the Trust
property; and
the statement of financial position and statement of comprehensive income of the
Trustee-Manager for the financial year ended 31 December 2011 as well as the
statement of financial position of the Trust and the consolidated financial statements
of the Group for the financial year ended 31 December 2011 before their
submission to the Board of Directors of the Trustee-Manager.

The Audit Committee has recommended to the Board that the independent auditor,
PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming
Annual General Meeting of the Trust.



111
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2011




4
Independent auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to
accept re-appointment.



On behalf of the directors






Mr Bertram R. C. Rickmers
Director
Dr Ignace Adolf Julien Van Meenen
Director

Singapore

13 February 2012

112
RICKMERS MARITIME
AND ITS SUBSIDIARIES

STATEMENT BY TRUSTEE-MANAGER
For the financial year ended 31 December 2011




5
In our opinion,

(a) the statement of financial position of the Trust and the consolidated financial
statements of the Group as set out on pages 7 to 50 are drawn up so as to give a
true and fair view of the state of affairs of the Trust and of the Group as at 31
December 2011 and of the results of the business, changes in unitholders funds
and cash flows of the Group for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the
Trust will be able to pay its debts as and when they fall due.



On behalf of the directors






Mr Bertram R. C. Rickmers
Director
Dr Ignace Adolf Julien Van Meenen
Director

Singapore

13 February 2012

113



6
INDEPENDENT AUDITORS REPORT TO THE UNITHOLDERS OF RICKMERS MARITIME


Report on the Financial Statements

We have audited the accompanying financial statements of Rickmers Maritime (the Trust) and its
subsidiaries (the Group) set out on pages 7 to 50 which comprise the consolidated statement of financial
position of the Group and the statement of financial position of the Trust as at 31 December 2011, the
consolidated statement of comprehensive income, the consolidated statement of changes in unitholders
funds and the consolidated statement of cash flows of the Group for the financial year then ended, and a
summary of significant accounting policies and other explanatory notes.

Trustee-Managers responsibility for the Financial Statements

The Trustee-Manager is responsible for the preparation of financial statements that give a true and fair view
in accordance with the provisions of the Singapore Business Trusts Act (the Act) and International Financial
Reporting Standards, and for such internal control as management determines necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgement, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entitys preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

Opinion
In our opinion, the accompanying financial statements of the Group and the statement of the financial position
of the Trust give a true and fair view of the financial position of Rickmers Maritime and its subsidiaries as of
31 December 2011, and of their financial performance and cash flows for the year then ended in accordance
with International Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Trustee-Manager have
been properly kept in accordance with the provisions of the Act.







PricewaterhouseCoopers LLP
Public Accountants and Certified Public Accountants

Singapore, 13 February 2012
114
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the financial year ended 31 December 2011


The accompanying notes form an integral part of these financial statements.

7
Group
Note 2011 2010
US$000 US$000

Revenue 149,466 147,014
Other income 5 6,406 8,954
Other gains/(losses) - net 6 3,980 (5,279)
159,852 150,689

Expenses
- Depreciation 14 (37,868) (37,199)
- Write-back of vessel impairment 14 2,850 7,298
- Amortisation of favourable charter contracts 15 (511) (512)
- Impairment of goodwill 15 (4,097) -
- Vessel operating expenses (33,048) (31,724)
- Trustee-Manager fee

(3,035) (2,955)
- Other trust expenses

(655) 322
- Transaction fees

- (1,408)
- Compensation expense - (64,000)
- Finance expenses

7 (43,158) (49,064)
Total expenses (119,522) (179,242)

Profit/(loss) before income tax 40,330 (28,553)

Income tax expense 8 (4) -

Total profit/(loss) 40,326 (28,553)

Other comprehensive income/(losses):
Cash flow hedges
- Fair value losses (16,573) (30,534)
- Transfer to finance expenses 21,921 21,767
- Transfer to other losses - net - 4,427
Other comprehensive income/(losses), net of tax 5,348 (4,340)

Total comprehensive income/(losses) 45,674 (32,893)

Earnings/(loss) per unit based on the weighted
average number of units issued (US cents)


Basic 9 9.52 (6.74)
Diluted 9 7.24 (6.74)

115
RICKMERS MARITIME
AND ITS SUBSIDIARIES

STATEMENTS OF FINANCIAL POSITION

As at 31 December 2011


The accompanying notes form an integral part of these financial statements.

8
Group Trust
Note 2011 2010 2011 2010
US$000 US$000 US$000 US$000

ASSETS
Current assets
Cash and cash equivalents 10 55,321 49,101 21,066 13,934
Trade and other receivables 11 836 288 67 69
Inventories 3,142 2,751 149 82
Prepayments 24 3 24 3
59,323 52,143 21,306 14,088

Non-current assets
Investments in subsidiaries 12 - - 160 160
Loans to subsidiaries 13 - - 898,441 898,441
Vessels 14 1,035,763 1,068,336 - -
Intangible assets 15 45,069 49,677 - -
Other non-current assets - 453 - 453
1,080,832 1,118,466 898,601 899,054

Total assets 1,140,155 1,170,609 919,907 913,142

LIABILITIES
Current liabilities
Trade and other payables 16 3,604 3,037 250,278 195,770
Advanced charter hire received 2,166 3,786 - -
Secured bank loans 19 43,167 32,877 28,570 18,280
Derivative financial instruments 17 16,679 855 1,398 -
65,616 40,555 280,246 214,050

Non-current liabilities
Other payables 892 1,785 563 1,129
Deferred income from charter
contracts
18
21,475 27,220 - -
Secured bank loans 19 576,966 636,474 366,942 406,138
Convertible loan 20 49,198 48,808 49,198 48,808
Derivative financial instruments 17 38,478 63,743 291 3,053
687,009 778,030 416,994 459,128

Total liabilities

752,625 818,585 697,240 673,178


NET ASSETS 387,530 352,024 222,667 239,964

UNITHOLDERS FUNDS
Units in issue 21 431,435 431,435 431,435 431,435
Unit issue costs (10,122) (10,122) (10,122) (10,122)
Hedging reserve (46,945) (52,293) - -
Distributable income/(accumulated
losses)

13,162 (16,996) (198,646) (181,349)
Total unitholders funds 387,530 352,024 222,667 239,964


116
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN UNITHOLDERS FUNDS

For the financial year ended 31 December 2011


The accompanying notes form an integral part of these financial statements.

9
Attributable to unitholders of Trust
Group Note
Units in
issue
Unit
issue
costs

Hedging
reserve
Distributable
income/
(accumulated
losses) Total
US$000 US$000 US$000 US$000 US$000
2011
Beginning of financial year 431,435 (10,122) (52,293) (16,996) 352,024
Total comprehensive income
for the year

- - 5,348 40,326 45,674
Distribution to unitholders 22 - - - (10,168) (10,168)
End of financial year

431,435 (10,122) (46,945) 13,162 387,530



2010
Beginning of financial year 431,435 (10,122) (47,953) 21,217 394,577
Total comprehensive losses
for the year

- - (4,340) (28,553) (32,893)
Distribution to unitholders 22 - - - (9,660) (9,660)
End of financial year

431,435 (10,122) (52,293) (16,996) 352,024





117
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

For the financial year ended 31 December 2011


The accompanying notes form an integral part of these financial statements.

10
Group
2011 2010
Note US$000 US$000

Cash flows from operating activities:
Cash receipts from customers 147,880 151,392
Cash paid to suppliers and Trustee-Manager (37,594) (35,191)
Cash paid as part of compensation expense - (15,000)
Net cash provided by operating activities 110,286 101,201

Cash flows from investing activities:
Drydocking cost paid (1,638) (726)
Interest received 77 278
Net cash used in investing activities (1,561) (448)

Cash flows from financing activities:
Transaction fees paid - (1,466)
Repayment of bank loans (49,037) (104,999)
Other fees paid (51) (51)
Interest paid (42,336) (41,691)
Undrawn credit facility payment - (183)
Loan restructuring fee paid (893) (2,678)
Decrease/(increase) in restricted cash 893 (2,678)
Distribution to unitholders (10,168) (11,343)
Net cash used in financing activities (101,592) (165,089)

Net increase/(decrease) in cash and cash equivalents 7,133 (64,336)
Cash and cash equivalents at beginning of financial year 10 46,423 110,724
Effects of exchange rate changes on cash and cash
equivalents (20) 35
Cash and cash equivalents at end of financial year * 10 53,536 46,423



* Cash and cash equivalents include an amount of US$25.0 million which can be used by the
Group for operational purposes (subject to certain requirements) but the amount is not available
for distribution to unitholders nor to service interest payments on the convertible loan.
118
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




11
These notes form an integral part of and should be read in conjunction with the
accompanying financial statements.


1. General information


Rickmers Maritime (the Trust) is a Singapore registered business trust
constituted on 30 March 2007 under the Business Trusts Act, Chapter 31A of
Singapore. The Trust was listed on the Singapore Exchange Securities Trading
Limited on 4 May 2007 and is managed by Rickmers Trust Management Pte. Ltd.
(Trustee-Manager). The address of its registered office is 11 Keppel Road, #10-
02 ABI Plaza, Singapore 089057.

The principal activities of the Trust are owning and operating containerships under
long-term, fixed-rate time charters to leading container liner shipping companies
through wholly-owned subsidiaries. These vessels operate worldwide, carrying
containers for the worlds leading container liner companies. The principal
activities of the subsidiaries are set out in Note 12.


2. Summary of significant accounting policies

2.1 Basis of preparation

These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). The financial statements have been
prepared under the historical cost convention, except as disclosed in the
accounting policies below.

The preparation of financial statements in conformity with IFRS requires
management to exercise its judgement in the process of applying the Groups
accounting policies. It also requires the use of certain critical accounting estimates
and assumptions. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 3.

119
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




12
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations

(a) Interpretations and amendments to published standards effective in 2011


The Group has adopted the following new and amended IFRS as of 1
January 2011:

(i) Amendments to IAS 24 Related Party Disclosures
(ii) Annual Improvements 2010 consisting of minor amendments to the
following Standards and Interpretations:

IAS 1 Presentation of Financial Statements
Transition requirements for amendments arising as a result of
IAS 27 Consolidated and Separate Financial Statements
IAS 34 Interim Financial Reporting
IFRS 3 Business Combinations
IFRS 7 Financial Instruments: Disclosures

The adoption of these new or amended standards did not result in
substantial changes to the Groups accounting policies and had no
material effect on the amounts reported for the current or prior financial
years.

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group

The following standards and amendments to existing standards have been
published that are mandatory for the Groups accounting periods beginning
on or after 1 January 2012 or later periods, but the Group has not early
adopted them. The Groups assessment of the impact of adopting those
standards, amendments and interpretations that are relevant to the Group is
set out below:

(i) Amendments to IFRS 7 Disclosures - Transfers of Financial Assets
(effective for annual periods beginning on or after 1 July 2011)

The revised standard clarifies and simplifies the disclosure of credit
risk and foreclosed collateral, and removes the requirement to disclose
the carrying amount of renegotiated financial assets that would be past
due or impaired if not for the renegotiation. The Group will apply the
revised standard from 1 January 2012. It is not expected to have a
material impact on the Groups financial statements.

120
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




13
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations (continued)

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group
(continued)

(ii) Amendment to IAS 1 Presentation of financial statements
(effective for annual periods beginning on or after 1 July 2012)

The amendment requires entities to separate items presented in Other
Comprehensive Income (OCI) into two groups, based on whether they
may be recycled to profit or loss in the future. Items that will not be
recycled such as revaluation gains on property, plant and equipment
will be presented separately from items that may be recycled in the
future. Entities that choose to present OCI items before tax will be
required to show the amount of tax related to the two groups
separately. The Group will apply the revised standard from 1 January
2013. It is not expected to have a material impact on the Groups
financial statements.

(iii) IFRS 9 Financial Instruments
(effective for annual periods beginning on or after 1 January 2013)

This standard replaces parts of IAS 39 that relates to the classification
and measurement of financial assets, and sets the requirement for the
classification of financial assets into two measurement categories:
those to be measured subsequently at fair value, and those to be
measured subsequently at amortised cost. The Group will apply the
interpretation from 1 January 2013. It is not expected to have a
material impact on the Groups financial statements.

(iv) IFRS 10 Consolidated Financial Statements
(effective for annual periods beginning on or after 1 January 2013)

The new standard clarifies the definition of control and focuses on the
need to have both power and variable returns before control is present.
In addition, the revised standard also includes guidance on
participating and protective rights, and guidance on agent/principal
relationships. All entities are required to consider the new guidance.
The Group will apply the new standard from 1 January 2013. It is not
expected to have a material impact on the Groups financial
statements.
121
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




14
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations (continued)

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group
(continued)

(v) IFRS 12 Disclosure of interests in other entities
(effective for annual periods beginning on or after 1 January 2013)

The new standard requires entities to disclose information that helps
financial statement readers to evaluate the nature, risks and financial
effects associated with the entitys interests in subsidiaries, associates,
joint arrangements and unconsolidated structured entities. Disclosures
are required in significant judgements and assumptions, interests in
subsidiaries, interests in joint arrangements and associates, and
interests in unconsolidated structured entities. The Group will apply the
new standard from 1 January 2013. It is not expected to have a
material impact on the Groups financial statements.

(vi) IFRS 13 Fair Value Measurements
(effective for annual periods beginning on or after 1 January 2013)

The new standard explains how to measure fair value and aims to
enhance fair value disclosures. The Group will apply the new standard
from 1 January 2013. It is not expected to have a material impact on
the Groups financial statements.

2.3 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for
the rendering of services in the ordinary course of the Groups activities. Revenue
is presented, net of goods and services tax, rebates, discounts and commissions
payable to third parties.

The Group recognises revenue when the amount of revenue and related costs
can be reliably measured, it is probable that future economic benefits will flow to
the entity and when the specific criteria for each of the Groups activities are met
as follows:
122
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




15
2. Summary of significant accounting policies (continued)

2.3 Revenue recognition (continued)

(a) Rendering of services



Revenue from a time charter, which is of operating lease in nature, is
recognised on a straight-line basis over the period of the time charter
contracts.

(b) Interest income



Interest income, including income arising from financial instruments, is
recognised using the effective interest method.

(c) Dividend income



Dividend income is recognised when the right to receive payment is
established.

2.4 Group accounting

Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Group
has power to govern the financial and operating policies, generally accompanied
by a shareholding giving rise to the majority of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.

The purchase method of accounting is used to account for the acquisition of
subsidiaries. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued or liabilities incurred or assumed at the
dates of exchange and includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair
value on the date of acquisition. On an acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interests proportionate share of the acquirees net assets. Please
refer to Note 2.6(a) for the accounting policy on goodwill on acquisition of
subsidiaries.




123
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




16
2. Summary of significant accounting policies (continued)

2.4 Group accounting (continued)

Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and
unrealised gains on transactions between group entities are eliminated.
Unrealised losses are also eliminated but are considered an impairment indicator
of the asset transferred. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.

Please refer to Note 2.7 for the accounting policy on investments in subsidiaries in
the financial statements of the Trust.

2.5 Plant and equipment



(a) Measurement

Vessels are initially recognised at cost and subsequently carried at cost
less accumulated depreciation and accumulated impairment losses.
Vessel cost consists of the contract purchase price and any material
expenses incurred upon acquisition (improvements and delivery
expenses).

The vessels that are acquired are treated as a business combination to the
extent that such acquisitions include business characteristics; otherwise an
acquisition of a vessel is treated as a purchase of assets and recorded at
cost.

Where any intangible assets or liabilities associated with the acquisition of
a vessel are identified, they are recorded at fair value. Fair value is
determined by reference to market data and the revenue stream
associated with the charters. All vessels have been acquired with existing
charters.

(b) Depreciation

Depreciation is calculated using the straight-line method to allocate the
depreciable amounts of vessels, after taking into account the residual
values, over their estimated useful lives. The estimated useful lives for the
vessels are 30 years.

The residual values are reviewed, and adjusted as appropriate, at the end
of each financial year. The effects of any revision are recognised in profit
or loss when the changes arise.
124
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




17
2. Summary of significant accounting policies (continued)

2.5 Plant and equipment (continued)

(b) Depreciation (continued)

Included in the value of vessels acquired are costs relating to dry-docking.
These costs are depreciated on a straight-line basis over the period to the
next scheduled dry-docking, which is generally 5 to 7.5 years.

(c) Subsequent expenditure

Subsequent expenditure relating to vessels, including dry-docking, that
has already been recognised is added to the carrying amount of the asset
when it is probable that future economic benefits, in excess of the
originally assessed standard of performance of the existing asset will flow
to the Group and the cost can be reliably measured. Other subsequent
expenditures are recognised as expenses during the financial year in
which they are incurred.

(d) Disposal

On disposal of vessels, the difference between the net disposal proceeds
and the carrying amount is recognised in profit or loss.

2.6 Intangible assets

(a) Goodwill on acquisitions


Goodwill represents the excess of the cost of an acquisition over the fair
value of the Groups share of identifiable net assets and contingent
liabilities of the acquired subsidiaries or businesses at the date of
acquisition.

Goodwill on acquisitions of subsidiaries or businesses is recognised
separately as intangible assets and carried at cost less accumulated
impairment losses.

Gains and losses on the disposal of subsidiaries or businesses include the
carrying amount of goodwill relating to the entity or business sold.

Negative goodwill represents the excess of the fair value of the identifiable
net assets of subsidiaries or businesses when acquired over the cost of
acquisition. Negative goodwill is recognised immediately in profit or loss.


125
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




18
2. Summary of significant accounting policies (continued)

2.6 Intangible assets (continued)

(b) Charter contracts

Charter contracts, that are favourable or unfavourable at the acquisition
date, are initially recognised based on the excess or shortfall of contracted
charter income over the market value of similar contracts and are
subsequently carried at cost (i.e. the fair value at initial recognition) less
accumulated amortisation and accumulated impairment losses. These
costs are amortised to profit or loss using the straight-line method over the
remaining period of the charter. Unfavourable charter contracts are called
deferred income from charter contracts on the statement of financial
position.

The amortisation period and amortisation method of intangible assets
other than goodwill are reviewed at least at the end of each financial year.
The effects of any revision are recognised in profit or loss when the
changes arise.

2.7 Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment
losses in the Trusts statement of financial position. On disposal of investments in
subsidiaries, the difference between disposal proceeds and the carrying amounts
of the investments are recognised in profit or loss.

2.8 Impairment of non-financial assets

(a) Goodwill

Goodwill is tested for impairment annually and whenever there is indication
that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to
each of the Groups cash-generating-units (CGU) expected to benefit
from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU,
including the goodwill, exceeds the recoverable amount of the CGU.
Recoverable amount of a CGU is the higher of the CGUs fair value less
costs to sell and value-in-use.



126
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




19
2. Summary of significant accounting policies (continued)

2.8 Impairment of non-financial assets (continued)

(a) Goodwill (continued)

The total impairment loss of a CGU is allocated first to reduce the carrying
amount of goodwill allocated to the CGU and then to the other assets of
the CGU pro-rata on the basis of the carrying amount of each asset in the
CGU. An impairment loss on goodwill is recognised in profit or loss and is
not reversed in a subsequent period.

(b) Vessels, intangible assets and investments in subsidiaries

Vessels, intangible assets and investments in subsidiaries are reviewed for
impairment whenever there is any objective evidence of indication that
these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the
higher of the fair value less costs to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not
generate cash flows that are largely independent of those from other
assets. If this is the case, the recoverable amount is determined for the
CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less
than its carrying amount, the carrying amount of the asset (or CGU) is
reduced to its recoverable amount. The difference between the carrying
amount and recoverable amount is recognised as an impairment loss in
profit or loss.

An impairment loss for an asset other than goodwill is reversed if, and only
if, there has been a change in the estimates used to determine the assets
recoverable amount since the last impairment loss was recognised. The
carrying amount of an asset other than goodwill is increased to its revised
recoverable amount, provided that this amount does not exceed the
carrying amount that would have been determined (net of any
accumulated amortisation or depreciation) had there been no impairment
loss recognised for the asset in prior years. A reversal of impairment loss
for an asset other than goodwill is recognised in profit or loss.

2.9 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
presented as current assets, except for those maturing later than 12 months after
the end of the financial year which are presented as non-current assets.

127
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




20
2. Summary of significant accounting policies (continued)

2.9 Loans and receivables (continued)

Loans and receivables are presented as cash and cash equivalents, and trade
and other receivables on the statement of financial position.

These financial assets are initially recognised at fair value plus transaction costs
and subsequently carried at amortised cost using the effective interest method.

The Group assesses at the end of each financial year whether there is objective
evidence that these financial assets are impaired and recognises an allowance
for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy, and default or significant delay in payments are objective evidence
that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment
allowance account which is calculated as the difference between the carrying
amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. When the asset becomes uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are recognised against the same line item in profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a
subsequent period when the amount of impairment loss decreases and the
related decrease can be objectively measured. The carrying amount of the asset
previously impaired is increased to the extent that the new carrying amount does
not exceed the amortised cost had no impairment been recognised in prior
periods.

2.10 Borrowings

Borrowings are presented as current liabilities unless the Group has an
unconditional right to defer settlement for at least 12 months after the balance
sheet date.

(a) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost. Any
difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method.

128
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




21
2. Summary of significant accounting policies (continued)

2.10 Borrowings (continued)

(a) Borrowings (continued)

Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all
of the facility will be drawn down. In this case, the fee is deferred until the
drawdown occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the
facility to which it relates.

(b) Convertible loan

When convertible loans are issued, the total proceeds are allocated to the
liability component and the derivative component, which are separately
presented on the statement of financial position.

On initial recognition, the derivative component is measured at fair value
and presented as part of derivative financial instruments. It is subsequently
carried at fair value with the changes in fair value recognised in profit or
loss.

The difference between the total proceeds and the derivative component is
allocated to the liability component. The liability component is
subsequently carried at amortised cost using the effective interest method
until the liability is extinguished on conversion or redemption of the loan.

2.11 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to
the Group prior to the end of financial year which are unpaid. They are classified
as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current
liabilities.

Trade and other payables are initially recognised at fair value, and subsequently
carried at amortised cost using the effective interest method.





129
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




22
2. Summary of significant accounting policies (continued)

2.12 Derivative financial instruments and hedging activities

The Group uses derivative financial instruments to hedge its exposure to risks
arising from operational, financing and investment activities. The Group does not
hold or issue derivative financial instruments for trading purposes.

A derivative financial instrument is initially recognised at its fair value on the date
the contract is entered into and is subsequently carried at its fair value. The
method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged.

The Group documents at the inception of the transaction the relationship between
the hedging instruments and hedged items, as well as its risk management
objective and strategies for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives designated as hedging instruments are highly effective
in offsetting changes in fair value or cash flows of the hedged items.

The carrying amount of a derivative designated as a hedge is presented as a non-
current asset or liability if the remaining maturity of the hedged item is more than
12 months, and as a current asset or liability if the remaining maturity of the
hedged item is less than 12 months. The fair value of a trading derivative is
presented as a current asset or liability.

Cash flow hedge Interest rate swaps

The Group has entered into interest rate swaps that are cash flow hedges for the
Groups exposure to interest rate risk on its borrowings. The interest rate swaps
entitle the Group to receive interest at floating rates on notional principal amounts
and oblige the Group to pay interest at fixed rates on the same notional principal
amounts, thus allowing the Group to raise non-current borrowings at floating rates
and swap them into fixed rates that are lower than those available if it borrowed at
fixed rates directly.

The fair value changes on the effective portion of the interest rate swaps
designated as cash flow hedges are recognised in other comprehensive income
and transferred to profit or loss when the interest expense on the borrowings are
recognised in profit or loss. The fair value changes on the ineffective portion of the
interest rate swaps are recognised immediately in profit or loss.




130
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




23
2. Summary of significant accounting policies (continued)

2.13 Fair value estimation of financial assets and liabilities

The fair values of interest rate swaps are based on valuation provided by
reputable financial institutions. The fair value of interest rate swaps is calculated
as the present value of the estimated future cash flows, discounted at actively
quoted interest rates.

The fair values of current financial assets and liabilities carried at amortised cost
approximate their carrying amounts.

The fair values of non-current financial liabilities carried at amortised cost are
estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Group for similar financial liabilities.

2.14 Leases

As lessor:

The Group owns containerships and charters them to leading container liner
companies under long-term, fixed-rate time charters. These time charters are
classified as operating leases as the Group retains substantially all risk and
rewards incidental to ownership. Containerships are included in plant and
equipment as vessels.

Rental income from operating leases of the vessels (net of any incentives and
commissions given to lessees) is recognised in profit or loss on a straight-line
basis over the lease term. Initial direct costs incurred by the Group in negotiating
and arranging an operating lease are added to the carrying amount of the leased
asset and recognised as an expense in profit or loss over the lease term on the
same basis as the lease income.

Contingent rents are recognised as income in profit or loss when earned.

As lessee:

Leases of property, plant and equipment where a significant portion of the risks
and rewards of ownership are retained by the lessors are classified as operating
leases.

Rental expenses under operating leases are charged to profit or loss on a
straight-line basis over the term of the relevant lease. Benefits received as an
incentive to enter into an operating lease are also spread on a straight-line basis
over the lease term.

131
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




24
2. Summary of significant accounting policies (continued)

2.15 Inventories

Inventories are lubricant oil and spare parts for the vessels. Inventories are carried
at cost. Cost is determined using the weighted average method. Lubricant oil and
spare parts are used for the operation of the vessels, therefore inventories are not
written down to net realisable value when market price falls below cost if the
overall shipping activity is expected to be profitable.

2.16 Income taxes

No provision is made for taxation on qualifying chartering and qualifying dividend
income from Approved Special Purpose Vehicles, which is exempt under the
Maritime Sector Incentive Maritime Leasing (MSI ML) previously known as
Maritime Finance Incentive. Under the MSI ML, the Trust has been awarded the
Approved Shipping Investment Enterprise status with effect from 4 May 2007 for a
period of 10 years and its subsidiaries will be regarded as Approved Special
Purpose Vehicles with effect from the date of their approval.

Current income tax for current and prior periods is recognised at the amount
expected to be paid to or recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively enacted at the end of the
financial year.

Deferred income tax is recognised for all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial
statements, except when the deferred income tax arises from the initial
recognition of an asset or liability in a transaction that is not a business
combination, and at the time of the transaction, affects neither accounting nor
taxable profit or loss.

A deferred income tax liability is recognised on temporary differences arising on
investments in subsidiaries, except where the Group is able to control the timing
of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that
future taxable profit will be available against which the deductible temporary
differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled,
based on tax rates and tax laws that have been enacted or substantively
enacted at the end of the financial year; and
132
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




25
2. Summary of significant accounting policies (continued)

2.16 Income taxes (continued)

(ii) based on the tax consequence that will follow from the manner in which
the Group expects, at the end of the financial year, to recover or settle the
carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in profit
or loss, except to the extent that the tax arises from a business combination or a
transaction which is recognised directly in equity. Deferred tax on temporary
differences arising from fair value gains and losses on cash flow hedges are
charged or credited directly to equity in the same period the temporary differences
arise. Deferred tax arising from a business combination is adjusted against
goodwill on acquisition.

2.17 Currency translation

(a) Functional and presentation currency


Items included in the financial statements of each entity in the Group are
measured using the currency of the primary economic environment in
which the entity operates (functional currency). The financial statements
are presented

in US dollar, which is the Trusts and Groups functional
currency.

(b) Transactions and balances

Transactions in a currency other than the functional currency (foreign
currency) are translated into the functional currency using the exchange
rates at the dates of the transactions. Currency translation differences from
the settlement of such transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies at the closing rates
as at the end of the financial year are recognised in profit or loss.

2.18 Segment reporting


Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker (CODM). The CODM
has been identified as the Chief Executive Officer (CEO) and the Chief Financial
Officer (CFO) who are responsible for allocating resources and assessing the
performance of the operating segments.

2.19 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash
and cash equivalents include deposits with financial institutions.
133
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




26
2. Summary of significant accounting policies (continued)

2.20 Units in issue

Units in issue are classified as equity.

Unit issue costs represent expenses incurred in connection with the initial public
offering of the Group on the Singapore Exchange Securities Trading Limited.
Expenses, which are directly attributable to the issuance of units, are deducted
directly from net assets attributable to unitholders. Expenses, which are not
directly attributable to the issuance of units, are recognised in profit or loss.

2.21 Distributions to unitholders

Distributions to unitholders are recorded in the period in which they are declared
payable by the Trustee-Manager.


3. Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based
on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.

(a) Goodwill impairment test

Goodwill is tested for impairment annually in accordance with the
accounting policy stated in Note 2.8(a). The recoverable amounts of CGUs
have been determined based on fair value less cost to sell calculations.
The carrying amount of goodwill as at 31 December 2011 was US$44.0
million (2010: US$48.1 million). Details of the estimates used to calculate
the recoverable amounts are given in Note 15.

(b) Impairment of vessels

The Groups management follows its accounting policy set out in Note 2.8
(b) in determining when vessels are considered impaired. Impairment is
recognised when events and circumstances indicate that these assets may
be impaired and the carrying amounts of these assets exceed the
recoverable amounts. The recoverable amounts of vessels have been
determined based on value-in-use calculations. The carrying amount of
vessels as at 31 December 2011 was US$1,035.8 million (2010:
US$1,068.3 million). Details of the estimates used to calculate the
recoverable amounts are given in Note 14.


134
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




27
4. Employee compensation

The Group does not have any employee on its payroll because all operations are
undertaken by the Trustee-Manager.


5. Other income



6. Other gains/(losses) - net


(*) The gain/(loss) recognised is due to the fair value changes on the ineffective portion
of interest rate swaps (as defined in IAS 39 Financial Instruments: Recognition and
Measurement). This gain/(loss) is recognised directly into profit or loss and is a non-
cash item.

(**) The non-cash gain recognised is due to the fair value changes on the derivative
component of the convertible loan that was issued to discharge the Group from its
obligation to purchase seven vessels.








Group
2011 2010
US$000 US$000

Amortisation of deferred income from charter contracts 5,745 8,133
Interest income from financial institutions 83 265
Other income 578 556
6,406 8,954
Group
2011 2010
US$000 US$000

Gain/(loss) on cash flow hedges (*) 3,907 (5,364)
Net currency translation (loss)/gain (22) 38
Loss on sale of bunker - (17)
Gain on fair value of derivative component of
convertible loan (**) 95 64
3,980 (5,279)
135
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




28
7. Finance expenses


(^) Included in this amount are cash flow hedges, transferred from hedging reserve of
US$21.9 million (2010: US$21.8 million).

(^^) Included in this amount is an interest expense of US$390,000 (2010: US$258,000)
arising from the amortisation of the convertible loan using the effective interest rate
method and is a non-cash item.


8. Income taxes

The tax expense on profit/(loss) differs from the amount that would arise using the
Singapore standard rate of income tax as explained below:

Items that are included in comprehensive income are not subjected to tax.








Group
2011 2010
US$000 US$000

Interest expense on bank borrowings (13,855) (13,510)
Interest expense on interest rate swaps (^) (27,956) (27,831)
Interest expense on cash portion of compensation fee - (103)
Interest expense on convertible loan (^^) (Note 20) (1,297) (990)
Undrawn credit facility expense - (120)
Amortisation of debt issuance costs - (1,104)
Loan restructuring fee - (5,356)
Other fees (50) (50)
(43,158) (49,064)
Group
2011 2010
US$000 US$000

Profit/(loss) before tax 40,330 (28,553)

Tax calculated at tax rate of 17% (2010: 17%) 6,856 (4,854)
Effects of:
- tax exemption (6,852) 4,854
Tax charge 4 -
136
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




29
9. Earnings/(loss) per unit

(a) Basic earnings/(loss) per unit

Basic earnings/(loss) per unit is calculated by dividing the net profit/(loss) attributable to
unitholders of the Trust by the weighted average number of units outstanding during the
financial year.

(b) Diluted earnings/(loss) per unit

For the purpose of calculating diluted earnings/(loss) per unit, net profit/(loss) attributable
to unitholders of the Trust and the weighted average number of units outstanding are
adjusted for the effects of all dilutive potential units.

The convertible loan is assumed to have been converted into units at issuance and the net
profit/(loss) is adjusted to exclude the interest expense and other related changes in
income/expense.

Group
2011

Net profit after tax attributable to unitholders of the Trust (US$000)
40,326
Interest expense on convertible loan (US$000)
1,297
Gain on fair value of derivative component of convertible loan
(US$000)

(95)
Net profit after tax used to determine diluted earnings per unit
(US$000)

41,528

Weighted average number of units outstanding for basic earnings
per unit (000)

423,675
Adjustments for convertible loan (000)
150,000

573,675

Diluted earnings per unit (US cents) 7.24

For the financial year ended 31 December 2010, the units assumed to have been
converted from the convertible loan are anti-dilutive and hence not included in the diluted
earnings per unit calculation. The diluted and basic loss per unit were US cents 6.74 for
the financial year ended 31 December 2010.
Group
2011 2010
Net profit/(loss) after tax attributable to unitholders of the
Trust (US$000) 40,326 (28,553)
Weighted average number of units outstanding for
basic earnings/(loss) per unit (000) 423,675 423,675

Basic earnings/(loss) per unit (US cents) 9.52 (6.74)
137
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




30
10. Cash and cash equivalents
Group Trust
2011 2010 2011 2010
US$000 US$000 US$000 US$000

Cash at bank 39,321 41,316 5,066 6,149
Short-term bank deposits 16,000 7,785 16,000 7,785
55,321 49,101 21,066 13,934

Cash and cash equivalents include an amount of US$25.0 million which can be used by
the Group for operational purposes (subject to certain requirements) but the amount is not
available for distribution to unitholders nor to service interest payments on the convertible
loan.

For the purpose of presenting the consolidated statement of cash flows, cash and cash
equivalents comprise the following:
Group
2011 2010
US$000 US$000

Cash and cash equivalents per Statement of Financial Position 55,321 49,101
Less: Restricted cash for payment of loan restructuring fee (1,785) (2,678)
Cash and cash equivalents per Consolidated Statement of Cash
Flows 53,536 46,423



11. Trade and other receivables
Group Trust
2011 2010 2011 2010
US$000 US$000 US$000 US$000

Trade receivables from non-related parties 634 117 - -
Other receivables from non-related parties 202 171 67 69
836 288 67 69


12. Investments in subsidiaries

Details of the subsidiary companies are as follows:

Name of subsidiary company
(a)

Country of
incorporation Vessel name Principal activities Equity holding
2011
%
2010
%

Kaethe Navigation Limited Marshall Islands Kaethe C.
Rickmers
Ship owning
and operating
100 100

Richard II Navigation Limited Marshall Islands ITAL Festosa Ship owning
and operating
100 100

Henry II Navigation Limited Marshall Islands ITAL Fastosa Ship owning
and operating
100 100
138
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




31
12. Investments in subsidiaries (continued)

Name of subsidiary company
(a)
Country of
incorporation
Vessel
name
Principal
activities

Equity holding

2011

2010
% %
Moni II Navigation Limited Marshall Islands ITAL
Fiducia
Ship owning
and operating
100 100

Vicki Rickmers Navigation Limited Marshall Islands ANL
Warringa
Ship owning
and operating
100 100



Maja Rickmers Navigation Limited Marshall Islands ANL
Windarra
Ship owning
and operating
100 100

Marte Rickmers Navigation Limited Marshall Islands CMA CGM
Azure
Ship owning
and operating
100 100

Laranna Rickmers Navigation Limited Marshall Islands ANL
Warrain
Ship owning
and operating
100 100

Sabine Rickmers Navigation Limited Marshall Islands CMA CGM
Jade
Ship owning
and operating
100 100

Erwin Rickmers Navigation Limited Marshall Islands CMA CGM
Onyx
Ship owning
and operating
100 100

Olympia II Navigation Limited Marshall Islands MOL
Dominance
Ship owning
and operating
100 100

Sui An Navigation Limited Marshall Islands MOL
Dedication
Ship owning
and operating
100 100

Pingel Navigation Limited Marshall Islands MOL
Delight
Ship owning
and operating
100 100

Ebba Navigation Limited Marshall Islands MOL
Destiny
Ship owning
and operating
100 100

Clan Navigation Limited Marshall Islands MOL
Devotion
Ship owning
and operating
100 100

India Navigation Limited Marshall Islands Hanjin
Newport
Ship owning
and operating
100 100


(a)
Audited by PricewaterhouseCoopers LLP, Singapore


13. Loans to subsidiaries

Loans to subsidiaries are treated as a long-term source of additional capital and
financing within the Group. Accordingly, they are managed centrally and deemed
to be quasi-equity loans representing an addition to the Trusts net investments in
the subsidiaries.

The loans to subsidiaries are unsecured, interest-free, have no fixed terms of
repayment and are not expected to be repaid within twelve months from the end
of the financial year except for loans of US$315.0 million (2010: US$315.0 million)
which bear interest at a rate of 2.33% (2010: 2.05%) per annum at the end of the
financial year.
139
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




32
14. Vessels


Bank borrowings of US$620.1 million (2010: US$669.0 million) are secured on 16
(2010: 16) vessels of the Group with net book value of US$1,035.8 million (2010:
US$1,068.3 million) (Note 19(a)).

Group

2011 US$000
Cost
Beginning of financial year 1,182,144
Additions 2,445
Write-off of fully depreciated dry-dock component (2,296)
End of financial year 1,182,293

Accumulated depreciation and impairment losses
Beginning of financial year (113,808)
Depreciation charge (37,868)
Write-back of vessel impairment 2,850
Write-off of fully depreciated dry-dock component 2,296
End of financial year (146,530)


Net book value at end of financial year 1,035,763

2010 US$000
Cost
Beginning of financial year 1,181,410
Additions 734
End of financial year 1,182,144

Accumulated depreciation and impairment losses
Beginning of financial year (83,907)
Depreciation charge (37,199)
Write-back of vessel impairment 7,298
End of financial year (113,808)


Net book value at end of financial year 1,068,336
140
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




33
14. Vessels (continued)

During the financial year ended 31 December 2010, the Group had written back
US$7.3 million of impairment due to higher contracted charter rates.

As at 30 June 2011, the Group had written back US$2.9 million of impairment as a
result of improved charter rates in the first half of the financial year. As at 31
December 2011, management has assessed that no further impairment or write-
back of impairment was required based on the following:

The recoverable amount of the vessel was determined based on value-in-use
calculations. Cash flow projections used in these calculations are based on
financial budgets approved by management covering a thirty-year period.

Management determined the budgeted cash flows based on past performance
and its expectations of market development. Cash inflows are based on existing
charter contracts and management's estimate of the average charter rates over
the recent observable shipping industry cycle. Cash outflows are projected using
an estimated growth rate of 3% (2010: 2.5%) per annum for expenses. A period of
more than 5 years for cash flow projections is prepared as management is able to
reasonably estimate the cash flows over the existing charter contract periods and
using observable market trends.

A Weighted Average Cost of Capital (WACC) of 7.04% (2010: 7.28%) was used
to discount the cash flows. The cost of the equity component of the WACC was
derived using the capital asset pricing model.

If the discount rate applied to the discounted cash flows had been 5% (2010: 5%)
higher than managements estimates (for example, 7.39% instead of 7.04%), the
Group would have recognised a lower write-back of impairment loss of US$1.9
million (2010: lower write-back of impairment loss by US$2.2 million) for this
vessel.

If the cash flows after the contracted period had been 5% (2010: 5%) lower than
managements estimates, the Group would have reversed the write-back of
impairment of US$2.9 million and recognised an impairment loss of US$1.7 million
(2010: lower write-back of impairment loss by US$4.5 million) for this vessel.

If the estimated annual growth rate of cash outflows was increased from 3% to
3.5% (2010: 2.5% to 3.0%), the Group would have recognised a lower write-back
of impairment loss of US$1.2 million (2010: lower write-back of impairment loss by
US$1.4 million) for this vessel.
141
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




34
15. Intangible assets

Group
2011 Goodwill
Favourable
charter
contracts Total
US$000 US$000 US$000
Cost
Beginning and end of financial year 48,050 3,500 51,550

Accumulated amortisation and impairment
losses
Beginning of financial year - (1,873) (1,873)
Amortisation charge - (511) (511)
Impairment charge (4,097) - (4,097)
End of financial year (4,097) (2,384) (6,481)

Net book value at 31 December 2011 43,953 1,116 45,069


Group
2010 Goodwill
Favourable
charter
contracts Total
US$000 US$000 US$000
Cost
Beginning and end of financial year 48,050 3,500 51,550

Accumulated amortisation
Beginning of financial year - (1,361) (1,361)
Amortisation charge - (512) (512)
End of financial year - (1,873) (1,873)

Net book value at 31 December 2010 48,050 1,627 49,677






Impairment test for goodwill

Goodwill is allocated to the Groups CGUs which are the individual vessel owning
subsidiaries.

As at 30 June 2011, an impairment loss of US$4.1 million was charged for
goodwill allocated to a vessel owning subsidiary. The impairment loss was due to
a higher discount rate as at 30 June 2011 as a result of changes in market base
parameters used in deriving the discount rate. As at 31 December 2011,
management has assessed that no further impairment was required based on the
following:

The recoverable amount of a CGU was determined based on fair value less cost
to sell calculations. Cash flow projections used in these calculations are based on
financial budgets approved by management covering a thirty-year period. Cash
flows beyond the thirty-year period are extrapolated using zero (2010: zero)
growth rate. The growth rate does not exceed the long-term average growth rate
for the industry in which the CGU operates.
142
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




35
15. Intangible assets (continued)

Management determined the budgeted cash flows based on past performance
and its expectations of market development. Cash inflows are based on existing
charter contracts and management's estimate of the average charter rates over
the recent observable shipping industry cycle. Cash outflows are projected using
an estimated growth rate of 3% (2010: 2.5%) per annum for expenses. A period of
more than 5 years for cash flow projections is prepared as management is able to
reasonably estimate the cash flows over the existing charter contract periods and
using observable market trends.

As at 31 December 2011, the discount rate used on the cash flows was based on
the Weighted Average Cost of Capital (WACC) of 7.04% (2010: 7.28%). The
cost of the equity component of the WACC was derived using the capital asset
pricing model.

For the financial year ended 31 December 2011, management believes that any
reasonable change to the key assumptions above of which the recoverable
amounts are based would not cause the carrying amounts as at 31 December
2011 to exceed the recoverable amounts.

For the financial year ended 31 December 2010, if the discount rate applied to the
discounted cash flows had been 5% higher than managements estimates (for
example, 7.64% instead of 7.28%), the Group would have recognised an
impairment loss on goodwill of US$2.1 million. If the cash flows after the
contracted period had been 5% lower than managements estimates, the Group
would have recognised an impairment loss on goodwill of US$3.2 million. If the
estimated annual growth rate of cash outflows was increased from 2.5% to 3.0%,
the Group would have recognised an impairment loss on goodwill of US$1.4
million.

16. Trade and other payables

Group Trust

2011
US$000
2010
US$000
2011
US$000
2010
US$000


Trade payables to non-related
parties 202 359 - -

Other payables (non-trade)
- Non-related party 24 393 24 -
- Affiliated company 14 45 - -
- Subsidiaries - - 249,380 194,913
- Unitholders 2 - 2 -
40 438 249,406 194,913

Other accrual for operating
expenses 3,362 2,240 872 857
3,604 3,037 250,278 195,770

143
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




36
16. Trade and other payables (continued)

All non-trade related party payables are unsecured, interest-free, have no fixed
terms of repayment and are expected to be repaid within twelve months from the
end of the financial year.


17. Derivative financial instruments


Group Trust
Contract
notional
amount
Fair
value
liability
Contract
notional
amount

Fair value
liability
US$000 US$000 US$000 US$000

2011
Cash flow hedges
- Interest rate swaps 487,800 47,621 - -

Non-hedging instruments
- Interest rate swaps 133,200 7,245 40,000 1,398

54,866 1,398
Less: Current portion
(16,679) (1,398)
Non-current portion of interest rate
swaps

38,187 -
Derivative component of convertible
loan (Note 20)

291 291
Total non-current portion 38,478 291

2010
Cash flow hedges
- Interest rate swaps 487,800 52,955 - -

Non-hedging instruments
- Interest rate swaps 158,200 11,257 40,000 2,667

64,212 2,667
Less: Current portion (855) -
Non-current portion of interest rate
swaps

63,357 2,667
Derivative component of convertible
loan (Note 20)

386 386
Total non-current portion 63,743 3,053
144
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




37
17. Derivative financial instruments (continued)

Period when the cash flows on cash flow hedges are expected to occur or affect
profit or loss

Interest rate swaps are entered into to hedge floating quarterly interest payments
on borrowings. The interest rate swaps will mature before 1 July 2015. At 31
December 2011, the fixed interest rates vary from 3.50% to 5.06% (2010: 3.50%
to 5.06%) per annum and the main floating rate is US$ LIBOR (London Inter Bank
Offer Rate). Fair value gains and losses on the interest rate swaps recognised in
the hedging reserve on the interest rate swap contracts as at 31 December 2011
will be continuously transferred to profit or loss as part of interest expense over
the period of the borrowings.


18. Deferred income from charter contracts

Group
2011 US$000
Cost
Beginning and end of financial year 61,750

Accumulated amortisation
Beginning of financial year (34,530)
Amortisation (5,745)
End of financial year (40,275)

Net book value at 31 December 2011 21,475


2010 US$000
Cost
Beginning and end of financial year 61,750

Accumulated amortisation
Beginning of financial year (26,397)
Amortisation (8,133)
End of financial year (34,530)

Net book value at 31 December 2010 27,220


19. Secured bank loans
Group Trust
2011
US$000
2010
US$000
2011
US$000
2010
US$000

Current 43,167 32,877 28,570 18,280
Non-current 576,966 636,474 366,942 406,138
Total 620,133 669,351 395,512 424,418
145
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




38
19. Secured bank loans (continued)

As at 31 December 2011, the bank loans bear interest at rates of 2.13% to 2.33%
(2010: 2.04% to 2.05%) per annum. The loans mature from 2015 to 2021 (2010:
2015 to 2021). The loans will be repriced within 3 months (2010: 3 months) from
the end of the financial year.

(a) Security granted

The bank loans are secured on all existing 16 (2010: 16) vessels (which
are owned by the Trusts subsidiaries) and their respective assignment of
the charter revenues, insurance, earnings, deposit accounts and pledge of
respective owners/borrowers (the Trusts subsidiaries) shares and
requisition compensation.

(b) Fair value of non-current bank loans

The fair values are determined from cash flow analyses, discounted at
market borrowing rates of an equivalent instrument at the end of the
financial year which the management expect to be available to the Group
at the end of the financial year. The fair values of bank loans approximate
their carrying amounts.

(c) Terms and debt repayment schedules

Group
US$ floating rate loans
Nominal interest rate Year of
maturity
Face
value
Unamortised
debt issuance
costs
Carrying
amount
US$000 US$000 US$000
(i) US$ 3-month LIBOR + 1.75% 2015 59,410 - 59,410
(ii) US$ 3-month LIBOR + 1.75% 2017 336,482 (380) 336,102
(iii) US$ 3-month LIBOR + 1.75% 2019 189,926 (1,165) 188,761
(iv) US$ 3-month LIBOR + 1.75% 2021 36,099 (239) 35,860
621,917 (1,784) 620,133

Trust
US$ floating rate loans
Nominal interest rate Year of
maturity
Face
value
Unamortised
debt issuance
costs
Carrying
amount
US$000 US$000 US$000
(i) US$ 3-month LIBOR + 1.75% 2015 59,410 - 59,410
(ii) US$ 3-month LIBOR + 1.75% 2017 336,482 (380) 336,102
395,892 (380) 395,512


146
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




39
20. Convertible loan

On 6 September 2010, the Trust issued a convertible loan denominated in US
dollar with a nominal value of US$49.0 million to Polaris Shipmanagement
Company Limited (Polaris) to discharge the Group from its obligation to
purchase seven vessels. Polaris has the option to convert the loan into units of
the Trust on 1 April 2014 or receive repayments from the Trust in ten equal
quarterly instalments with the first instalment due and payable on 30 June 2014.
As at 31 December 2011, the loan bears interest at a rate of 1.83% (2010: 1.55%)
per annum. From 1 April 2014, the loan will bear interest at a rate of US$ 3-month
LIBOR plus a margin of 3.00% per annum and the margin will increase by 0.25%
per quarter until it reaches a maximum rate of 4.50% per annum.

The derivative component of the convertible loan, included in derivative financial
instruments, is measured at fair value on initial recognition, and determined using
a model utilising a combination of a binomial and trinomial tree to model changes
in the unit price and interest rates. The fair value as at 31 December 2011
amounted to US$291,000 (2010: US$386,000) (Note 17). The derivative
component is a financial liability at fair value through profit or loss.

The carrying amount of the liability component of the convertible loan at the end
of the financial year is derived as follows:

Group and Trust
2011 2010
US$000 US$000

Face value of convertible loan upon initial recognition * 49,000
Derivative component on initial recognition

* (450)

Liability component at beginning of financial year/upon initial
recognition 48,808 48,550
Interest expense (Note 7) 1,297 990
Interest paid (907) (732)
Liability component at end of financial year 49,198 48,808

* Not applicable for financial year ended 31 December 2011.


21. Units in issue

No. of units Amount
Common
Units

Total
Common
Units

Total
000 000 US$000 US$000
2011 and 2010
At beginning and end of financial year 423,675 423,675 431,435 431,435


All Common Units have no par value and are fully paid.
147
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




40
22. Distribution to unitholders


A final cash distribution of 0.60 US cents per unit amounting to US$2,542,050 was
recommended for units issued as at 31 December 2011 in respect of the financial
period from 1 October 2011 to 31 December 2011. The recommended distribution
has not been provided for in these financial statements and will be accounted for
in the statement of changes in unitholders funds in the first quarter of 2012.

Group and Trust
2011 2010
US$000 US$000

Exempt distribution paid in respect of the current
financial year are as follows:





For the period from 1 October 2010 to 31 December
2010:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 January 2011 to 31 March 2011:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 April 2011 to 30 June 2011:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 July 2011 to 30 September 2011:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 October 2009 to 31 December
2009:
- Distribution of 0.57 US cents per unit
- 2,415

For the period from 1 January 2010 to 31 March 2010:
- Distribution of 0.57 US cents per unit
- 2,415

For the period from 1 April 2010 to 30 June 2010:
- Distribution of 0.57 US cents per unit
- 2,415

For the period from 1 July 2010 to 30 September 2010:
- Distribution of 0.57 US cents per unit
- 2,415
10,168 9,660
148
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




41
23. Commitments

Operating lease commitments arising from charter contracts where the Group is
a lessor

The Group charters out its vessels under long-term time charter agreements. The
operating leases have different terms and renewal rights and terminate at various
dates. The future minimum lease receivable under the operating leases
contracted for as at the end of the financial year but not recognised as
receivables, are as follows:



24. Financial risk management

Financial risk factors

The Groups activities mainly expose it to credit risk, interest rate risk and liquidity
risk. The Groups overall risk management strategy seeks to minimise adverse
effects from the unpredictability of financial markets on the Groups financial
performance. The Group uses financial instruments such as interest rate swaps
to hedge interest rate risk.

The Board of Directors of the Trustee-Manager is responsible for setting the
objectives and underlying principles of financial risk management for the Group as
well as carrying out financial risk management for the Group. There are detailed
policies such as authority levels, exposure limits and hedging strategies, in
accordance with the objectives and underlying principles approved by the Board
of Directors.

Group
2011 2010
US$000 US$000

Not later than one year 143,509 150,005
Between one and five years 413,172 505,645
Later than five years 89,706 141,203
646,387 796,853
149
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




42
24. Financial risk management (continued)

(a) Market risk

(i) Currency risk

The Groups revenues, cost of operations and majority of financial assets
and liabilities are principally denominated in US dollar.

The Groups business is exposed to currency risk arising from currency
exposures primarily in respect to Singapore dollar. As this exposure is
insignificant, the Group manages this risk by entering into currency spot
contracts, transacted with financial institution, when the need arises.

(ii) Interest rate risk

The Group is exposed to interest rate risk due primarily to its variable-rate
secured bank loans and convertible loan. The strategy of the Trustee-
Manager, acting on behalf of the Trust and the Group, is to actively
manage the risk of potential interest rate volatility through the use of
interest rate swap contracts to reduce its exposure on anticipated
transactions and firm commitments with the objective to reduce variability
in cash flows arising from interest rate fluctuations. This will allow the
Group to raise borrowings at floating rates and swap them into fixed rates,
optimising net interest cost and reducing interest rate volatility.

The Groups and Trusts borrowings are denominated in US dollar. If the
interest rates increase/decrease by 100 (2010: 100) basis points during
the current financial year with all other variables being held constant, the
profit after tax will be lower/higher by US$1.3 million (2010: loss after tax
will be higher/lower by US$1.9 million) as a result of higher/lower interest
expense on the portion of borrowings where interest rate swap contracts
were not entered into.

The Groups interest rate swaps are denominated in US dollar. If the
interest rates increase/decrease by 100 (2010: 100) basis points during
the current financial year with all other variables being held constant, the
hedging reserve will decrease/increase by US$10.4 million/US$8.9 million
(2010: decrease/increase by US$15.6 million/US$17.2 million). The profit
after tax will be higher/lower by US$1.6 million/US$1.2 million (2010: loss
after tax will be lower/higher by US$3.3 million/US$3.2 million). There will
be no impact on cash flow.
150
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




43
24. Financial risk management (continued)

(b) Credit risk

There is significant concentration of credit risk as the Group currently deals with
only five customers (2010: five customers). However, the Group ensures that
charter contracts are entered into with customers of appropriate credit standing.
There have not been any defaults on payments as at the end of the financial year.
For other financial assets, the Group adopts the policy of dealing with financial
institutions and other counterparties with high credit ratings assigned by
international credit rating agencies.

The maximum exposure to credit risk for each class of financial assets is the
carrying amount of that class of financial instruments presented on the statement
of financial position. The Groups major classes of financial assets are bank
deposits and trade and other receivables. The Trusts major classes of financial
assets are bank deposits.

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits
with banks with high credit ratings assigned by international credit rating
agencies.

(ii) Financial assets that are past due and/or impaired

As at 31 December 2011, none of the Groups trade receivables are past
due. As at 31 December 2010, the Groups trade receivables past due but
not impaired amounting to US$117,100 was aged less than one month.

(c) Liquidity risk

The table below analyses the maturity profile of the Groups and Trusts financial
liabilities (including derivative financial liabilities) based on contractual
undiscounted cash flows.

Less than
1 year
Between
1 and 2
years
Between 2
and 5 years

Over 5 years
US$000 US$000 US$000 US$000

Group
At 31 December 2011
Trade and other payables 3,604 892 - -
Net-settled interest rate swaps
- cash flow hedges 20,304 14,396 13,588 -
- non-hedging instruments 4,805 2,145 381 -
Secured bank loans and interest payable 57,258 80,982 203,376 342,336
Convertible loan and interest payable 911 909 52,153 -

151
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




44
24. Financial risk management (continued)

(c) Liquidity risk (continued)


Less than
1 year
Between
1 and 2
years
Between 2
and 5 years

Over 5
years
US$000 US$000 US$000 US$000
Trust
At 31 December 2011
Trade and other payables 250,278 563 - -
Net-settled interest rate swaps
- non-hedging instruments 1,405 - - -
Secured bank loans and interest payable 37,664 55,108 122,693 217,760
Convertible loan and interest payable 911 909 52,153 -

Group
At 31 December 2010
Trade and other payables 3,037 893 893 -
Net-settled interest rate swaps
- cash flow hedges 21,229 17,704 14,914 -
- non-hedging instruments 5,939 4,175 1,282 -
Secured bank loans and interest payable 42,061 57,811 237,141 404,173
Convertible loan and interest payable 771 774 37,645 15,057

Trust
At 31 December 2010
Trade and other payables 195,770 564 564 -
Net-settled interest rate swaps
- non-hedging instruments 1,491 1,216 - -
Secured bank loans and interest payable 25,875 36,747 147,403 256,953
Convertible loan and interest payable 771 774 37,645 15,057

The Group and Trust manage the liquidity risk by maintaining sufficient cash to
enable them to meet their normal operating commitments.

The Trustee-Manager, acting on behalf of the Trust, entered into credit facilities
with financial institutions which are used for the acquisition of vessels and for
general corporate purposes.

On 9 June 2010, the Trust obtained a waiver of value-to-loan covenants for up to
a three-year period.

(d) Capital risk


The Groups objectives when managing capital are to safeguard the Groups
ability to continue as a going concern and to maintain an optimal capital structure
so as to maximise unitholders value. In order to maintain or achieve an optimal
capital structure, the Group may adjust the amount of distribution payment, return
capital to unitholders, issue new units, buy back issued units, obtain new
borrowings or sell assets to reduce borrowings.

The Group may issue new units to finance future growth.
152
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




45
24. Financial risk management (continued)

(d) Capital risk (continued)


Management monitors capital based on a gearing ratio. The ratio is calculated as
external bank loans and convertible loan divided by total unitholders funds,
external bank loans and convertible loan.

Group
2011 2010

Gearing ratio 63% 67%

The Group is in compliance with all externally imposed capital requirements for
the financial years ended 31 December 2011 and 2010.

(e) Fair value measurements

The following table presents the assets and liabilities measured at fair value and
classified by level of the following fair value measurement hierarchy:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities
(Level 1);
(ii) inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices) (Level 2); and
(iii) inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (Level 3).


Level 1 Level 2 Level 3 Total
US$000 US$000 US$000 US$000
Group
2011
Liabilities

Derivative financial instruments
- interest rate swaps - - 54,866 54,866

Derivative component of convertible
loan - - 291 291
Total liabilities - - 55,157 55,157

Trust
2011
Liabilities

Derivative financial instruments
- interest rate swaps - - 1,398 1,398

Derivative component of convertible
loan - - 291 291
Total liabilities - - 1,689 1,689

153
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




46
24. Financial risk management (continued)

(e) Fair value measurements (continued)

Level 1 Level 2 Level 3 Total
US$000 US$000 US$000 US$000
Group
2010
Liabilities

Derivative financial instruments
- interest rate swaps - - 64,212 64,212

Derivative component of convertible
loan - - 386 386
Total liabilities - - 64,598 64,598

Trust
2010
Liabilities

Derivative financial instruments
- interest rate swaps - - 2,667 2,667

Derivative component of convertible
loan - - 386 386
Total liabilities - - 3,053 3,053


The fair value of interest rate swaps is obtained from financial institutions and is
calculated as the present value of the estimated future cash flows. These
instruments are included in Level 3.

The fair value of the derivative component of the convertible loan is obtained as
disclosed in Note 20. This is also included in Level 3.

The following table presents the changes in Level 3 instruments for the financial
year ended 31 December 2011:


Group
2011
Interest rate
swaps
Derivative
component of
convertible loan Total
US$000 US$000 US$000

Beginning of financial year 64,212 386 64,598
Total income recognised in other
comprehensive income (5,348) - (5,348)

58,864 386 59,250
Total income and interest expense
recognised in profit or loss (3,998) (95) (4,093)
End of financial year 54,866 291 55,157

154
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




47
24. Financial risk management (continued)

(e) Fair value measurements (continued)



(f) Financial instruments by category


The carrying amount of financial liabilities at fair value through profit or loss is
disclosed in Note 17 to the financial statements. The aggregate carrying amounts
of loans and receivables and financial liabilities at amortised cost are as follows:

Group Trust
2011 2010 2011 2010
US$000 US$000 US$000 US$000

Loans and receivables 56,157 49,389 21,133 14,003
Financial liabilities at amortised
cost

673,827

722,981

695,551

670,260


Trust
2011
Interest rate
swaps
Derivative
component of
convertible loan Total
US$000 US$000 US$000

Beginning of financial year 2,667 386 3,053
Total income and interest expense
recognised in profit or loss (1,269) (95) (1,364)
End of financial year 1,398 291 1,689

Group
2010



Beginning of financial year 53,308 - 53,308
Total losses recognised in other
comprehensive income

4,340

-

4,340
57,648 - 57,648
Total losses and interest expense
recognised in profit or loss

6,564

386

6,950
End of financial year 64,212 386 64,598


Trust
2010



Beginning of financial year - - -
Total losses and interest expense
recognised in profit or loss

2,667

386

3,053
End of financial year 2,667 386 3,053
155
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




48
25. Related party transactions

(a) Related party transactions

In addition to the information disclosed elsewhere in the financial statements, the
following related party transactions took place between the Group and related
parties at terms agreed between the parties during the financial year:


Affiliated companies are companies which share common shareholders/
unitholders.

(^) The amount was incurred to discharge the Group from its obligation to purchase seven vessels.
These transactions were approved by unitholders at the Extraordinary General Meeting on 6
September 2010.


(b) Key management personnel compensation

There are no key management personnel of the Group as the operations are
managed by the Trustee-Manager.










Group
2011 2010
US$000 US$000

Write-back of accrued interest payable to a unitholder - (553)
Cash compensation to a unitholder (^) - 15,000
Convertible loan issued to a unitholder (^) - 49,000

Interest expense on cash portion of compensation fee
and convertible loan to a unitholder (^) 907 835
Management fees paid to Trustee-Manager 3,035 2,955
Management fees paid to an affiliated company 1,898 1,860

Vessel fixed operating costs paid to an affiliated
company 26,802 25,130

Cable, victual and entertainment expenses paid to an
affiliated company 579 553
Commission paid to an affiliated company 95 34
Legal fees and advance to a company which is
controlled by a director of the Trustee-Manager
- 80
Insurance premium paid to an affiliated company 20 -
156
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




49
26. Segment information

Management has determined the Groups business as one operating segment
based on the reports reviewed by the CODM, as the Group is only involved in the
chartering of container vessels which is carried out in international waters. The
reports reviewed by the CODM have been prepared on the same basis as the
financial statements, hence, there are no reconciling items to be disclosed.

Revenue from major products and services

All revenues from external customers are derived from the charter of
containerships.

Geographical information

Revenues from external customers are attributed to the countries based on the
customers country of origin.

Revenue Non-current assets **
2011 2010 2011 2010
US$000 US$000 US$000 US$000

Australia * 27,224 27,291 - -
Italy * 27,657 28,243 - -
France * 28,784 28,831 - -
Japan * 49,001 49,005 - -
Korea * 9,381 9,471 - -
Singapore - - 45,069 50,130
Others 7,419 4,173 - -
Total 149,466 147,014 45,069 50,130

* Revenues shown are derived from a single external customer in each of these
countries.
** Excludes carrying amount of vessels.

With respect to the presentation of vessels by geographical information, the
Group time charters them to several liner companies and the vessels are
deployed to various parts of the world at the discretion and direction of these
liner companies. Accordingly, the Trustee-Manager does not consider it
meaningful to allocate vessels to specific geographical locations. All other non-
current assets are attributed to the countries based on the Groups country of
domicile.


157
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2011




50
27. Events occurring after the end of the financial year
One of the Group's vessels, Kaethe C. Rickmers is expected to be redelivered by
the charterer on or about 24 February 2012. The management anticipates that the
revenue for this vessel in the forthcoming year will be significantly lower than the
revenue earned for the financial year ended 31 December 2011.

28. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a
resolution of the Board of Directors of the Trustee-Manager on 13 February 2012.


158
APPENDIX III
AUDITED FINANCIAL STATEMENTS OF RICKMERS MARITIME AND ITS
SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
The information in this Appendix III has been reproduced from the annual report of Rickmers Maritime)
for the financial year ended 31 December 2012 and has not been specifically prepared for inclusion in
this Information Memorandum. Investors should read the consolidated financial data in conjunction with
the related notes.
159





RICKMERS MARITIME
(Registered in Singapore. Business Trust Registration Number: 2007003)
AND ITS SUBSIDIARIES


ANNUAL REPORT
For the financial year ended 31 December 2012



























160




RICKMERS MARITIME
(Registered in Singapore)
AND ITS SUBSIDIARIES

ANNUAL REPORT
For the financial year ended 31 December 2012




Contents


Page

Report of the Trustee-Manager 1

Statement by Trustee-Manager 5

Independent Auditors Report 6

Consolidated Statement of Comprehensive Income 7

Statements of Financial Position 8

Consolidated Statement of Changes in
Unitholders Funds
9

Consolidated Statement of Cash Flows 10

Notes to the Financial Statements 11






161
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2012




1
The directors of Rickmers Trust Management Pte. Ltd., the Trustee-Manager of Rickmers
Maritime (the Trust), are pleased to present their report to the unitholders of the Trust,
together with the audited consolidated financial statements of Rickmers Maritime and its
subsidiaries (the Group) for the financial year ended 31 December 2012 and the
statement of financial position of the Trust as at 31 December 2012.


Directors

The directors of the Trustee-Manager in office at the date of this report are as follows:

Mr Bertram R. C. Rickmers
Dr Ignace Adolf Julien Van Meenen
Mrs Lee Suet Fern
Mr Lim How Teck
Mr Raymundo A. Yu Jr.


Arrangements to enable directors to acquire Common Units and debentures

Neither at the end of nor at any time during the financial year was the Trust a party to any
arrangement whose object was to enable the directors of the Trustee-Manager to acquire
benefits by means of the acquisition of Common Units in, or debentures of the Trust.


Directors interests in Common Units or debentures

None of the directors holding office at the end of the financial year had any interest in
Common Units, or debentures of the Trust, except as disclosed below.


Directors interests in Common Units of the Trust



Name of director
Direct Interests Deemed Interests
As at
1 January
2012
As at
31 December
2012
As at
1 January
2012
As at
31 December
2012

Mr Bertram R. C. Rickmers - - 140,229,000 140,229,000
Dr Ignace Adolf Julien Van Meenen - - - -
Mrs Lee Suet Fern 450,000 450,000 - -
Mr Lim How Teck 800,000 800,000 220,000 220,000
Mr Raymundo A. Yu Jr. - - - -


The directors interests in Common Units as at 21 January 2013 were the same as at 31
December 2012.

162
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2012




2
Directors contractual benefits

Since the end of the previous financial year, no director has received or become entitled
to receive a benefit by reason of a contract made by the Trust or a related corporation
with the director or with a firm of which he is a member or with a company in which he
has a substantial financial interest, except as disclosed in the accompanying financial
statements

and in this report.

Options

On 6 September 2010, the Trust issued a convertible loan denominated in United States
Dollars (US dollar) with a nominal value of US$49.0 million to Polaris Shipmanagement
Company Limited (Polaris) as part of the compensation expense to discharge the Group
from its obligation to purchase seven vessels. The convertible loan may be repaid by the
Trust, in part or in full, any time on or before 31 March 2014. If the convertible loan is not
repaid by 31 March 2014, Polaris has the option to convert any part of the outstanding
loan amount as at 31 March 2014 into Common Units of the Trust on 1 April 2014. If
Polaris does not exercise the option to convert any outstanding amount into Common
Units, the remaining outstanding amount will be repayable in ten equal quarterly
instalments commencing on 30 June 2014. The maximum number of Common Units to
be allotted and issued by the exercise of the option is 150.0 million units.

No Common Units have been issued during the financial year by virtue of exercising of
options to take up unissued Common Units of the Trust.

The maximum number of unissued Common Units of the Trust under the option at the
end of the financial year is 150.0 million units. The exercise price of the option is
S$0.482625 per unit. The price will be converted into US dollar using the mid spot rate of
exchange at close of business in Singapore at the latest practicable date before 1 April
2014.

The option does not provide Polaris with any rights to participate in any distributions
and/or offers of future securities made by the Trust unless and until the option is
exercised.

Audit Committee


The members of the Audit Committee at the end of the financial year were as follows:

Mr Lim How Teck (Chairman)
Mrs Lee Suet Fern
Mr Raymundo A. Yu Jr.

All members of the Audit Committee are independent and non-executive directors.

163
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2012




3
Audit Committee (continued)


The Audit Committee carried out its functions in accordance with Regulation 13(6) of the
Business Trusts Regulations 2005. In performing those functions, the Committee
reviewed:

the audit plan and the auditors report of the Trust and any recommendations on
internal accounting controls of the Trustee-Manager arising from the statutory audit;

the assistance given by the officers of the Trustee-Manager to the independent
auditor of the Trust, the accounting internal controls, the policies and practices
established by the Trustee-Manager to ensure statutory compliance and compliance
with the Trust Deed, procedures put in place by the Trustee-Manager for managing
conflicts of interests between unitholders and Trustee-Manager, including interested
person transactions, indemnification of expenses or liabilities incurred by the
Trustee-Manager and the setting of fees or charges payable out of the Trust
property; and
the statement of financial position and statement of comprehensive income of the
Trustee-Manager for the financial year ended 31 December 2012 as well as the
statement of financial position of the Trust and the consolidated financial statements
of the Group for the financial year ended 31 December 2012 before their
submission to the Board of Directors of the Trustee-Manager.

The Audit Committee has recommended to the Board that the independent auditor,
PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming
Annual General Meeting of the Trust.


Finance Committee

The Finance Committee was re-constituted on 6 August 2012 to assist the Board in
reviewing the capital structure of the Trust and to resolve any potential conflicts of interest
that may arise in the course of discussions between the Trust and any interested parties.

The Finance Committee comprised the following independent directors of the Trustee-
Manager:

Mr Lim How Teck (Chairman)
Mrs Lee Suet Fern
Mr Raymundo A. Yu Jr.

164
RICKMERS MARITIME
AND ITS SUBSIDIARIES

REPORT OF THE TRUSTEE-MANAGER
For the financial year ended 31 December 2012




4
Independent auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to
accept re-appointment.



On behalf of the directors






Mr Bertram R. C. Rickmers
Director
Dr Ignace Adolf Julien Van Meenen
Director

Singapore
11 March 2013


165
RICKMERS MARITIME
AND ITS SUBSIDIARIES

STATEMENT BY TRUSTEE-MANAGER
For the financial year ended 31 December 2012




5
In our opinion,

(a) the statement of financial position of the Trust and the consolidated financial
statements of the Group as set out on pages 7 to 51 are drawn up so as to give a
true and fair view of the state of affairs of the Trust and of the Group as at 31
December 2012 and of the results of the business, changes in unitholders funds
and cash flows of the Group for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the
Trust will be able to pay its debts as and when they fall due.



On behalf of the directors






Mr Bertram R. C. Rickmers
Director
Dr Ignace Adolf Julien Van Meenen
Director

Singapore
11 March 2013


166



6
INDEPENDENT AUDITORS REPORT TO THE UNITHOLDERS OF RICKMERS MARITIME


Report on the Financial Statements

We have audited the accompanying financial statements of Rickmers Maritime (the Trust) and its
subsidiaries (the Group) set out on pages 7 to 51 which comprise the consolidated statement of financial
position of the Group and the statement of financial position of the Trust as at 31 December 2012, the
consolidated statement of comprehensive income, the consolidated statement of changes in unitholders
funds and the consolidated statement of cash flows of the Group for the financial year then ended, and a
summary of significant accounting policies and other explanatory notes.

Trustee-Managers responsibility for the Financial Statements
The Trustee-Manager is responsible for the preparation of financial statements that give a true and fair view
in accordance with the provisions of the Singapore Business Trusts Act (the Act) and International Financial
Reporting Standards, and for such internal control as management determines necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgement, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entitys preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

Opinion
In our opinion, the accompanying financial statements of the Group and the statement of the financial position
of the Trust give a true and fair view of the financial position of the Group and the Trust as of 31 December
2012, and of their financial performance and cash flows for the financial year then ended in accordance with
the provisions of the Act and International Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Trustee-Manager have
been properly kept in accordance with the provisions of the Act.
















PricewaterhouseCoopers LLP
Public Accountants and Certified Public Accountants
Singapore, 11 March 2013
167
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the financial year ended 31 December 2012


The accompanying notes form an integral part of these financial statements.

7
Group
Note 2012 2011
US$000 US$000

Revenue 144,294 149,466
Other income 5 6,807 6,406
Other (losses)/gains - net 6 (62) 73
151,039 155,945

Expenses
- Depreciation 14 (37,661) (37,868)
- (Provision for)/write-back of vessel impairment 14 (4,521) 2,850
- Amortisation of favourable charter contracts 15 (512) (511)
- Impairment of goodwill 15 (2,070) (4,097)
- Vessel operating expenses (35,412) (33,048)
- Trustee-Manager fee

(3,070) (3,035)
- Other trust expenses

(619) (655)
- Finance expenses

7 (39,555) (39,251)
Total expenses (123,420) (115,615)

Profit before income tax 27,619 40,330

Income tax credit/(expense) 8 4 (4)

Total profit 27,623 40,326

Other comprehensive income:
Cash flow hedges
- Fair value losses (1,513) (16,573)
- Transfer to finance expenses 19,880 21,921
Other comprehensive income, net of tax 18,367 5,348

Total comprehensive income 45,990 45,674

Earnings per Common Unit based on the weighted
average number of Common Units issued (US
cents)


Basic 9 6.52 9.52
Diluted 9 5.07 7.24

168
RICKMERS MARITIME
AND ITS SUBSIDIARIES

STATEMENTS OF FINANCIAL POSITION

As at 31 December 2012


The accompanying notes form an integral part of these financial statements.

8
Group Trust
Note 2012 2011 2012 2011
US$000 US$000 US$000 US$000

ASSETS
Current assets
Cash and cash equivalents 10 57,168 55,321 16,916 21,066
Trade and other receivables 11 679 836 63 67
Inventories 2,462 3,142 149 149
Prepayments 23 24 16 24
60,332 59,323 17,144 21,306

Non-current assets
Investments in subsidiaries 12 - - 160 160
Loans to subsidiaries 13 - - 898,441 898,441
Vessels 14 997,178 1,035,763 - -
Intangible assets 15 42,487 45,069 - -
1,039,665 1,080,832 898,601 898,601

Total assets 1,099,997 1,140,155 915,745 919,907

LIABILITIES
Current liabilities
Trade and other payables 16 3,296 3,604 297,393 250,278
Advanced charter hire received 4,726 2,166 - -
Secured bank loans 19 69,580 43,167 46,850 28,570
Derivative financial instruments 17 6,299 16,679 - 1,398
83,901 65,616 344,243 280,246

Non-current liabilities
Other payables - 892 - 563
Deferred income from charter
contracts 18 15,730 21,475 - -
Secured bank loans 19 498,822 576,966 315,547 366,942
Convertible loan 20 49,595 49,198 49,595 49,198
Derivative financial instruments 17 28,597 38,478 331 291
592,744 687,009 365,473 416,994

Total liabilities

676,645 752,625 709,716 697,240


NET ASSETS 423,352 387,530 206,029 222,667

UNITHOLDERS FUNDS
Common Units in issue 21 431,435 431,435 431,435 431,435
Unit issuance costs (10,122) (10,122) (10,122) (10,122)
Hedging reserve (28,578) (46,945) - -
Distributable income/(accumulated
losses)

30,617 13,162 (215,284) (198,646)
Total unitholders funds 423,352 387,530 206,029 222,667


169
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN UNITHOLDERS FUNDS

For the financial year ended 31 December 2012


The accompanying notes form an integral part of these financial statements.

9
Attributable to unitholders of Trust
Group Note
Common
Units in
issue
Unit
issuance
costs

Hedging
reserve
Distributable
income/
(accumulated
losses) Total
US$000 US$000 US$000 US$000 US$000
2012
Beginning of financial year 431,435 (10,122) (46,945) 13,162 387,530
Total comprehensive income
for the year

- - 18,367 27,623 45,990
Distribution to unitholders 22 - - - (10,168) (10,168)
End of financial year

431,435 (10,122) (28,578) 30,617 423,352



2011
Beginning of financial year 431,435 (10,122) (52,293) (16,996) 352,024
Total comprehensive income
for the year

- - 5,348 40,326 45,674
Distribution to unitholders 22 - - - (10,168) (10,168)
End of financial year

431,435 (10,122) (46,945) 13,162 387,530



170
RICKMERS MARITIME
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

For the financial year ended 31 December 2012


The accompanying notes form an integral part of these financial statements.

10
Group
2012 2011
Note US$000 US$000

Cash flows from operating activities:
Cash receipts from customers 147,718 147,880
Cash paid to suppliers and Trustee-Manager (38,469) (37,592)
Net cash provided by operating activities 109,249 110,288

Cash flows from investing activities:
Dry-docking cost paid (3,657) (1,638)
Interest received 240 77
Net cash used in investing activities (3,417) (1,561)

Cash flows from financing activities:
Repayment of secured bank loans (52,003) (49,037)
Other fees paid (51) (51)
Interest paid on secured bank loans (13,637) (13,384)
Interest paid on interest rate swaps (26,245) (28,047)
Interest paid on convertible loan (1,006) (907)
Loan restructuring fee paid (893) (893)
Decrease in restricted cash 893 893
Distribution to unitholders (10,168) (10,168)
Net cash used in financing activities (103,110) (101,594)

Net increase in cash and cash equivalents 2,722 7,133
Cash and cash equivalents at beginning of financial year 10 53,536 46,423
Effects of exchange rate changes on cash and cash
equivalents 18 (20)
Cash and cash equivalents at end of financial year 10 56,276 53,536




171
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





11
These notes form an integral part of and should be read in conjunction with the
accompanying financial statements.


1. General information


Rickmers Maritime (the Trust) is a Singapore registered business trust
constituted on 30 March 2007 under the Business Trusts Act, Chapter 31A of
Singapore. The Trust was listed on the Singapore Exchange Securities Trading
Limited on 4 May 2007 and is managed by Rickmers Trust Management Pte. Ltd.
(Trustee-Manager). The address of its registered office is 11 Keppel Road, #10-
02 ABI Plaza, Singapore 089057.

The principal activities of the Trust are owning and operating containerships under
long-term, fixed-rate time charters to leading container liner shipping companies
through wholly-owned subsidiaries. These vessels operate worldwide, carrying
containers for the worlds leading container liner companies. The principal
activities of the subsidiaries are set out in Note 12.


2. Summary of significant accounting policies

2.1 Basis of preparation

These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). The financial statements have been
prepared under the historical cost convention, except as disclosed in the
accounting policies below.

The preparation of financial statements in conformity with IFRS requires
management to exercise its judgement in the process of applying the Groups
accounting policies. It also requires the use of certain critical accounting estimates
and assumptions. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 3.

172
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





12
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations

(a) Interpretations and amendments to published standards effective in 2012


The Group has adopted the following new and amended IFRS as of 1
January 2012:

Amendments to IFRS 7 Disclosure - Transfer of Financial Assets

The adoption of these new or amended standards did not result in
substantial changes to the Groups accounting policies and had no material
effect on the amounts reported for the current or prior financial years.

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group

The following standards and amendments to existing standards have been
published that are mandatory for the Groups accounting periods beginning
on or after 1 January 2013 or later periods, and the Group has not early
adopted them. The Groups assessment of the impact of adopting those
standards, amendments and interpretations that are relevant to the Group is
set out below:

(i) Amendments to IAS 1 Presentation of financial statements
(effective for annual periods beginning on or after 1 July 2012)

The amendment requires entities to separate items presented in Other
Comprehensive Income (OCI) into two groups, based on whether they
may be recycled to profit or loss in the future. Items that will not be
recycled such as revaluation gains on property, plant and equipment
will be presented separately from items that may be recycled in the
future. Entities that choose to present OCI items before tax will be
required to show the amount of tax related to the two groups
separately. The Group will apply the revised standard from 1 January
2013. It is not expected to have a material impact on the Groups
financial statements.
173
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





13
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations (continued)

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group
(continued)

(ii) IFRS 10 Consolidated Financial Statements
(effective for annual periods beginning on or after 1 January 2013)

The new standard clarifies the definition of control and focuses on the
need to have both power and variable returns before control is present.
In addition, the revised standard also includes guidance on
participating and protective rights, and guidance on agent/principal
relationships. All entities are required to consider the new guidance.
The Group will apply the new standard from 1 January 2013. It is not
expected to have a material impact on the Groups financial
statements.

(iii) IFRS 12 Disclosure of interests in other entities
(effective for annual periods beginning on or after 1 January 2013)

The new standard requires entities to disclose information that helps
financial statement readers to evaluate the nature, risks and financial
effects associated with the entitys interests in subsidiaries, associates,
joint arrangements and unconsolidated structured entities. Disclosures
are required in significant judgements and assumptions, interests in
subsidiaries, interests in joint arrangements and associates, and
interests in unconsolidated structured entities. The Group will apply the
new standard from 1 January 2013. It is not expected to have a
material impact on the Groups financial statements.

(iv) IFRS 13 Fair Value Measurements
(effective for annual periods beginning on or after 1 January 2013)

The new standard explains how to measure fair value and aims to
enhance fair value disclosures. The Group will apply the new standard
from 1 January 2013. It is not expected to have a material impact on
the Groups financial statements.








174
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





14
2. Summary of significant accounting policies (continued)

2.2 New or revised accounting standards and interpretations (continued)

(b) Standards, amendments and interpretations to existing standards that are
issued but not yet effective and have not been early adopted by the Group
(continued)

(v) IFRS 9 Financial Instruments
(effective for annual periods beginning on or after 1 January 2015)

This standard replaces parts of IAS 39 that relates to the classification
and measurement of financial assets, and sets the requirement for the
classification of financial assets into two measurement categories:
those to be measured subsequently at fair value, and those to be
measured subsequently at amortised cost. The Group will apply the
standard from 1 January 2015. It is not expected to have a material
impact on the Groups financial statements.


2.3 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for
the rendering of services in the ordinary course of the Groups activities. Revenue
is presented, net of goods and services tax, rebates, discounts and commissions
payable to third parties.

The Group recognises revenue when the amount of revenue and related costs
can be reliably measured, it is probable that future economic benefits will flow to
the entity and when the specific criteria for each of the Groups activities are met
as follows:

(a) Rendering of services



Revenue from a time charter, which is of an operating lease in nature, is
recognised on a straight-line basis over the period of the time charter
contracts (see Note 2.14).

(b) Interest income



Interest income, including income arising from financial instruments, is
recognised using the effective interest method.

(c) Dividend income



Dividend income is recognised when the right to receive payment is
established.
175
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





15
2. Summary of significant accounting policies (continued)
2.4 Group accounting

Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Group
has power to govern the financial and operating policies, generally accompanied
by a shareholding giving rise to the majority of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.

The purchase method of accounting is used to account for the acquisition of
subsidiaries. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued or liabilities incurred or assumed at the
dates of exchange and includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair
value on the date of acquisition. On an acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interests proportionate share of the acquirees net assets. Please
refer to Note 2.6(a) for the accounting policy on goodwill on acquisition of
subsidiaries.

Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and
unrealised gains on transactions between group entities are eliminated.
Unrealised losses are also eliminated but are considered an impairment indicator
of the asset transferred. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.

Please refer to Note 2.7 for the accounting policy on investments in subsidiaries in
the financial statements of the Trust.


176
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





16
2. Summary of significant accounting policies (continued)

2.5 Plant and equipment



(a) Measurement

Vessels are initially recognised at cost and subsequently carried at cost
less accumulated depreciation and accumulated impairment losses.
Vessel cost consists of the contract purchase price and any material
expenses incurred upon acquisition (improvements and delivery
expenses).

The vessels that are acquired are treated as a business combination to the
extent that such acquisitions include business characteristics; otherwise an
acquisition of a vessel is treated as a purchase of assets and recorded at
cost.

Where any intangible assets or liabilities associated with the acquisition of
a vessel are identified, they are recorded at fair value. Fair value is
determined by reference to market data and the revenue stream
associated with the charters. All vessels have been acquired with existing
charters.

(b) Depreciation

Depreciation is calculated using the straight-line method to allocate the
depreciable amounts of vessels, after taking into account the residual
values, over their estimated useful lives. The estimated useful lives for the
vessels are 30 years.

The residual values are reviewed, and adjusted as appropriate, at the end
of each financial year. The effects of any revision are recognised in profit
or loss when the changes arise.

Included in the value of vessels acquired are costs relating to dry-docking.
These costs are depreciated on a straight-line basis over the period to the
next scheduled dry-docking, which is generally 5 to 7.5 years.
177
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





17
2. Summary of significant accounting policies (continued)

2.5 Plant and equipment (continued)

(c) Subsequent expenditure

Subsequent expenditure relating to vessels, including dry-docking, that
has already been recognised is added to the carrying amount of the asset
when it is probable that future economic benefits, in excess of the
originally assessed standard of performance of the existing asset will flow
to the Group and the cost can be reliably measured. Other subsequent
expenditures are recognised as expenses during the financial year in
which they are incurred.

(d) Disposal

On disposal of vessels, the difference between the net disposal proceeds
and the carrying amount is recognised in profit or loss.

2.6 Intangible assets

(a) Goodwill on acquisitions


Goodwill on acquisitions of subsidiaries or businesses on or after 1
January 2010 represents the excess of (i) the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and
the acquisition-date fair value of any previous equity interest in the
acquiree over (ii) the fair value of the identifiable net assets acquired.

Goodwill on acquisitions of subsidiaries or businesses prior to 1 January
2010 represents the excess of the cost of acquisition over the fair value of
the Groups share of the identifiable net assets acquired.

Goodwill on subsidiaries is recognised separately as intangible assets and
carried at cost less accumulated impairment losses.

Gains and losses on the disposal of subsidiaries or businesses include the
carrying amount of goodwill relating to the entity or business sold.

Negative goodwill represents the excess of the fair value of the identifiable
net assets of subsidiaries or businesses when acquired over the cost of
acquisition. Negative goodwill is recognised immediately in profit or loss.
178
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





18
2. Summary of significant accounting policies (continued)

2.6 Intangible assets (continued)

(b) Charter contracts

Charter contracts, that are favourable or unfavourable at the acquisition
date, are initially recognised based on the excess or shortfall of contracted
charter income over the market value of similar contracts and are
subsequently carried at cost (i.e. the fair value at initial recognition) less
accumulated amortisation and accumulated impairment losses. These
costs are amortised to profit or loss using the straight-line method over the
remaining period of the charter. Unfavourable charter contracts are called
deferred income from charter contracts on the statement of financial
position.

The amortisation period and amortisation method of intangible assets
other than goodwill are reviewed at least at the end of each financial year.
The effects of any revision are recognised in profit or loss when the
changes arise.

2.7 Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment
losses in the Trusts statement of financial position. On disposal of investments in
subsidiaries, the difference between disposal proceeds and the carrying amounts
of the investments are recognised in profit or loss.

2.8 Impairment of non-financial assets

(a) Goodwill

Goodwill is tested for impairment annually and whenever there is indication
that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to
each of the Groups cash-generating-units (CGU) expected to benefit
from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU,
including the goodwill, exceeds the recoverable amount of the CGU.
Recoverable amount of a CGU is the higher of the CGUs fair value less
costs to sell and value-in-use.



179
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





19
2. Summary of significant accounting policies (continued)

2.8 Impairment of non-financial assets (continued)

(a) Goodwill (continued)

The total impairment loss of a CGU is allocated first to reduce the carrying
amount of goodwill allocated to the CGU and then to the other assets of
the CGU pro-rata on the basis of the carrying amount of each asset in the
CGU. An impairment loss on goodwill is recognised in profit or loss and is
not reversed in a subsequent period.

(b) Vessels, intangible assets and investments in subsidiaries

Vessels, intangible assets and investments in subsidiaries are reviewed for
impairment whenever there is any objective evidence or indication that
these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the
higher of the fair value less costs to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not
generate cash flows that are largely independent of those from other
assets. If this is the case, the recoverable amount is determined for the
CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less
than its carrying amount, the carrying amount of the asset (or CGU) is
reduced to its recoverable amount. The difference between the carrying
amount and recoverable amount is recognised as an impairment loss in
profit or loss.

An impairment loss for an asset other than goodwill is reversed if, and only
if, there has been a change in the estimates used to determine the assets
recoverable amount since the last impairment loss was recognised. The
carrying amount of an asset other than goodwill is increased to its revised
recoverable amount, provided that this amount does not exceed the
carrying amount that would have been determined (net of any
accumulated amortisation or depreciation) had there been no impairment
loss recognised for the asset in prior years. A reversal of impairment loss
for an asset other than goodwill is recognised in profit or loss.



180
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





20
2. Summary of significant accounting policies (continued)

2.9 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
presented as current assets, except for those maturing later than 12 months after
the end of the financial year which are presented as non-current assets.

Loans and receivables are presented as cash and cash equivalents, and trade
and other receivables on the statement of financial position.

These financial assets are initially recognised at fair value plus transaction costs
and subsequently carried at amortised cost using the effective interest method.

The Group assesses at the end of each financial year whether there is objective
evidence that these financial assets are impaired and recognises an allowance
for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy, and default or significant delay in payments are objective evidence
that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment
allowance account which is calculated as the difference between the carrying
amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. When the asset becomes uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are recognised against the same line item in profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a
subsequent period when the amount of impairment loss decreases and the
related decrease can be objectively measured. The carrying amount of the asset
previously impaired is increased to the extent that the new carrying amount does
not exceed the amortised cost had no impairment been recognised in prior
periods.



181
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





21
2. Summary of significant accounting policies (continued)

2.10 Borrowings

Borrowings are presented as current liabilities unless the Group has an
unconditional right to defer settlement for at least 12 months after the balance
sheet date.

(a) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost. Any
difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all
of the facility will be drawn down. In this case, the fee is deferred until the
drawdown occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the
facility to which it relates.

(b) Convertible loan

When convertible loans are issued, the total proceeds are allocated to the
liability component and the derivative component, which are separately
presented on the statement of financial position.

On initial recognition, the derivative component is measured at fair value
and presented as part of derivative financial instruments. It is subsequently
carried at fair value with the changes in fair value recognised in profit or
loss.

The difference between the total proceeds and the derivative component is
allocated to the liability component. The liability component is
subsequently carried at amortised cost using the effective interest method
until the liability is extinguished on conversion or redemption of the loan.









182
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





22
2. Summary of significant accounting policies (continued)

2.11 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to
the Group prior to the end of financial year which are unpaid. They are classified
as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current
liabilities.

Trade and other payables are initially recognised at fair value, and subsequently
carried at amortised cost using the effective interest method.

2.12 Derivative financial instruments and hedging activities

The Group uses derivative financial instruments to hedge its exposure to risks
arising from financing activities. The Group does not hold or issue derivative
financial instruments for trading purposes.

A derivative financial instrument is initially recognised at its fair value on the date
the contract is entered into and is subsequently carried at its fair value. The
method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged.

The Group documents at the inception of the transaction the relationship between
the hedging instruments and hedged items, as well as its risk management
objective and strategies for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives designated as hedging instruments are highly effective
in offsetting changes in fair value or cash flows of the hedged items.

The carrying amount of a derivative designated as a hedge is presented as a non-
current asset or liability if the remaining expected life of the hedged item is more
than 12 months, and as a current asset or liability if the remaining maturity of the
hedged item is less than 12 months.

Cash flow hedge Interest rate swaps

The Group has entered into interest rate swaps that are cash flow hedges for the
Groups exposure to interest rate risk on its borrowings. The interest rate swaps
entitle the Group to receive interest at floating rates on notional principal amounts
and oblige the Group to pay interest at fixed rates on the same notional principal
amounts, thus allowing the Group to raise non-current borrowings at floating rates
and swap them into fixed rates that are lower than those available if it borrowed at
fixed rates directly.


183
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





23
2. Summary of significant accounting policies (continued)

2.12 Derivative financial instruments and hedging activities (continued)

Cash flow hedge Interest rate swaps (continued)

The fair value changes on the effective portion of the interest rate swaps
designated as cash flow hedges are recognised in other comprehensive income
and transferred to profit or loss when the interest expense on the borrowings are
recognised in profit or loss. The fair value changes on the ineffective portion of the
interest rate swaps are recognised immediately in profit or loss.

2.13 Fair value estimation of financial assets and liabilities

The fair values of interest rate swaps are based on valuation provided by
reputable financial institutions. The fair value of interest rate swaps is calculated
as the present value of the estimated future cash flows, discounted at actively
quoted interest rates.

The fair values of current financial assets and liabilities carried at amortised cost
approximate their carrying amounts.

The fair values of non-current financial liabilities carried at amortised cost are
estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Group for similar financial liabilities.

2.14 Leases

As lessor:

The Group owns containerships and charters them to leading container liner
companies under long-term, fixed-rate time charters. These charters are classified
as operating leases as the Group retains substantially all risks and rewards
incidental to ownership. Containerships are included in plant and equipment as
vessels.

Rental income from operating leases of the vessels (net of any incentives and
commissions given to lessees) is recognised in profit or loss on a straight-line
basis over the lease term. Initial direct costs incurred by the Group in negotiating
and arranging an operating lease are added to the carrying amount of the leased
asset and recognised as an expense in profit or loss over the lease term on the
same basis as the lease income.

Contingent rents are recognised as income in profit or loss when earned.




184
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





24
2. Summary of significant accounting policies (continued)

2.14 Leases (continued)

As lessee:

Leases of property, plant and equipment where a significant portion of the risks
and rewards of ownership are retained by the lessors are classified as operating
leases.

Rental expenses under operating leases are charged to profit or loss on a
straight-line basis over the term of the relevant lease. Benefits received as an
incentive to enter into an operating lease are also spread on a straight-line basis
over the lease term.

2.15 Inventories

Inventories are lubricant oil and spare parts for the vessels. Inventories are carried
at cost. Cost is determined using the weighted average method. Lubricant oil and
spare parts are used for the operation of the vessels, therefore inventories are not
written down to net realisable value when market price falls below cost if the
overall shipping activity is expected to be profitable.

2.16 Income taxes

No provision is made for taxation on qualifying chartering and qualifying dividend
income from Approved Special Purpose Vehicles, which is exempt under the
Singapore Maritime Finance Incentive. Under the Singapore Maritime Finance
Incentive, the Trust has been awarded the Approved Shipping Investment
Enterprise status with effect from 4 May 2007 for a period of 10 years and its
subsidiaries will be regarded as Approved Special Purpose Vehicles with effect
from the date of their approval.

Current income tax for current and prior periods is recognised at the amount
expected to be paid to or recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively enacted at the end of the
financial year.

Deferred income tax is recognised for all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial
statements, except when the deferred income tax arises from the initial
recognition of an asset or liability in a transaction that is not a business
combination, and at the time of the transaction, affects neither accounting nor
taxable profit or loss.




185
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





25
2. Summary of significant accounting policies (continued)

2.16 Income taxes (continued)

A deferred income tax liability is recognised on temporary differences arising on
investments in subsidiaries, except where the Group is able to control the timing
of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that
future taxable profit will be available against which the deductible temporary
differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled,
based on tax rates and tax laws that have been enacted or substantively
enacted at the end of the financial year; and

(ii) based on the tax consequence that will follow from the manner in which
the Group expects, at the end of the financial year, to recover or settle the
carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in profit
or loss, except to the extent that the tax arises from a business combination or a
transaction which is recognised directly in equity. Deferred tax on temporary
differences arising from fair value gains and losses on cash flow hedges are
charged or credited directly to equity in the same period the temporary differences
arise. Deferred tax arising from a business combination is adjusted against
goodwill on acquisition.

2.17 Currency translation

(a) Functional and presentation currency


Items included in the financial statements of each entity in the Group are
measured using the currency of the primary economic environment in
which the entity operates (functional currency). The financial statements
are presented

in US dollar, which is the Trusts functional currency.








186
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





26
2. Summary of significant accounting policies (continued)

2.17 Currency translation (continued)

(b) Transactions and balances

Transactions in a currency other than the functional currency (foreign
currency) are translated into the functional currency using the exchange
rates at the dates of the transactions. Currency translation differences from
the settlement of such transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies at the closing rates
as at the end of the financial year are recognised in profit or loss.

2.18 Segment reporting


Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker (CODM). The CODM
has been identified as the Chief Executive Officer (CEO) and the Chief Financial
Officer (CFO) who are responsible for allocating resources and assessing the
performance of the operating segments.

2.19 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash
and cash equivalents include deposits with financial institutions which are subject
to an insignificant risk of change in value.

2.20 Common Units

The Trust issues Common Units that are classified as equity of the Trust.

Unit issuance costs represent expenses incurred in connection with the initial
public offering of the Group on the Singapore Exchange Securities Trading
Limited. Expenses, which are directly attributable to the issuance of the Common
Units, are deducted directly from net assets attributable to unitholders. Expenses,
which are not directly attributable to the issuance of the Common Units, had been
recognised in profit or loss.

2.21 Distributions to unitholders

Distributions to unitholders are recorded in the period in which they are declared
payable by the Trustee-Manager.



187
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





27
3. Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based
on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.

(a) Goodwill impairment test

Goodwill is tested for impairment annually in accordance with the
accounting policy stated in Note 2.8(a). The recoverable amounts of CGUs
have been determined based on fair value less cost to sell calculations.
The carrying amount of goodwill as at 31 December 2012 was US$41.9
million (2011: US$44.0 million). Details of the estimates used to calculate
the recoverable amounts are given in Note 15.

(b) Impairment of vessels

The Groups management follows its accounting policy set out in Note 2.8
(b) in determining when vessels are considered impaired. Impairment is
recognised when events and circumstances indicate that these assets may
be impaired and the carrying amounts of these assets exceed the
recoverable amounts. The recoverable amounts of vessels have been
determined based on value-in-use calculations. The carrying amount of
vessels as at 31 December 2012 was US$997.2 million (2011: US$1,035.8
million). Details of the estimates used to calculate the recoverable
amounts are given in Note 14.


4. Employee compensation

The Group does not have any employee as all its operations are undertaken by
the Trustee-Manager. The Group pays management fees to the Trustee-Manager
as disclosed in Note 25.


5. Other income




Group
2012 2011
US$000 US$000

Amortisation of deferred income from charter contracts 5,745 5,745
Interest income from financial institutions 236 83
Other income 826 578
6,807 6,406
188
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





28
6. Other (losses)/gains - net



7. Finance expenses


(^^) Included in this amount is an interest expense of US$397,000 (2011: US$390,000)
arising from the amortisation of the convertible loan using the effective interest rate
method and is a non-cash item.



Group
2012 2011
US$000 US$000

(Loss)/gain on fair value of derivative component of
convertible loan (40) 95
Others (22) (22)
(62) 73
Group
2012 2011
US$000 US$000

Interest expense on secured bank loans (13,791) (13,855)

Fair value losses on effective portion of interest rate
swaps transferred from other comprehensive income
- Interest paid (20,230) (21,908)
- Changes in derivative financial liability 350 (13)
Interest on secured bank loans net of effect of hedging (33,671) (35,776)

Interest on convertible loan (^^) (Note 20) (1,403) (1,297)


Fair value losses on ineffective portion of interest rate
swaps
- Interest paid (6,015) (6,139)
- Changes in derivative financial liability 1,584 4,011
(4,431) (2,128)

Other fees (50) (50)
(39,555) (39,251)
189
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





29
8. Income taxes

The tax expense on profit differs from the amount that would arise using the Singapore
standard rate of income tax as explained below:

Items that are included in comprehensive income are not subjected to tax.


9. Earnings per Common Unit

(a) Basic earnings per Common Unit

Basic earnings per Common Unit is calculated by dividing the net profit attributable to
unitholders of the Trust by the weighted average number of Common Units outstanding
during the financial year.


Group
2012 2011
US$000 US$000

Profit before tax 27,619 40,330

Tax calculated at tax rate of 17% (2011: 17%) 4,695 6,856
Effects of:
- tax exemption (4,699) (6,852)
Tax (credit)/charge (4) 4
Group
2012 2011
Net profit after tax attributable to unitholders of the Trust
(US$000) 27,623 40,326

Weighted average number of Common Units outstanding
for basic earnings per Comon Unit (000) 423,675 423,675

Basic earnings per Common Unit (US cents) 6.52 9.52
190
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





30
9. Earnings per Common Unit (continued)

(b) Diluted earnings per Common Unit

For the purpose of calculating diluted earnings per Common Unit, net profit attributable to
unitholders of the Trust and the weighted average number of Common Units outstanding
are adjusted for the effects of all dilutive potential Common Units.

The convertible loan is assumed to have been converted into Common Units at issuance
and the net profit is adjusted to exclude the interest expense and other related changes in
income/expense.

Group
2012 2011

Net profit after tax attributable to unitholders of the Trust
(US$000) 27,623 40,326
Interest expense on convertible loan (US$000)
1,403 1,297
Gain/(loss) on fair value of derivative component of
convertible loan (US$000) 40 (95)
Net profit after tax used to determine diluted earnings per
Common Unit (US$000)

29,066 41,528

Weighted average number of Common Units outstanding
for basic earnings per Common Unit (000) 423,675 423,675
Adjustments for convertible loan (000)
150,000 150,000

573,675 573,675

Diluted earnings per Common Unit (US cents) 5.07 7.24

191
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





31
10. Cash and cash equivalents
Group Trust
2012 2011 2012 2011
US$000 US$000 US$000 US$000

Cash at bank 49,153 39,321 8,901 5,066
Short-term bank deposits 8,015 16,000 8,015 16,000
57,168 55,321 16,916 21,066

Cash and cash equivalents include an amount of US$25.0 million which is not available
for distribution to unitholders nor to service interest payments on the convertible loan.
This amount can be used by the Group for operational purposes (subject to certain
requirements).

For the purpose of presenting the consolidated statement of cash flows, cash and cash
equivalents comprise the following:
Group
2012 2011
US$000 US$000

Cash and cash equivalents per Statement of Financial Position 57,168 55,321
Less: Restricted cash for payment of loan restructuring fee (892) (1,785)
Cash and cash equivalents per Consolidated Statement of Cash
Flows 56,276 53,536



11. Trade and other receivables
Group Trust
2012 2011 2012 2011
US$000 US$000 US$000 US$000

Trade receivables from non-related
parties 9 634

- -
Other receivables from an affiliated
company

469

-

-

-
Other receivables from non-related
parties 201 202

63 67
679 836 63 67



192
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





32
12. Investments in subsidiaries

Details of the subsidiary companies are as follows:

Name of subsidiary company
(a)

Country of
incorporation Vessel name Principal activities Equity holding
2012
%
2011
%

Kaethe Navigation Limited Marshall Islands Kaethe C.
Rickmers
Ship owning
and operating
100 100

Richard II Navigation Limited Marshall Islands ITAL Festosa Ship owning
and operating
100 100

Henry II Navigation Limited Marshall Islands ITAL Fastosa Ship owning
and operating
100 100
Moni II Navigation Limited Marshall Islands ITAL Fiducia Ship owning
and operating
100 100

Vicki Rickmers Navigation Limited Marshall Islands ANL Warringa Ship owning
and operating
100 100



Maja Rickmers Navigation Limited Marshall Islands ANL
Windarra
Ship owning
and operating
100 100

Marte Rickmers Navigation Limited Marshall Islands CMA CGM
Azure
Ship owning
and operating
100 100

Laranna Rickmers Navigation
Limited
Marshall Islands ANL Warrain Ship owning
and operating
100 100

Sabine Rickmers Navigation Limited Marshall Islands CMA CGM
Jade
Ship owning
and operating
100 100

Erwin Rickmers Navigation
Limited
Marshall Islands CMA CGM
Onyx
Ship owning
and operating
100 100

Olympia II Navigation Limited Marshall Islands MOL
Dominance
Ship owning
and operating
100 100

Sui An Navigation Limited Marshall Islands MOL
Dedication
Ship owning
and operating
100 100

Pingel Navigation Limited Marshall Islands MOL Delight Ship owning
and operating
100 100

Ebba Navigation Limited Marshall Islands MOL Destiny Ship owning
and operating
100 100

Clan Navigation Limited Marshall Islands MOL
Devotion
Ship owning
and operating
100 100

India Navigation Limited Marshall Islands Hanjin
Newport
Ship owning
and operating
100 100

(a)
Audited by PricewaterhouseCoopers LLP, Singapore



193
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





33
13. Loans to subsidiaries

Except for loans that are interest-bearing, loans to subsidiaries are treated as a
long-term source of additional capital and financing to the subsidiaries.
Accordingly, they are managed centrally and deemed to be quasi-equity loans
representing an addition to the Trusts net investments in the subsidiaries.

The loans to subsidiaries are unsecured, have no fixed terms of repayment and
are not expected to be repaid within twelve months from the end of the financial
year. They are interest-free except for loans of US$307.9 million (2011: US$315.0
million) which bear interest at a rate of 2.06% (2011: 2.33%) per annum at the end
of the financial year.


14. Vessels

The Group owns 16 containerships which are chartered out under time charter
agreements. 15 containerships are chartered out on long-term basis during the
financial year.

During the financial year ended 31 December 2012, the Group recognised an
impairment of US$4.5 million (2011: write back of impairment of US$2.9 million)
for Kaethe C. Rickmers to take into account low charter rate that was contracted
for a six months period commencing from March 2013 to September 2013.

The recoverable amounts of the vessels were determined based on value-in-use
calculations. Cash flow projections used in these calculations are based on
financial budgets approved by management covering a thirty-year period.

Group
2012 2011
US$000 US$000

Cost
Beginning of financial year 1,182,293 1,182,144
Additions 3,597 2,445
Write-off of fully depreciated dry-dock component (3,147) (2,296)
End of financial year 1,182,743 1,182,293

Accumulated depreciation and impairment losses
Beginning of financial year (146,530) (113,808)
Depreciation charge (37,661) (37,868)
(Provision for)/write-back of vessel impairment (4,521) 2,850
Write-off of fully depreciated dry-dock component 3,147 2,296
End of financial year (185,565) (146,530)


Net book value at end of financial year 997,178 1,035,763

194
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





34
14. Vessels (continued)

Management determined the budgeted cash flows based on past performance
and its expectations of market development. Cash inflows are based on existing
charter contracts and management's estimate of the average charter rates over
the recent observable shipping industry cycle. Cash outflows are projected using
an estimated growth rate of 3.5% (2011: 3.0%) per annum for expenses. A period
of more than 5 years for cash flow projections is prepared as management is able
to reasonably estimate the cash flows over the periods using observable market
trends.

A Weighted Average Cost of Capital (WACC) of 7.13% (2011: 7.04%) was used
to discount the cash flows. The cost of the equity component of the WACC was
derived using the capital asset pricing model.

If the discount rate applied to the discounted cash flows had been 5.0% (2011:
5.0%) higher than managements estimates (for example, 7.49% instead of
7.13%), the Group would have recognised a further impairment of US$2.0 million
(2011: lower write-back of impairment loss by US$1.9 million) for this vessel.

If the cash flows after the contracted period had been 5.0% (2011: 5.0%) lower
than managements estimates, the Group would have recognised a further
impairment of US$4.7 million (2011: reversed the write-back of impairment of
US$2.9 million and recognised an impairment loss of US$1.7 million) for this
vessel.

If the estimated annual growth rate of cash outflows was increased from 3.5% to
4.0% (2011: 3.0% to 3.5%), the Group would have recognised a further
impairment of US$1.2 million (2011: lower write-back of impairment loss by
US$1.2 million) for this vessel.



195
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





35
15. Intangible assets

Group
2012 Goodwill
Favourable
charter
contracts Total
US$000 US$000 US$000
Cost
Beginning and end of financial year 48,050 3,500 51,550

Accumulated amortisation and impairment
losses
Beginning of financial year (4,097) (2,384) (6,481)
Amortisation charge - (512) (512)
Impairment charge (2,070) - (2,070)
End of financial year (6,167) (2,896) (9,063)

Net book value at 31 December 2012 41,883 604 42,487


Group
2011 Goodwill
Favourable
charter
contracts Total
US$000 US$000 US$000
Cost
Beginning and end of financial year 48,050 3,500 51,550

Accumulated amortisation and impairment
losses
Beginning of financial year - (1,873) (1,873)
Amortisation charge - (511) (511)
Impairment charge (4,097) - (4,097)
End of financial year (4,097) (2,384) (6,481)

Net book value at 31 December 2011 43,953 1,116 45,069

Impairment test for goodwill

Goodwill is allocated to the Groups CGUs which are the individual vessel owning
subsidiaries.

During the financial year ended 31 December 2012, an impairment loss of US$2.1
million was charged for goodwill allocated to three vessel owning subsidiaries
(2011: one vessel owing subsidiary).

The recoverable amount of a CGU was determined based on fair value less cost
to sell calculations. Cash flow projections used in these calculations are based on
financial budgets approved by management covering a thirty-year period. Cash
flows beyond the thirty-year period are extrapolated using zero (2011: zero)
growth rate. The growth rate does not exceed the long-term average growth rate
for the industry in which the CGU operates.

196
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





36
15. Intangible assets (continued)

Management determined the budgeted cash flows based on past performance
and its expectations of market development. Cash inflows are based on existing
charter contracts and management's estimate of the average charter rates over
the recent observable shipping industry cycle. Cash outflows are projected using
an estimated growth rate of 3.5% (2011: 3.0%) per annum for expenses. A period
of more than 5 years for cash flow projections is prepared as management is able
to reasonably estimate the cash flows over the periods using observable market
trends.

As at 31 December 2012, the discount rate used on the cash flows was based on
the Weighted Average Cost of Capital (WACC) of 7.13% (2011: 7.04%). The
cost of the equity component of the WACC was derived using the capital asset
pricing model.

If the discount rate applied to the discounted cash flows had been 5.0% higher
than managements estimates (for example, 7.49% instead of 7.13%), the Group
would have recognised a further impairment loss on goodwill of US$7.1 million.

If the cash flows after the contracted period had been 5.0% lower than
managements estimates, the Group would have recognised a further impairment
loss on goodwill of US$14.9 million.

If the estimated annual growth rate of cash outflows was increased from 3.5% to
4.0%, the Group would have recognised a further impairment loss on goodwill of
US$5.7 million.



197
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





37
16. Trade and other payables

Group Trust

2012
US$000
2011
US$000
2012
US$000
2011
US$000


Trade payables to non-related
parties 20 202 - -

Other payables (non-trade)
- Non-related party 386 24 - 24
- Affiliated company 6 14 - -
- Subsidiaries - - 296,532 249,380
- Unitholders - 2 - 2
392 40 296,532 249,406

Other accrual for operating
expenses 2,884 3,362 861 872
3,296 3,604 297,393 250,278

All non-trade related party payables are unsecured, interest-free, have no fixed
terms of repayment and are expected to be repaid within twelve months from the
end of the financial year.


17. Derivative financial instruments




Group Trust
Contract
notional
amount
Fair
value
liability
Contract
notional
amount

Fair value
liability
US$000 US$000 US$000 US$000

2012
Cash flow hedges
- Interest rate swaps 328,400 28,904 - -

Non-hedging instruments
- Interest rate swaps 149,600 5,661 - -

34,565 -
Less: Current portion
(6,299) -
Non-current portion of interest rate
swaps

28,266 -
Derivative component of convertible
loan (Note 20)

331 331
Total non-current portion 28,597 331

198
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





38
17. Derivative financial instruments (continued)


Period when the cash flows on cash flow hedges are expected to occur or affect
profit or loss

Interest rate swaps are entered into to hedge floating quarterly interest payments
on borrowings. The interest rate swaps will mature before 1 July 2015. At 31
December 2012, the fixed interest rates vary from 3.50% to 4.99% (2011: 3.50%
to 5.06%) per annum and the main floating rate is US$ LIBOR (London Interbank
Offer Rate).


18. Deferred income from charter contracts
Group
2012 2011
US$000 US$000
Cost
Beginning and end of financial year 61,750 61,750

Accumulated amortisation
Beginning of financial year (40,275) (34,530)
Amortisation (5,745) (5,745)
End of financial year (46,020) (40,275)

Net book value at end of financial year 15,730 21,475









Group Trust
Contract
notional
amount
Fair
value
liability
Contract
notional
amount

Fair value
liability
US$000 US$000 US$000 US$000

2011
Cash flow hedges
- Interest rate swaps 487,800 47,621 - -

Non-hedging instruments
- Interest rate swaps 133,200 7,245 40,000 1,398

54,866 1,398
Less: Current portion
(16,679) (1,398)
Non-current portion of interest rate
swaps

38,187 -
Derivative component of convertible
loan (Note 20)

291 291
Total non-current portion 38,478 291
199
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





39
19. Secured bank loans
Group Trust
2012
US$000
2011
US$000
2012
US$000
2011
US$000

Current 69,580 43,167 46,850 28,570
Non-current 498,822 576,966 315,547 366,942
Total 568,402 620,133 362,397 395,512

The Trustee-Manager, acting on behalf of the Trust, had entered into various credit
facilities with financial institutions for the purpose of obtaining funding for the acquisition of
the Groups fleet of 16 containerships and general corporate purposes.

(a) Terms and debt repayment schedules

Group
US$ floating rate loans
Nominal interest rate Year of
maturity
Face
value
Unamortised
debt issuance
costs
Carrying
amount
US$000 US$000 US$000
(i) 3-month US$ LIBOR + 1.75% 2015 54,840 - 54,840
(ii) 3-month US$ LIBOR + 1.75% 2017 307,865 (308) 307,557
(iii) 3-month US$ LIBOR + 1.75% 2019 174,561 (992) 173,569
(iv) 3-month US$ LIBOR + 1.75% 2021 32,649 (213) 32,436
569,915 (1,513) 568,402

Trust
US$ floating rate loans
Nominal interest rate Year of
maturity
Face
value
Unamortised
debt issuance
costs
Carrying
amount
US$000 US$000 US$000
(i) 3-month US$ LIBOR + 1.75% 2015 54,840 - 54,840
(ii) 3-month US$ LIBOR + 1.75% 2017 307,865 (308) 307,557
362,705 (308) 362,397


(b) Fair value of non-current bank loans

The fair values are determined from cash flow analyses, discounted at market
borrowing rates of an equivalent instrument at the end of the financial year which
the management expect to be available to the Group at the end of the financial
year. The fair values of bank loans approximate their carrying amounts.

As at 31 December 2012, effective interest rate of the bank loans were between 2.06% to
2.10% (2011: 2.13% to 2.33%) per annum. The loans are re-priced every three months.



200
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





40
19. Secured bank loans (continued)

The bank loans are secured on all existing 16 containerships (Note 14) (which are
owned by the Trusts subsidiaries) and their respective assignment of the charter
revenues, insurance, earnings, deposit accounts and pledge of respective
owners/borrowers (the Trusts subsidiaries) shares and requisition compensation.
The loans are also subject to various financial ratio covenants, including restricted
cash balance (Note 10) and value-to-loan (VTL) ratios. On 9 June 2010, the
Group obtained a waiver to comply with the VTL covenant up to 14 May 2013. The
Group was in compliance with all the covenants during the financial years ended
31 December 2012 and 2011.


20. Convertible loan

The convertible loan denominated in US dollar is held by Polaris
Shipmanagement Company Limited (Polaris). Polaris is an entity controlled by a
unitholder that holds 33.1% of issued Common Units of the Trust. Polaris has the
option to convert the loan into Common Units of the Trust on 1 April 2014 or
receive repayments from the Trust in ten equal quarterly instalments with the first
instalment due and payable on 30 June 2014. The conversion price is
S$0.482625. As at 31 December 2012, the loan bears interest at a rate of 1.56%
(2011: 1.83%) per annum. From 1 April 2014, the loan will bear interest at a rate
of 3-month US$ LIBOR plus a margin of 3.00% per annum and the margin will
increase by 0.25% per quarter until it reaches a maximum rate of 4.50% per
annum.

The conversion option of the loan is a derivative financial liability and is measured
at fair value on initial recognition and subsequent measurement. Its fair value is
determined using a valuation model utilising a combination of a binomial and
trinomial tree to model changes in the unit price and interest rates. The fair value
as at 31 December 2012 amounted to US$331,000 (2011: US$291,000) (Note
17).

The carrying amount of the liability component of the convertible loan at the end
of the financial year is as follows:
Group and Trust
2012 2011
US$000 US$000

Liability component at beginning of financial year 49,198 48,808
Interest expense (Note 7) 1,403 1,297
Interest paid (1,006) (907)
Liability component at end of financial year 49,595 49,198




201
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





41
21. Common Units in issue

No. of Common
Units
Amount
Common
Units

Total
Common
Units

Total
000 000 US$000 US$000
2012 and 2011
At beginning and end of financial year 423,675 423,675 431,435 431,435

All Common Units have no par value and are fully paid.

22. Distribution to unitholders

A final cash distribution of 0.60 US cents per unit amounting to US$2,542,050 was
recommended for Common Units issued as at 31 December 2012 in respect of
the financial period from 1 October 2012 to 31 December 2012. The
recommended distribution has not been provided for in these financial statements
and will be accounted for in the statement of changes in unitholders funds in the
first quarter of 2013.

Group and Trust
2012 2011
US$000 US$000
Exempt distribution paid in respect of the current
financial year are as follows:





For the period from 1 October 2011 to 31 December 2011:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 January 2012 to 31 March 2012:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 April 2012 to 30 June 2012:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 July 2012 to 30 September 2012:
- Distribution of 0.60 US cents per unit
2,542 -

For the period from 1 October 2010 to 31 December 2010:
- Distribution of 0.60 US cents per unit
- 2,542

For the period from 1 January 2011 to 31 March 2011:
- Distribution of 0.60 US cents per unit
- 2,542

For the period from 1 April 2011 to 30 June 2011:
- Distribution of 0.60 US cents per unit
- 2,542

For the period from 1 July 2011 to 30 September 2011:
- Distribution of 0.60 US cents per unit
- 2,542
10,168 10,168
202
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





42
23. Commitments

Operating lease commitments arising from charter contracts where the Group is
a lessor

The Group charters out its vessels under long-term time charter agreements. The
operating leases have different terms and renewal rights and terminate at various
dates. The future minimum lease receivable under the operating leases
contracted for as at the end of the financial year but not recognised as
receivables, are as follows:



24. Financial risk management

Financial risk factors

The Groups activities mainly expose it to credit risk, interest rate risk and liquidity
risk. The Groups overall risk management strategy seeks to minimise adverse
effects from the unpredictability of financial markets on the Groups financial
performance. The Group uses financial instruments such as interest rate swaps
to hedge interest rate risk.

The Board of Directors of the Trustee-Manager is responsible for setting the
objectives and underlying principles of financial risk management for the Group as
well as carrying out financial risk management for the Group. There are detailed
policies such as authority levels, exposure limits and hedging strategies, in
accordance with the objectives and underlying principles approved by the Board
of Directors.

Group
2012 2011
US$000 US$000

Not later than one year 143,616 143,509
Between one and five years 320,236 413,172
Later than five years 40,704 89,706
504,556 646,387
203
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





43
24. Financial risk management (continued)

(a) Market risk

(i) Currency risk

The Groups revenues, cost of operations and majority of financial assets
and liabilities are principally denominated in US dollar.

The Groups business is exposed to currency risk arising from currency
exposures primarily with respect to Singapore dollar. As this exposure is
insignificant, the Group manages this risk by entering into currency spot
contracts, transacted with financial institution, when the need arises.

(ii) Interest rate risk

The Group is exposed to interest rate risk due primarily to its variable-rate
secured bank loans and convertible loan. The strategy of the Trustee-
Manager, acting on behalf of the Trust and the Group, is to actively
manage the risk of potential interest rate volatility through the use of
interest rate swap contracts to reduce its exposure on anticipated
transactions and firm commitments with the objective to reduce variability
in cash flows arising from interest rate fluctuations. This will allow the
Group to raise borrowings at floating rates and swap them into fixed rates,
optimising net interest cost and reducing interest rate volatility.

The Groups and Trusts borrowings are denominated in US dollar. If the
interest rates increase/decrease by 100 (2011: 100) basis points during
the current financial year with all other variables being held constant, the
profit after tax will be lower/higher by US$1.1 million (2011: profit after tax
will be lower/higher by US$1.3 million) as a result of higher/lower interest
expense on the portion of borrowings where interest rate swap contracts
were not entered into.

The Groups interest rate swaps are denominated in US dollar. If the
interest rates increase/decrease by 100 (2011: 100) basis points during
the current financial year with all other variables being held constant, the
hedging reserve will decrease/increase by US$5.8 million/US$2.8 million
(2011: decrease/increase by US$10.4 million/US$8.9 million). The profit
after tax will be higher/lower by US$1.1 million (2011: profit after tax will
be higher/lower by US$1.6 million/US$1.2 million).
204
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





44
24. Financial risk management (continued)

(b) Credit risk

Credit risk refers to the risk that a counterparty is in default on its contractual
obligations resulting in financial loss to the Group.

There is significant concentration of credit risk as the Group currently deals with
only five customers (2011: five customers). However, the Group ensures that
charter contracts are entered into with customers of appropriate credit standing. In
addition, in accordance with normal shipping practice, charter hire is received in
advance and there have not been any defaults on payments during the financial
year. In the event of default, the Group is also able to repossess its vessels from
the charter party. For other financial assets, the Group adopts the policy of dealing
with financial institutions and other counterparties with high credit ratings assigned
by international credit rating agencies.

The maximum exposure to credit risk for each class of financial assets is the
carrying amount of that class of financial instruments presented on the statement
of financial position. The Groups major classes of financial assets are bank
deposits and trade and other receivables. The Trusts major classes of financial
assets are bank deposits.

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits
with banks with high credit ratings assigned by international credit rating
agencies.

(ii) Financial assets that are past due and/or impaired

As at 31 December 2012 and 31 December 2011, none of the Groups
trade receivables are past due.

205
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





45
24. Financial risk management (continued)

(c) Liquidity risk

The table below analyses the maturity profile of the Groups and Trusts financial
liabilities (including derivative financial liabilities) based on contractual
undiscounted cash flows.

Less than
1 year
Between
1 and 2
years
Between 2
and 5 years

Over 5 years
US$000 US$000 US$000 US$000
Group
At 31 December 2012
Trade and other payables 3,296
- - -
Net-settled interest rate swaps
- cash flow hedges 13,158 11,132 4,795 -
- non-hedging instruments 5,163 465 - -
Secured bank loans and interest payable 80,920 80,980 356,055 93,989
Convertible loan and interest payable 776 16,084 35,853 -


Less than
1 year
Between
1 and 2
years
Between 2
and 5 years

Over 5
years
US$000 US$000 US$000 US$000
Trust
At 31 December 2012
Trade and other payables 297,393 - - -
Net-settled interest rate swaps
- non-hedging instruments - - - -
Secured bank loans and interest payable 54,060 53,082 280,140 -
Convertible loan and interest payable 776 16,084 35,853 -

Group
At 31 December 2011
Trade and other payables 3,604 892 - -
Net-settled interest rate swaps
- cash flow hedges 20,304 14,396 13,588 -
- non-hedging instruments 4,805 2,145 381 -
Secured bank loans and interest payable 57,258 80,982 203,376 342,336
Convertible loan and interest payable 911 909 52,153 -

Trust
At 31 December 2011
Trade and other payables 250,278 563 - -
Net-settled interest rate swaps
- non-hedging instruments 1,405 - - -
Secured bank loans and interest payable 37,664 55,108 122,693 217,760
Convertible loan and interest payable 911 909 52,153 -

The Group and Trust manage the liquidity risk by maintaining sufficient cash to
enable them to meet their normal operating commitments and loan repayments.

206
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





46
24. Financial risk management (continued)

(d) Capital risk


The Groups objectives when managing capital are to safeguard the Groups
ability to continue as a going concern and to maintain an optimal capital structure
so as to maximise unitholders value. In order to maintain or achieve an optimal
capital structure, the Group may adjust the amount of distribution payment, return
capital to unitholders, issue new Common Units, buy back issued Common Units,
obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on a gearing ratio. The ratio is calculated as
external bank loans and convertible loan divided by total unitholders funds,
external bank loans and convertible loan.

Group
2012 2011

Gearing ratio 59% 63%

The Group is in compliance with all externally imposed capital requirements for
the financial years ended 31 December 2012 and 2011.

(e) Fair value measurements

Financial assets and liabilities measured at fair value are classified in the following
fair value measurement hierarchy:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities
(Level 1);
(ii) inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices) (Level 2); and
(iii) inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (Level 3).

The following financial liabilities are measured at Level 3 of the fair value
measurement hierarchy:

Group Trust
2012 2011 2012 2011
US$000 US$000 US$000 US$000

Derivative financial instruments
- interest rate swaps 34,565 54,866

- 1,398
Derivative component of convertible
loan 331 291

331 291
Total liabilities 34,896 55,157 331 1,689
207
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





47
24. Financial risk management (continued)

(e) Fair value measurements (continued)

The fair value of interest rate swaps is obtained from financial institutions and is
calculated as the present value of the estimated future cash flows.

The fair value of the derivative component of the convertible loan is obtained as
disclosed in Note 20.

The following table presents the changes in Level 3 instruments:


Group
2012
Interest rate
swaps
Derivative
component of
convertible loan Total
US$000 US$000 US$000

Beginning of financial year 54,866 291 55,157
Total (gains)/losses recognised
- in other comprehensive income (18,367) - (18,367)
- in profit or loss
24,311 40 24,351
Interest paid
(26,245) - (26,245)
End of financial year 34,565 331 34,896


Trust
2012
Interest
rate
swaps
Derivative
component of
convertible
loan Total
US$000 US$000 US$000

Beginning of financial year 1,398 291 1,689
Total (gains)/losses recognised
- in profit or loss 72 40 112
Interest paid (1,470) - (1,470)
End of financial year - 331 331
208
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





48
24. Financial risk management (continued)

(e) Fair value measurements (continued)


(f) Financial instruments by category


The carrying amount of financial liabilities at fair value through profit or loss is
disclosed in Note 17 to the financial statements. The aggregate carrying amounts
of loans and receivables and financial liabilities at amortised cost are as follows:

Group Trust
2012 2011 2012 2011
US$000 US$000 US$000 US$000

Loans and receivables 57,847 56,157 16,979 21,133
Financial liabilities at amortised
cost

621,293

673,827

709,385

695,551




Interest rate
swaps
Derivative
component of
convertible loan Total
US$000 US$000 US$000

Group
2011

Beginning of financial year 64,212 386 64,598
Total (gains)/losses recognised
- in other comprehensive income
(5,348) - (5,348)
- in profit or loss
24,049 (95) 23,954
Interest paid (28,047) - (28,047)
End of financial year 54,866 291 55,157

Trust
2011
Beginning of financial year 2,667 386 3,053
Total (gains)/losses recognised
- in profit or loss 270 (95) 175
Interest paid (1,539) - (1,539)
End of financial year 1,398 291 1,689
209
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





49
25. Related party transactions

(a) Related party transactions

In addition to the information disclosed elsewhere in the financial statements, the
following related party transactions took place between the Group and related
parties at terms agreed between the parties during the financial year:


Affiliated companies are entities controlled by a unitholder which holds 33.1% of
the issued Common Units of the Trust.


(b) Key management personnel compensation

There are no key management personnel of the Group as the operations are
managed by the Trustee-Manager.










Group
2012 2011
US$000 US$000

Interest paid on convertible loan to Polaris (Note 20) 1,006 907
Management fees paid to Trustee-Manager 3,070 3,035
Management fees paid to an affiliated company 1,936 1,898

Vessel fixed operating costs paid to an affiliated
company 28,328 26,802

Cable, victual and entertainment expenses paid to an
affiliated company 538 579
Commission paid to an affiliated company 45 95
Insurance premium paid to an affiliated company 18 20
210
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





50
26. Segment information

Management has determined the Groups business as one operating segment
based on the reports reviewed by the CODM, as the Group is only involved in the
chartering of container vessels which is carried out in international waters. The
reports reviewed by the CODM have been prepared on the same basis as the
financial statements, hence, there are no reconciling items to be disclosed.

Revenue from major products and services

All revenues from external customers are derived from the charter of
containerships.

Geographical information

Revenues from external customers are attributed to the countries based on the
customers country of origin.

Revenue Non-current assets **
2012 2011 2012 2011
US$000 US$000 US$000 US$000

Australia * 26,575 27,224 - -
Italy * 28,363 27,657 - -
France * 28,031 28,784 - -
Japan * 49,010 49,001 - -
Korea * 8,871 9,381 - -
Singapore - - 42,487 45,069
Others 3,444 7,419 - -
Total 144,294 149,466 42,487 45,069

* Revenues shown are derived from a single external customer in each of these
countries.
** Excludes carrying amount of vessels.

With respect to the presentation of vessels by geographical information, the
Group time charters them to several liner companies and the vessels are
deployed to various parts of the world at the discretion and direction of these
liner companies. Accordingly, the Trustee-Manager does not consider it
meaningful to allocate vessels to specific geographical locations. All other non-
current assets are attributed to the countries based on the Groups country of
domicile.


211
RICKMERS MARITIME
AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2012





51
27. Events occurring after the financial year

As disclosed in Note 19, the Group is subject to various financial ratio covenants,
including value-to-loan (VTL) ratios on its bank borrowings. On 9 June 2010, the
Group obtained a waiver to comply with the VTL covenant up to 14 May 2013.

On 22 January 2013, the Trustee-Manager engaged in formal negotiations with its
bankers to explore various options to either regularise or revise the loan
covenants including a conditional waiver of the VTL covenant for a further period
up to 29 December 2014.

As at the date of this report, the Group has successfully obtained written in-
principle agreement from the consortium of banks for the waiver of the VTL
covenant for at least up to 29 December 2014. The Group is also able to meet the
conditions in written in-principle agreement from the banks.


28. Comparatives
Comparative figures for the Group have been reclassified within Other
gains/(losses) net and Finance expenses to conform to the changes in the
current years presentation. The reclassification has been made to better reflect
the changes in fair value on the cash flow hedges and changes in fair value on
ineffective portions of interest rate swaps. The restatement of prior years figures
is as follows:

As restated
As previously
disclosed
2011 2011
US$000 US$000
Consolidated statement of comprehensive
income

Other gains/(losses) net
73
3,980
Finance expenses
(39,251)
(43,158)

The revised presentation does not result in a change in the Groups profit after tax
and earnings per share.


29. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a
resolution of the Board of Directors of the Trustee-Manager on 11 March 2013.


212
APPENDIX IV
UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT OF
RICKMERS MARITIME AND ITS SUBSIDIARIES FOR THE THIRD QUARTER ENDED
30 SEPTEMBER 2013
The information set forth in this Appendix IV have been extracted and reproduced from the unaudited
financial statements and distribution announcement for the third quarter ended 30 September 2013 and
has not been specifically prepared for inclusion in this Information Memorandum. Investors should read
the consolidated financial data in conjunction with the related notes.
213
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 1 of 16




PICKhEPS hAPITIhE (the "Trust") and Its subsIdIarIes (the "Croup")
Unaudited financial statements and distribution announcement
For the third quarter ended 30 September 2013




Rickmers Maritime (the Trust) is a business trust constituted by the Trust Deed entered on 30 March
2007 by Rickmers Trust Management Pte. Ltd. as the trustee-manager of Rickmers Maritime.
Rickmers Maritime was listed on the Singapore Exchange Securities Trading Limited (SGX) on 4 May
2007.
As at 30 September 2013, the Group owned sixteen containerships, which are all chartered out on fixed-
rate time charters with an average remaining charter period of 2.5 years.






Abbreviations:
QTR
NM
Incr
Decr
: Quarter
: Not meaningful
: Increase
: Decrease
214
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 2 of 16
1.a (i) Consolidated Statement of Comprehensive Income for the 3rd quarter ended 30 September 2013

3rd QTR 9 Months to
2013 2012
Incr/
(Decr) 30/09/13 30/09/12
Incr/
(Decr)

Note US$000 US$000 % US$000 US$000 %
Revenue (a) 36,600 36,315 1 107,116 108,011 (1)
Other income (b) 1,594 1,815 (12) 4,793 5,186 (8)
Other gains/(losses) - net (c) 7 269 (97) 111 (67) NM
Depreciation (9,302) (9,387) (1) (28,211) (28,247) -
Amortisation of favourable charter
contracts (128) (128) - (384) (384) -
Vessel operating expenses (d) (9,009) (8,821) 2 (27,090) (26,621) 2
Trustee-Manager fee (797) (778) 2 (2,348) (2,298) 2
Other trust expenses (136) (139) (2) (482) (468) 3
Transaction fees 9 - NM (148) - NM
Finance expenses (e) (5,752) (10,917) (47) (21,835) (29,734) (27)
Profit before income tax 13,086 8,229 59 31,522 25,378 24
Income tax expense - - - - 4 NM
Net profit after tax 13,086 8,229 59 31,522 25,382 24
Other comprehensive income
Cash flow hedges
- Fair value (losses)/ gains
^
(577) 163 NM (448) (3,303) (86)
- Transfer to finance expenses 2,916 4,932 (41) 10,079 15,363 (34)
Other comprehensive income for the
period, net of tax 2,339 5,095 54 9,631 12,060 (20)
Total comprehensive income for the
period 15,425 13,324 16 41,153 37,442 10
^ The fair value (losses)/ gains on cash flow hedges is a non-cash item and will be continuously released to profit or loss to offset the
interest expense over the period of borrowings.
Notes:
(a) Consists of time charter income, net of commissions.
(b) Other income
3rd QTR 9 Months to

2013 2012
Incr/
(Decr) 30/09/13 30/09/12
Incr/
(Decr)
US$000 US$000 % US$000 US$000 %
- Amortisation of deferred income from charter
contracts 1,436 1,436 - 4,308 4,308 -
- Interest income from financial institutions 21 63 (67) 81 190 (57)
- Other income 137 316 (57) 404 688 (41)
1,594 1,815 (12) 4,793 5,186 (8)
215
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page J of 16
(c) Other gains/(losses) net
3rd QTR 9 Months to

2013 2012
Incr/
(Decr) 30/09/13 30/09/12
Incr/
(Decr)

US$000 US$000 % US$000 US$000 %
- Gain/(loss) on fair value of derivative
component of convertible loan 2 259 (99) 119 (44) NM
- Others 5 10 (50) (8) (23) (65)
7 269 (97) 111 (67) NM

(d) Consist mainly of vessels fixed operating expense, lubricant oil expense, vessel management fee, bunker
expense and other vessel-related expenses.
(e) Finance expenses
3rd QTR 9 Months to
2013 2012
Incr/
(Decr) 30/09/13 30/09/12
Incr/
(Decr)
US$000 US$000 % US$000 US$000 %
Interest expense on secured bank loans (2,484) (3,414) (27) (8,331) (10,578) (21)
Fair value losses on effective portion of
interest rate swaps transferred from other
comprehensive income
- Interest paid (2,979) (4,848) (39) (10,374) (15,292) (32)
- Changes in derivative financial liability 64 (84) NM 295 (71) NM
Interest on secured bank loans net of effect
of hedging (5,399) (8,346) (35) (18,410) (25,941) (29)
Interest on convertible loan (329) (353) (7) (1,495) (1,069) 40
Fair value losses on ineffective portion of
interest rate swaps
- Interest paid (1,559) (1,699) (8) (4,643) (4,188) 11
- Changes in derivative financial liability 1,535 (519) NM 4,563 1,514 201
(24) (2,218) (99) (80) (2,674) (97)
Debt processing fee - - - (1,800) - NM
Other fees - - - (50) (50) -
(5,752) (10,917) (47) (21,835) (29,734) (27)
216
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 4 of 16
1.a (ii) Consolidated Distribution Statement for the 3rd quarter ended 30 September 2013

3rd QTR 9 Months to
2013 2012
Incr/
(Decr) 30/09/13 30/09/12
Incr/
(Decr)

Note US$000 US$000 % US$000 US$000 %
Profit after tax 13,086 8,229 59 31,522 25,382 24
Add:
Non-cash adjustments and others (a) 6,992 8,555 (18) 21,022 23,366 (10)
Interest expense - net 6,829 10,219 (33) 23,305 30,686 (24)
EBITDA 26,907 27,003 - 75,849 79,434 (5)

Non-recurring expenses (b) (8) - NM 1,949 - NM
Adjusted EBITDA 26,899 27,003 - 77,798 79,434 (2)
Add/(less):
Movement in working capital (1,518) 793 NM (1,912) (141) 1,256
Drydock reserve (c) (979) (407) 141 (3,002) (3,198) (6)
Cash flow available for distribution before
payment to debt capital providers 24,402 27,389 (11) 72,884 76,095 (4)
Net proceeds from issuance of
Common Units (284)
#
- NM 78,466 - NM
Less: Payment to debt capital providers
Repayment of secured bank loans (20,480) (13,109) (56) (113,797) (38,282) 197
Interest paid secured bank loans, interest
rate swaps and convertible loan (7,265) (10,124) (28) (23,921) (30,649) (22)
Debt processing fee paid - - - (1,800) - NM
Loan restructuring fee paid - - - (893) (893) -
Cash flow available for distribution to
unitholders (3,627) 4,156 NM 10,939 6,271 74
Amount to be distributed to
unitholders (d) 5,084 2,542 100 12,710^ 7,626 67
Number of units 000 847,350 423,675 100 847,350 423,675 100
Distribution Per Unit - US Cents 0.6 0.6 - 1.5 1.8 (17)
Notes:
(a) Non-cash adjustments comprise unrealised gain on interest rate swaps, depreciation expense, amortisation
of the convertible loan using the effective interest rate method as defined in IAS 39, amortisation of debt
issuance costs, amortisation of charter contracts (net), and exchange translation differences.
(b) Non-recurring expenses consist of debt processing fee and legal and professional fees incurred on the
finalisation of the agreements with lending banks to extend the waiver of value-to-loan covenant.
(c) The reserve represents management's estimate of the amount of cash that needs to be retained
progressively for the vessels future dry-docking costs.
(d) For 3Q2013, the amount to be distributed to unitholders is funded from cash retained in the prior periods.
For 3Q2012, the amount to be distributed to unitholders is funded by cash flow available for distribution to
unitholders.
For 9 months to 30 September 2013 and 30 September 2012, the amount to be distributed to unitholders is
funded by cash flow available for distribution to unitholders and partly from cash retained in the prior
periods.
# Comprise payment for unit issuance costs and related transaction fees in 3Q2013.
^ Consist of i) distribution of 0.6 US Cents per unit for 423,675,000 units in first quarter of 2013.
ii) distribution of 0.6 US Cents per unit for 847,350,000 units in second quarter and
third quarter of 2013.
217
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 5 of 16
1.b (i) Statement of financial position as at 30 September 2013 together with comparative statements
as at the end of the immediately preceding year

30/09/13 31/12/12
Group Trust Group Trust

US$000 US$000 US$000 US$000
ASSETS
Current assets
Cash and cash equivalents 57,836 30,173 57,168 16,916
Trade and other receivables 1,985 181 679 63
Inventories 2,268 149 2,462 149
Prepayments 24 11 23 16
Total current assets 62,113 30,514 60,332 17,144

Non-current assets
Investments in subsidiaries - 160 - 160
Loans to subsidiaries - 898,441 - 898,441
Vessels 971,927 - 997,178 -
Intangible assets 42,103 - 42,487 -
Total non-current assets 1,014,030 898,601 1,039,665 898,601

Total assets 1,076,143 929,115 1,099,997 915,745

LIABILITIES
Current liabilities
Trade and other payables 2,947 333,145 3,296 297,393
Advanced charter hire received 3,174 - 4,726 -
Secured bank loans 48,765 24,000 69,580 46,850
Derivative financial instruments 1,098 - 6,299 -
Total current liabilities 55,984 357,145 83,901 344,243

Non-current liabilities
Deferred income from charter contracts 11,422 - 15,730 -
Secured bank loans 406,043 252,126 498,822 315,547
Convertible loan 50,417 50,417 49,595 49,595
Derivative financial instruments 19,191 212 28,597 331
Total non-current liabilities 487,073 302,755 592,744 365,473

Total liabilities 543,057 659,900 676,645 709,716

NET ASSETS 533,086 269,215 423,352 206,029

UNITHOLDERS FUNDS
Common Units in issue 512,086 512,086 431,435 431,435

Unit issuance costs (12,024) (12,024) (10,122) (10,122)
Hedging reserve (18,947) - (28,578) -
Distributable income/(accumulated losses) 51,971 (230,847) 30,617 (215,284)

Total unitholders funds 533,086 269,215 423,352 206,029





218
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 6 of 16
1.b (ii) Groups borrowings and debt securities
Secured bank loans Group
30/09/13 31/12/12
US$000 US$000
Amount repayable within one year
48,765 69,580
Amount repayable after one year
406,043 498,822

454,808 568,402

As at 31 December 2012, the face value of the Groups total outstanding secured bank loans was
US$569.9 million. During the first nine months of 2013, a total repayment of US$113.8 million (2012:
US$38.3 million) was made by the Group. As at 30 September 2013, the face value of the Groups
total outstanding secured bank loans was US$456.1 million.

Group
30/09/13 31/12/12
US$000 US$000
Face value of secured bank loans 456,119 569,915
Unamortised portion of debt issuance costs (1,311) (1,513)
Carrying amount of secured bank loans 454,808 568,402

The difference between the face value of secured bank loans and the carrying amount of US$454.8
million (31 December 2012: US$568.4 million) is due to the accounting treatment for borrowings,
which is initially recognised at fair value (net of transaction costs) and subsequently stated at
amortised cost.
The loans bear interest at floating rates and are secured on all existing sixteen containerships and
their respective assignment of the charter revenues, insurance, earnings, deposit accounts and
pledge of respective owners/borrowers (the Trusts subsidiaries) shares and requisition
compensation.
In the first quarter of 2013, the Group successfully obtained an extension of the waiver of the value-to-
loan (VTL) covenant to 29 December 2014. A one-time debt processing fee of US$1.8 million was
paid.
219
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 7 of 16
Convertible loan
Group
30/09/13 31/12/12
US$000 US$000
Amount repayable after one year 50,417 49,595

The convertible loan denominated in US dollar is held by Polaris Shipmanagement Company Limited
(Polaris). Polaris has the option to convert the loan into Common Units of the Trust on 1 April 2014
or receive repayments from the Trust in ten equal quarterly instalments with the first instalment due
and payable on 30 June 2014.
On 20 May 2013, the Trust entered into a Second Supplemental Agreement (to the Settlement and
Convertible Loan Agreement dated 9th June 2010) with Polaris to defer the first instalment of the
convertible loan from 30 June 2014 to 1 February 2015. Should the Trust be able to meet the
conditions to exit from debt restructuring with the consortium of banks, it shall bring forward the first
instalment of the convertible loan provided no repayment shall be made earlier than 30 June 2014.
The convertible loan bears interest at a rate of 3-month US$ LIBOR plus a margin of 1.25% per
annum. From 1 April 2014, the loan will bear interest at a rate of 3-month US$ LIBOR plus a margin of
3.00% per annum and the margin will increase by 0.25% per quarter until it reaches a maximum rate
of 4.50% per annum.
Following the successful completion of the rights issue, the Trust signed a Third Supplemental
Agreement with Polaris on 1 July 2013 to formalise adjustments to the convertible loan conversion
price from S$0.482625 to S$0.399385, and the revised maximum settlement units from 150,000,000
to 181,263,067.
220
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 8 of 16
1.c Consolidated statement of cash flows for the 3rd quarter ended 30 September 2013

3rd QTR 9 Months to

2013 2012 30/09/13 30/09/12

US$000 US$000 US$000 US$000
Cash flows from operating activities:
Cash receipts from customers 36,590 36,363 106,978 107,841
Cash paid to suppliers and Trustee-Manager (10,709) (8,735) (30,421) (28,723)
Net cash provided by operating activities 25,881 27,628 76,557 79,118
Cash flows from investing activities:
Vessel improvement (52) - (91) -
Dry-docking cost paid (1,971) (378) (3,703) (2,761)
Interest received 17 74 78 189
Net cash used in investing activities (2,006) (304) (3,716) (2,572)

Cash flows from financing activities:
Proceeds from issuance of Common Units - - 80,651 -
Unit issuance costs paid (162) - (2,031) -
Transaction fees paid (122) - (154) -
Repayment of secured bank loans (20,480) (13,109) (113,797) (38,282)
Other fees paid - - (50) (50)
Interest paid on secured bank loans (2,497) (3,327) (8,228) (10,403)
Interest paid on interest rate swaps (4,538) (6,547) (15,017) (19,480)
Interest paid on convertible loan (228) (250) (676) (766)
Debt processing fee paid - - (1,800) -
Loan restructuring fee paid - - (893) (893)
Decrease in restricted cash - - 893 893
Distribution to unitholders (5,084) (2,542) (10,168) (7,626)
Net cash used in financing activities (33,111) (25,775) (71,270) (76,607)
Net (decrease)/increase in cash and cash
equivalents for the period (9,236) 1,549 1,571 (61)
Cash and cash equivalents at beginning of
period 67,066 51,931 56,276 53,536
Effects of exchange rate changes on cash and
cash equivalents 6 11 (11) 16
Cash and cash equivalents at end of period
^
57,836 53,491 57,836 53,491
For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents
comprise the following:

30/09/13 30/09/12
US$000 US$000
Cash and cash equivalents per statement of financial position 57,836 54,384
Less: Restricted cash for payment of loan restructuring fee - (893)
Cash and cash equivalents per consolidated statement of cash flows 57,836 53,491

Footnote:
^ Cash and cash equivalents include an amount of US$25.0 million which can be used by the Group for operational purposes
(subject to certain requirements) but the amount is not available for distribution to unitholders nor to service interest payments
on the convertible loan.
221
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 9 of 16
1.d (i) Statement of changes in unitholders funds for the 3rd quarter ended 30 September 2013
Group Attributable to unitholders of Trust
Common
Units in
issue
Unit
issuance
costs
Hedging
reserve
Distributable
income Total
US$000 US$000 US$000 US$000 US$000
2013
Balance at 1 January 2013 431,435 (10,122) (28,578) 30,617 423,352
Common Units issued 80,651 - - - 80,651
Unit issuance costs - (1,903) - - (1,903)
Total comprehensive income for the period - - 7,292 18,436 25,728
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 June 2013 512,086 (12,025) (21,286) 43,969 522,744
Unit issuance costs - 1 - - 1
Total comprehensive income for the period - - 2,339 13,086 15,425
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 September 2013 512,086 (12,024) (18,947) 51,971 533,086
2012
Balance at 1 January 2012 431,435 (10,122) (46,945) 13,162 387,530
Total comprehensive income for the period - - 6,965 17,153 24,118
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 June 2012 431,435 (10,122) (39,980) 25,231 406,564
Total comprehensive income for the period - - 5,095 8,229 13,324
Distribution to unitholders - - - (2,542) (2,542)
Balance at 30 September 2012 431,435 (10,122) (34,885) 30,918 417,346
222
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 10 of 16
1.d (i) Statement of changes in unitholders funds for the 3rd quarter ended 30 September 2013
Trust
Attributable to unitholders of Trust
Common
Units in
issue
Unit
issuance
costs
Hedging
reserve
Accumulated
losses Total
US$000 US$000 US$000 US$000 US$000
2013
Balance at 1 January 2013 431,435 (10,122) - (215,284) 206,029
Common Units issued 80,651 - - - 80,651
Unit issuance costs - (1,903) - - (1,903)
Total comprehensive loss for the period - - - (4,171) (4,171)
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 June 2013 512,086 (12,025) - (224,539) 275,522

Unit issuance costs - 1 - - 1
Total comprehensive loss for the period - - - (1,224) (1,224)
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 September 2013 512,086 (12,024) - (230,847) 269,215

2012
Balance at 1 January 2012 431,435 (10,122) - (198,646) 222,667
Total comprehensive loss for the period - - - (3,671) (3,671)
Distribution to unitholders - - - (5,084) (5,084)
Balance at 30 June 2012 431,435 (10,122) - (207,401) 213,912

Total comprehensive loss for the period - - - (1,302) (1,302)
Distribution to unitholders - - - (2,542) (2,542)
Balance at 30 September 2012 431,435 (10,122) - (211,245) 210,068

223
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 11 of 16
1.d (ii) Details of any changes in the companys units arising from rights issue, bonus issue, share
buy-backs, exercise of share options or warrants, conversion of other issues of equity
securities, issue of units for cash or as consideration for acquisition or for any other purpose
since the end of the previous period reported on. State also the number of units that may be
issued on conversion of all the outstanding convertibles, as well as the number of units held
as treasury units, if any, against the total number of issued units excluding treasury units of
the issuer, as at the end of the current financial period reported on and as at the end of the
corresponding period of the immediately preceding financial year.

30/09/13 30/09/12
Units Units
At the beginning of the period 847,350,000
(c)
423,675,000
Footnote:
(a) There are no treasury units.
(b)
(c)
There is a convertible loan of principal amount US$49,000,000 issued in 2010 to Polaris
Shipmanagement Company Ltd (Polaris). If the convertible loan is not repaid by 31 March 2014,
Polaris has the option to convert any part of the outstanding loan amount into new units of the Trust
up to a maximum of 181,263,067 units on 1 April 2014. If the option is exercised with the maximum
number of units to be issued, the total number of units in Rickmers Maritime would be 1,028,613,067.
There was an issuance of 423,675,000 common units on 27 May 2013 as a result of the rights issue
conducted in 2Q13.
1.d (iii) To show the total number of issued units excluding treasury units as at the end of the current
financial period and as at the end of the immediately preceding year.

30/09/13 31/12/12

Total issued units 847,350,000 423,675,000




1.d (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury units as
at the end of the current financial period reported on.
Not applicable.

2 Whether the figures have been audited, or reviewed and in accordance with which auditing
standard or practice
The figures have not been audited nor reviewed. However, our auditors have performed certain
procedures and enquiries. These procedures are substantially less in scope than an audit or a review
in accordance with International Standard on Review Engagements (ISRE) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the Entity.
3 Where the figures have been audited, or reviewed, the auditors report (including any
qualifications or emphasis of matter)
Not applicable.
4 Whether the same accounting policies and methods of computation as in the issuers most
recently audited financial statements have been applied
Except as stated in Note 5, the Group has applied the same accounting policies and methods of
computation in the financial statements for the current financial period as those of the audited financial
statements for the financial year ended 31 December 2012.
224
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 12 of 16

5 If there are any changes in the accounting policies and methods of computation, including any
required by an accounting standard, what has changed, as well as the reasons for, and the
effect of, the change
On 1 January 2013, the Group adopted the new and amended International Financial Reporting
Standards (IFRS) that are mandatory for application on that date. The following are the new and
amended IFRS that are relevant to the Group.
(i) IFRS 10 Consolidated Financial Statements
(ii) IFRS 12 Disclosure of interests in other entities
(iii) IFRS 13 Fair Value Measurements
(iv) Amendments to IFRS 7 Financial Instruments: Disclosure on offsetting
The adoption of the above IFRS did not result in any substantial change to the Groups accounting
policies nor any significant impact on the financial statements.
6 Earnings per unit (EPU) for the current financial period and corresponding period of the
immediately preceding financial year
3rd QTR YTD
(Restated)* (Restated)*
2013 2012 2013 2012
Weighted average number of units as at
end of period
-basic 847,350,000 508,410,000 665,419,000 508,410,000
-diluted 1,028,613,067 689,673,067 846,682,067 689,673,067
Earnings per unit for the period based on
the weighted average number of units in
issue (US Cents)
-basic 1.54 1.62 4.74 4.99
-diluted 1.30
^
1.21
^
3.89
^
3.84
^
* Restated to take into account effects of the rights issue in accordance with IAS 33 Earnings per Share.
^ Based on the assumption that the maximum number of units of 181,263,067 will be issued. The gain/(loss) on fair value of the
derivative component of the convertible loan was deducted/added back and the interest expense on the convertible loan was
added back to the EPU computation to arrive at the diluted EPU.
7 Net asset value (for the issuer and group) per unit based on the total number of issued units
excluding treasury units of the issuer at the end of the period and immediately preceding
financial year:-

30/09/13
(a)
31/12/12
Group Trust Group Trust

Net asset value per unit (US$) 0.63 0.32 1.00 0.49

Footnote:

(a) The number of units used in the computation of actual NAV is 847,350,000 units.
There are no treasury units.
225
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 1J of 16
8 Review of the Performance of the Group
The Group operates a fleet of sixteen containerships, which are all chartered out on fixed-rate time
charters with an average remaining charter period of 2.5 years.
Group revenue of US$36.6 million for the third quarter of 2013 (3Q13) was 1% higher than the
corresponding quarter of 2012. During the quarter, the charter of the vessel, Kaethe C. Rickmers was
extended for a further six months with its existing charterer. The net daily charter rate is US$ 6,650
and the charter will expire at the end of March 2014
^
. The Group achieved a utilisation rate of 99.9%
in 3Q13 (3Q12: 99.5%).
Other income of US$1.6 million in 3Q13 comprising mainly amortisation of deferred income from
charter contracts (non-cash in nature) was US$0.2 million (12%) lower than the corresponding
quarter of 2012 due to a one-off recovery of an insurance claim in 3Q12.
Vessel operating expenses comprising vessel management fees, fixed operating expenses and
lubricant oil expense, increased by US$0.2 million (2%) from US$8.8 million in 3Q12 to US$9.0
million in 3Q13. The increase was due to a contractual increase in fixed operating expense and
vessel management fees.
Finance expenses decreased from US$10.9 million in 3Q12 to US$5.8 million in 3Q13. The decrease
was due to reduced outstanding bank loans balances and expiry of interest rate swaps contracts
which resulted in lower interest expenses incurred in 3Q13.
Overall, the Group recorded a net profit after tax of US$13.1 million in 3Q13 compared to a profit of
US$8.2 million in 3Q12.
^ 24 March 2014, +/- 30 days at the charterers option

9 Where a forecast, or a prospect statement, has been previously disclosed to unitholders, any
variance between it and the actual results.
The current results are in line with the Companys forecast presented in the circular to unitholders
dated 5 April 2013, except for the increase in net profit arising from the fair value gain on interest rate
swaps amounting to US$1.2 million, and lower interest expense incurred of US$0.7 million.
.
226
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 14 of 16
10 Commentary on the significant trends and competitive conditions of the industry in which the
group operates and any known factors or events that may affect the group in the next reporting
period and the next 12 months.
Expected trade growth for the year 2013 is projected to reach 4.7%^. Growth in global container
capacity is forecasted to outpace demand growth this year. For 2014, trade growth is projected to
accelerate to 6.2%^. However, the trade growth is subject to risks from global economic
developments. Downside risks are high oil prices and continued uncertainty in the global economy.
A significant amount of new ships, mainly very large container ships in excess of 10,000 TEU, is
scheduled for delivery during the next twelve months. Despite an increase in scrapping of existing
ships and continued slow-steaming, demand is unlikely to absorb the prevailing over-supply within the
near term. As a result, recovery of time charter rates and vessel values is expected to begin
materialising only in 2014.
Rickmers Maritimes fleet has, through existing charter agreements, US$ 372.1 million of secured
revenue between 1 October 2013 and the expiry of the last charter party contract in 2019. The fleet is
100% employed for the remaining period of 2013 and 83% employed in 2014. Revenue from the
unemployed 17% will be negatively affected if the charter market remains depressed. Nonetheless,
with the majority of our fleet employed until 2015, and barring any unforeseen circumstances, we
believe our existing leases will continue to generate ongoing positive cash flow for the Trust.
^ source: Clarkson Research Services, September 2013
227
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 15 of 16
11 Distribution

a Current financial period

Any distributions recommended for the
current financial period
: Yes (recommended)
Amount : US$5,084,100
Distribution Period : 1 July 2013 to 30 September 2013
Distribution Type : Cash, Tax-exempt Distribution
Distribution Rate : 0.60 US Cents per unit
Par Value of units : Not applicable
Tax Rate : Distribution received by either Singapore tax resident
Unitholders or non-Singapore tax resident Unitholders
are exempt from Singapore income tax.

The recommended distribution has not been provided for in these financial statements. This
distribution will be accounted for in the statement of changes in unitholders funds in the 4th quarter of
2013.

b Corresponding period of the immediately preceding financial period

Any distributions declared for the
previous corresponding financial period
: Yes. At 0.60 US cents per unit for distribution period
from 1 July 2012 to 30 September 2012

c Date payable : 27 Nov 2013
d Books Closure date : The Transfer Books and Register of Unitholders of
Rickmers Maritime (the Trust) will be closed from 5.00
pm on 12 Nov 2013 for the purposes of determining
each Unitholders entitlement to the distribution.

Unitholders whose Securities Accounts with the Central
Depository (Pte) Limited (CDP) are credited with
shares at 5.00 pm on 12 Nov 2013 will be entitled to the
Distribution to be paid on 27 Nov 2013.

12 If no distribution has been declared / (recommended), a statement to that effect.

Not applicable

13 If the Group has obtained a general mandate from shareholders for IPTs, the aggregate value
of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained,
a statement to that effect.
The Group has not obtained a general mandate from unitholders for IPTs.

228
FInancIal Statements Announcement
For the thIrd quarter ended J0 September 201J


Page 16 of 16
14 The board of directors of Rickmers Trust Management Pte. Ltd. do hereby confirm that, to the
best of their knowledge, nothing has come to their attention which may render the financial
results for the quarter ended 30 September 2013 to be false or misleading.

This release may contain forward-looking statements that involve risks and uncertainties. Actual future
performance, outcomes and results may differ materially from those expressed in forward-looking
statements as a result of a number of risks, uncertainties and assumptions. Representative examples
of these factors include (without limitation) general industry and economic conditions, interest rate
trends, cost of capital and capital availability, competition from other companies, changes in operating
expenses, trust expenses and governmental and public policy changes and the continued availability
of financing in the amounts and the terms necessary to support future business. Investors are
cautioned not to place undue reliance on these forward-looking statements, which are based on
current view of management on future events.
Any discrepancies in the tables included in this announcement between the listed amounts and total
thereof are due to rounding.
BY ORDER OF THE BOARD OF RICKMERS TRUST MANAGEMENT PTE. LTD.
AS TRUSTEE-MANAGER OF RICKMERS MARITIME
Bertram R. C. Rickmers
Chairman
Date: 22 October 2013

229
APPENDIX V
REPORT OF MAERSK BROKER ASIA LTD.
The information presented in the following report, including all data (actual, estimates and forecasts)
relating to, among others, demand, supply, utilisation and time charter rates, has been provided by
Maersk Broker Asia Ltd.. None of the Issuer, the Arrangers and the Dealers make any representation as
to the accuracy of this information. The data provided by Maersk Broker Asia Ltd. is based on economic
and other assumptions that may prove to be incorrect and the information has not been independently
verified by the Issuer, the Arrangers or the Dealers, nor any of its or their respective advisors. Certain
industry data contained in this section is estimated in the absence of official company confirmation or
reliable country source information, and prospective investors should not place undue reliance on such
data.
This report includes forecasts and other forward-looking estimates. These forward-looking statements
are necessarily based on various assumptions and estimates that are inherently subject to various
risks and uncertainties relating to possible invalidity of the underlying assumptions and estimates and
possible changes or development of social, economic, business, industry, market, legal, government, and
regulatory circumstances and conditions and actions taken or omitted to be taken by others. Assumptions
relating to the foregoing involve judgments with respect to, among other things, future economic and
competitive market conditions and future government and business decisions, all of which are difficult
or impossible to predict accurately. Actual results and future events could differ materially from such
forecasts and projections. Prospective investors should not place undue reliance on such statements in
the report, or on the ability of Maersk Broker Asia Ltd. or any other third party to accurately predict future
industry trends or performance.
230
The Container Vessel Market
Autumn 2013
Maersk Broker Asia Ltd.,
Room 3702, 37/F. The Lee Gardens
33 Hysan Avenue, Causeway Bay, Hong Kong 14 November 2013
231

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
1






Disclaimer



Statistical data, graphs, tables and other information, content and/or data "(the
"Information") contained in the "The container vessel market - Autumn 2013" has been
provided by Maersk Broker Asia Ltd. Maersk Broker Asia Ltd. has advised that the
Information is drawn from its database and other third party sources. In connection
therewith, Maersk Broker Asia Ltd. has advised that:

(i) certain information from its database is derived from estimates or subjective judgments;

(ii) the information in the databases of other maritime data collection agencies may differ
from the information in its database;

(iii) whilst Maersk Broker Asia Ltd. has taken reasonable care in the compilation of the
Information and believes it to be accurate and correct, data compilation is subject to limited
audit and validation procedures and may accordingly contain errors; in particular, Maersk
Broker Asia Ltd. is unable to pre-screen or systematically monitor information, content
and/or data from third party sources.

The Information is provided on an "as is" basis, without any representations or warranties of
any kind (whether express, implied or statutory). To the fullest extent permitted by law, all
representations and warranties, express, implied or statutory, including, without limitation,
all warranties relating to the accuracy, reliability, completeness, adequacy, timeliness or
fitness for any particular purpose of the Information are hereby disclaimed.

The Information is made available as general information for general circulation only and
does not take into account the specific objectives, situation or particular needs of any
particular person or party. The Information does not constitute business, financial,
investment, hedging, trading, legal, regulatory, tax, accounting or other professional advice,
for which services of a competent professional should be sought. You assume total
responsibility and risk for your use of, or reliance on the Information, which is subject to
change at any time without notice. The fact that the Information is available to you
constitutes neither a recommendation that you enter into a particular transaction nor a
representation that any product described is suitable or appropriate.

To the fullest extent permitted by law, we shall not be responsible or liable for any loss or
damage of any kind, including direct, indirect, incidental, consequential, special, exemplary,
punitive or other loss or damage (including but not limited to, damages for loss of profits,
loss of revenue, loss of business, use or data, loss of anticipated savings, loss of contract or
opportunity or loss of goodwill) under any contract or tort (including, without limitation,
negligence and strict liability), howsoever caused, relating in any way to the Information,
your use thereof, or any errors or omissions therein.


The numbers/data contained in this document may in some instances differ from
numbers/data in previously published documents. As stated above, information has been
drawn from the databases of Maersk Broker Asia Ltd. and other sources. It is accordingly
subject to updating and review.






232

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
2
The Container Vessel Market - Autumn 2013
Introduction
The currently low container vessel charter market
has come about as a result of oversupply having
outpaced growth in demand. This situation has
developed after a contraction on the demand side
which commenced late 2008 and throughout
2009, thus leading to reduced charter rates.
Charter rates have been on a declining trend
since April 2011. The container vessel charter
market is expected to be under pressure during
the latter part of 2013, although it is estimated to
have bottomed out. On average charter rates are
expected to remain at the current level before
improving in 2014.

The development of the Maersk Broker Container
Index (MBCI) evidences the weaker container
vessel charter market. After reaching a record
high in June 2005, the MBCI declined to 1,027 at
the end of the year. In late 2006, the market
again experienced a slow-down with rates
declining - the MBCI fell to 795 in December that
year. The MBCI fluctuated in 2007 and went from
826 in early 2007 to 1,141 in October of the
same year. A new high was seen in February
2008 of 1,110 after which a significant correction
set off with the MBCI reaching a historically low
level of 307 at the end of 2009.

During 2010 a rebound in charter rates took place
at the same time as more than 1.3 mill. TEU was
delivered and more than 1 mill. TEU idle capacity
absorbed. Growing demand in combination with
an increase in forward market sentiment pushed
up demand and the MBCI reached a periodical
high of 757 in April 2011. Since then, a
combination of low demand and significant new
capacity which entered the market, have kicked-
started a new reduction in time charter rates.
The container vessel charter market has been on
a downward trend since 2005. Positively during
this period the newbuilding order book has been
reduced from a peak of close to 60% of the fleet
to about 20% at present (newbuilding capacity in
nominal TEU in relation to existing fleet of
container vessels).

As a result of long term economic developments
- specifically in regards to the economic growth
in emerging markets (China, South East Asia,
Latin America and Africa specifically) and with
the EURO-zone and the USA gradually returning
to average economic growth. We forecast
relatively strong development in the average
tonnage demand from 2013 to 2017 (annual
average growth rates of 8.6%).

The global financial crisis led to a significant
reduction in growth of tonnage demand during
2008-2012 - and a recovery is expected to take
place within the next 12-18 months. Currently,
the supply vs. demand scenario remains
negative, but this is expected to change in 2014
with demand growth anticipated to outpace
supply growth in subsequent years.


As idle tonnage has to be absorbed charter rates
are, in general, not expected to improve until
sometime during 2014 - with significant
improvements in 2015. Major scenarios, which
could influence the market positively, are a
quicker than expected rebound of the economy in
USA and Europe, demolition activity above
expectations, a delay in deliveries of newbuildings
or lower than expected contracting of new
tonnage.

Maersk Broker Container Index
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
M
a
e
r
s
k

B
r
o
k
e
r

C
o
n
t
a
i
n
e
r

I
n
d
e
x

233

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
3
Demand for Containerized Trade
The global financial crisis reached its initial climax
in the first half of 2009. Whilst some recovery was
seen in 2010 this proved to be a false start and
the financial crisis has persisted until now. We are
currently experiencing a slow and volatile recovery
- with some countries still having significant
challenges - which is expected to continue
throughout 2013 with a full year forecasted global
economic growth rate of 3.3%. This is mainly
driven by emerging markets and a gradually
improving US economy and in parts of the Euro-
zone.

After 2013 the global economy is, however,
expected to return to more normal growth rates.
Growth in tonnage demand is expected to increase
at an annual average of 8.6% during 2013-2017.
(As the world recovered from the previous crisis in
2000-2001 the following years, 2002-2007,
recorded an average demand growth of 13.6%).
Tonnage demand was reduced by a record 11% in
2009, but rebounded to a growth rate of 24.7% in
2010 followed by much lower growth of 7.6% and
0.8% in 2011 and 2012 respectively.

In the medium term, returning growth in the USA
and the Euro-zone will be positive for container
demand as the two areas together account for
about 66% of global demand.

On the two major trade lanes, Asia to Europe and
Asia to the USA, container imports have been
growing with double digits prior to the financial
crisis to low single digits on average from 2008 to
2012. Container import growth is, however, not
expected to return to the same levels as before
the crisis. But a decent growth of 7.5% on
average for 2013-2017 for Asia-Europe and 5.5%
for Asia-USA is expected.

In 2009, the recession in the USA and the Euro-
zone prompted a near halt of Foreign Direct
Investments (FDIs) into China. This together with
the lack of demand from consumers in the USA
and the Euro-zone led to a decline in growth of
imports from China into the USA and the Euro-
zone.

As an importer, China will continue to be an
important factor for the container industry going
forward. The two major and relatively new growth
drivers are likely to be Africa and Latin America.

For Latin America we even expect container
import growth to accelerate to levels surpassing
the growth seen before the financial crisis. This is
also likely to be the case for imports by African
nations from Asia. Container imports can be
divided into consumer oriented products and
products driven by the manufacturing sector. In
many of the countries in the two regions the
manufacturing sector has not yet reached its
natural level and a large part of the local
consumers are on the verge of entering the
middle class - a parameter for higher demand.
Accordingly, the container demand for imports to
both Latin American and Africa will be driven by
both the consumer and the manufacturing sector.

In addition, demand for container tonnage going
forward will also, to some extent, be assisted by
the vessels which, in general, are expected to be
operating at slower and slower speeds - a
parameter reducing productivity and thus
requiring more tonnage to move the same
amount of containers. Therefore, our forecast is
based on bunker cost remaining at or close to the
current price level.



Basis Scenario Forecasts

Year
World
GDP
Growth
Transported TEU
Transported TEU
Growth
Av. Time
at Sea
Av.
Speed
Tonnage
Demand (TEU)
Tonnage
Demand
Growth
2010 5.2% 110,951,199 15.0% 65% 18 10,629,812 24.7%
2011 4.0% 119,408,792 7.6% 65% 18 11,434,050 7.6%
2012 3.2% 121,736,951 1.9% 65% 18 11,529,060 0.8%
2013 3.3% 125,683,564 3.2% 65% 17.9 12,226,125 6.0%
2014 4.0% 134,762,515 7.2% 65% 17.8 13,271,059 8.5%
2015 4.4% 145,348,249 7.9% 65% 17.7 14,522,947 9.4%
2016 4.5% 156,878,640 7.9% 65% 17.6 15,901,670 9.5%
2017 4.5% 169,527,911 8.1% 65% 17.5 17,438,318 9.7%


234

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
4
Growth in Transported TEU
Following a sharp decline in demand during the
second half of 2008 and especially in 2009, the
major trades experienced an increase in 2010,
followed by a second wave of decline between
2011 and 2012. Container import growth is
expected to have bottomed out in 2012/2013 and
return to more stable rates from late 2014/2015
onwards.

Intra Asia
A constant flow of positive economic
developments, increasing urbanisation and
general population growth in Asia are expected to
continue to be the main drivers of growth for
containerized trade in the region, leading to an
annual average growth rate of 7.8% in the intra-
Asian trades. The intra-Asian trade is now the
largest of the main trading areas in terms of the
number of imported containers. The continued
high growth will continue to positively influence
the market and the need for larger vessels.

Asia - Europe
Until the onset of the financial crisis in late 2008
the Asia-Europe trade experienced high growth
rates (14.5% growth in trade from Asia to Europe
on average in the period 2003-2007). Going
forward, growth in demand is expected to be
more subdued at 7.7% on average from 2013
until 2017. Continued high economic growth in
Asia is expected to guide demand in the
eastbound trade reaching annual growth rates of
7.6% in the same period.

Asia - North America
The transpacific trade experienced average
growth of 7.8% per annum from Asia to the US
West Coast and 14.2% per annum from Asia to
the US East Coast in 2000 to 2007. The trade is
predicted to show an annual average growth rate
of 6.1% in the Asian trade to the US West Coast
and 7.0% in trade to the US East Coast in the
period from 2013 to 2017.
Asia - Latin America
Trade between Asia and Latin America is increasing
at a fast pace - in both directions. The
containerised trade volume from Asia to Latin
America enjoyed an annual average growth rate of
as high as 12.3% in 2000 to 2012, meanwhile the
Latin America to Asia route also grew at close to
10% each year on average. Going forward, the
annual average growth rate is expected to reach
about 11% for Asia to Latin America trades from
2013 until 2017. The Latin America to Asia trade
volume is also expected to improve annually to
7.4% on average over the next few years.

Europe - North America
Transatlantic trade - from Europe to North America
- experienced growth rates of an annual average
rate of 4.3% from 2000 to 2007. During late 2011
and throughout 2012, growth rates stabilised at a
low level after a major contraction in 2009 of
21.3% and a 2010 rebound with a growth rate of
17.9%. The annual average growth rate is
forecasted to be 6.9% in the westbound trade from
2013 to 2017, while the eastbound traffic is
expected to grow by an annual average growth rate
of 6.7% during the same period.

Latin America - North America
Latin - North America trade has gained momentum
with strong growth rates as with regards to the
north- and southbound trades. It is estimated that
the trade will continue to grow during the next few
years (2013-2017) at an annual average growth
rate of 6.8% for the northbound trade, and 10.0%
for the southbound trade.

Africa - Asia
The front haul westbound trade route grew at
15.4% from 2000-2007 and decelerated to 8.6% in
2008-2012. Growth is expected to increase to
9.8% on average in 2013-2017. Growth on the
backhaul trade has accelerated during the financial
crisis and is expected to keep accelerating going
forward.



Trade Pattern Summary
2000-2007 2000-2012 2013-2017 2009 2017
Intra-Asia 8.9% 6.8% 7.8%
Asia - Europe 14.8% 8.4% 7.7%
Europe - Asia 11.8% 8.7% 7.6%
Asia - North America East Coast 14.2% 8.8% 7.0%
North America East Coast - Asia 9.6% 8.2% 8.0%
Asia - North America West Coast 7.8% 3.6% 6.1%
North America West Coast - Asia 5.2% 4.2% 7.3%
Asia - Latin America 13.9% 12.3% 10.8%
Latin America - Asia 9.6% 8.0% 7.4%
Europe - North America 4.3% 3.4% 6.9%
North America - Europe 4.1% 2.5% 6.7%
Latin America - North America 5.6% 2.2% 6.8%
North America - Latin America 6.0% 5.1% 10.0%
Asia - Africa 15.4% 12.5% 9.8%
Africa - Asia 6.2% 6.7% 8.5%
Average Growth p.a. Imbalance Ratio
1.37 1.73
1.83 1.74
1.84 2.74
1.70 1.71
1.54 1.71
4.16 4.34
1.30 0.94

235

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5
Growth in Tonnage Demand
The total tonnage demand (in nominal TEU) is
assessed by Maersk Broker on the basis of
estimated figures of transported TEU in an effort
to obtain a number, which is comparable to
tonnage supply (in nominal TEU).

This is done by taking into account distances and
productivity factors; average time at sea, average
speed and the average weight of a container.
Hence, total tonnage demand expresses the fleet
capacity needed to carry out the transportation
work (TEU - miles).

The first step in assessing the total tonnage
demand is to calculate the total transportation
work. This is done by using the data of
transported TEU and average distances between
all regions. In addition, factors such as speed
(including Super Slow Speed efforts) and conges-
tion - or rather time at sea - are taken into
consideration, and total tonnage demand is
calculated.

In the Maersk Broker Basis Scenario the
transported TEU is forecast to increase with an
annual average growth rate of 7.8% during
2013-2017 (historic growth has been 9.5% per
year during 2000-2007, 3.7% in 2008, -10.0% in
2009 and 8.2% during 2010-2012).

Accordingly, the total tonnage demand is
expected to grow by an average of 8.6% per
year from 2013 to 2017.

Tonnage demand has typically improved sharply
after economic recessions. The forecasted
rebound in growth outlined is, however, well
below what has been seen historically.
Global Tonnage Demand Growth
Year Transported TEU
Growth in
Transported TEU
Tonnage Demand,
Nominal TEU
Tonnage Demand
Growth

2010 110,951,199 15.0% 10,629,812 24.7%
2011 119,408,792 7.6% 11,434,050 7.6%
2012 121,736,951 1.9% 11,529,060 0.8%
2013 125,683,564 3.2% 12,226,125 6.0%
2014 134,762,515 7.2% 13,271,059 8.5%
2015 145,348,249 7.9% 14,522,947 9.4%
2016 156,878,640 7.9% 15,901,670 9.5%
2017 169,527,911 8.1% 17,438,318 9.7%


Transported TEU and Tonnage Demand vs. Tonnage Supply
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236

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6
Tonnage Supply
At the end of 2012, the total container vessel fleet
had reached a capacity of 16,243,659 TEU and the
order book equalled 3,355,153 TEU -
corresponding to a fleet growth of 6.1% compared
to year end 2011.

The newbuilding contracting activity during 2012
was low (480,946 TEU) and the order book in
relative terms of the total fleet reduced to 20.7%
by end of December 2012, compared to 25.5% in
January 2011. From 2003 to mid-2008 contracting
activity within the container segment exceeded all
previous records with a total of 2,097,500 TEU
ordered in 2003; 1,751,900 TEU in 2004;
1,473,350 TEU in 2005; 1,818,550 TEU in 2006;
and finally a record 3,541,150 TEU ordered in 2007
followed by 1,050,250 TEU in 2008.

Apart from 2 x 1,000 TEU contracts, which were
reported during 2009, newbuilding activity reached
a complete standstill in 2009 and the first six
months of 2010. However, during the second half
of 2010 contracting sentiment changed. This was
driven by an improving charter market resulting in
full year ordering of about 646,000 TEU - a trend
which continued at an increasing pace into the first
half of 2011 with full year 2011 confirmed
contracts of nearly 1,740,000 TEU.

The delivery profile of the current order book is
between two and three years. Regardless - and as
a result - of negotiated postponements of
deliveries, especially with regards to the large
vessels during the initial part of the financial crisis
from late 2008 until the first half of 2010, the order
book was relatively full when the new contracting
cycle began in the second half of 2010.

The significant addition to the order book of more
than 2 mill. TEU during late 2010 and 2011 led to a
high number of deliveries in 2012, and will do so
for the full year 2013 and most of 2014.
On a more positive note, it should be emphasized
that the majority of the large vessels have been
ordered by end users and not for speculative
reasons, leading to a smooth absorption into the
trading fleet.

During the second half of 2013 the contracting of
container tonnage has increased once again (YTD
1.6 mill. TEU). Nearly 1.75 mill. TEU is expected
to be contracted throughout the full year (1.5
mill. TEU has been estimated for 2014). It is
expected that the ordering will be dominated by
the liner companies, who are seeking to upgrade
their fleets with new and efficient large Post-
Panamax tonnage, whilst also taking advantage
of the low prices offered by the shipyards.

Based on our knowledge of the current order
book and our estimate of future contracting (and
indeed demolition activity), we forecast the fleet
will grow at an annual average rate of 6.6% from
now until 2017.

Although, the current order book is biased
towards the largest container vessels, this is not
seen as a scenario that will limit a recovery of
the container vessel charter market.

Rather, the large vessels ordered are expected to
fill the requirements from the end users (liner
companies) in order to upscale their services and
the tonnage they are utilising in an effort to cater
for the expected future growing demand, while at
the same time, creating the basis for the lowest
possible cost of transportation.

The expectations for continued high bunker
prices and, hence, continued focus on super slow
steaming will - as stated earlier in this report -
also drive demand for additional container
vessels.

Fleet Development - including estimated future contractings
End Year Fleet
Forecast
2008 2009 2010 2011 2012 2013 f 2014 f 2015 f 2016 f 2017 f
0-199 TEU 9,417 11,076 10,909 10,912 10,841 9,841 8,341 8,011 7,636 7,261
200-399 TEU 47,791 46,657 46,327 45,135 44,998 43,833 37,812 34,654 33,083 31,583
400-649 TEU 146,529 137,427 132,765 130,349 123,571 111,677 99,677 93,677 90,677 87,677
650-899 TEU 297,860 299,383 303,528 306,835 305,349 300,174 294,338 289,838 287,588 285,338
900-1,299 TEU 765,663 741,368 734,799 739,943 760,213 748,842 730,279 725,454 725,118 731,118
1,300-1,999 TEU 1,169,414 1,180,443 1,216,990 1,233,439 1,193,933 1,169,798 1,154,621 1,151,037 1,165,947 1,198,197
2,000-2,999 TEU 1,850,082 1,803,538 1,808,505 1,808,523 1,719,815 1,727,009 1,713,615 1,749,027 1,767,486 1,799,361
3,000-3,949 TEU 1,138,724 1,093,146 1,100,964 1,110,638 1,016,083 969,284 946,826 954,726 969,376 995,626
3,950-5,199 TEU 2,464,411 2,763,628 3,102,390 3,195,404 3,380,398 3,545,221 3,559,143 3,544,661 3,573,239 3,633,989
5,200-6,999 TEU 2,129,597 2,301,930 2,470,058 2,597,862 2,658,827 2,751,589 2,832,882 2,855,596 2,894,153 2,969,153
7,000-8,999 TEU 1,277,916 1,445,906 1,688,809 1,953,682 2,184,671 2,516,998 2,671,217 2,892,563 3,041,406 3,266,406
9,000-10,999 TEU 733,855 792,291 840,829 940,719 1,052,059 1,185,107 1,694,636 2,028,354 2,304,125 2,754,125
11,000+ TEU 185,750 309,514 677,850 1,236,344 1,793,652 2,298,036 2,918,617 3,681,859 4,123,082 4,648,082
Total 12,217,009 12,926,307 14,134,723 15,309,785 16,244,410 17,377,409 18,662,005 20,009,457 20,982,916 22,407,916

237

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
7

Tonnage Supply - Demolition
In line with the gradual decline in time charter
rates, demolition activity picked up during 2006-
2009 from nil in 2005 to 33,807 TEU in 2006;
23,247 TEU in 2007; 89,145 TEU in 2008 and a
needed 391,835 TEU in 2009.

For full year 2010, demolition activity was
150,397 TEU, and for the full year 2011 and 2012
it reached 71,617 TEU and 329,966 TEU
respectively. Demolition activity is expected to
reach minimum 400,000 TEU in 2013; 334,962
TEU has been scrapped during the first nine
months of 2013 indicating a somewhat higher full
year figure.

In 2014, demolition activity is expected to stay at
a high level as 300,000 TEU has been forecasted
to be scrapped. We calculate an immediate
scrapping potential of about 206,446 TEU for
vessels that are in excess of 25 years of age.
Further scrapping potential of 388,459 TEU occurs
for vessels now aged 21-25 years.
In 2009, the depressed time charter market led
to a significant share of the fleet being idle. Idle
or laid-up vessels reached more than 600
vessels - corresponding to 12% of the fleet -
during the autumn of 2009.

However, in line with an improving charter
market in 2010 - especially for tonnage above
4,000 TEU - the idle fleet reduced to a level
around 1.5% (77 vessels in May 2011).
Concurrent with the renewed poor charter
market, idle capacity increased and reached
approximately 245 vessels in January 2012, or
5.0% of the fleet.

Idle capacity has since been reduced to 185
container vessels, equal to 3.9% of the fleet
(September 2013) and is expected to increase
slightly during the fourth quarter of the year.
Positively, we expect idle capacity at the start of
2014 to be below the level seen at the beginning
of this year.

Monthly Contracting
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Orderbook vs. Fleet
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Fleet Growth - including estimated future contractings
Growth Rate
Forecast 2009 2010 2011 2012 2013 f 2014 f 2015 f 2016 f 2017 f
Average
Growth
2013-2017
0-199 TEU 17.6% -1.5% 0.0% -0.7% -9.2% -15.2% -4.0% -4.7% -4.9% -7.3%
200-399 TEU -2.4% -0.7% -2.6% -0.3% -2.6% -13.7% -8.3% -4.5% -4.5% -7.9%
400-649 TEU -6.2% -3.4% -1.8% -5.2% -9.6% -10.7% -6.0% -3.2% -3.3% -5.9%
650-899 TEU 0.5% 1.4% 1.1% -0.5% -1.7% -1.9% -1.5% -0.8% -0.8% -1.3%
900-1,299 TEU -3.2% -0.9% 0.7% 2.7% -1.5% -2.5% -0.7% 0.0% 0.8% -0.6%
1,300-1,999 TEU 0.9% 3.1% 1.4% -3.2% -2.0% -1.3% -0.3% 1.3% 2.8% 0.6%
2,000-2,999 TEU -2.5% 0.3% 0.0% -4.9% 0.4% -0.8% 2.1% 1.1% 1.8% 1.0%
3,000-3,949 TEU -4.0% 0.7% 0.9% -8.5% -4.6% -2.3% 0.8% 1.5% 2.7% 0.7%
3,950-5,199 TEU 12.1% 12.3% 3.0% 5.8% 4.9% 0.4% -0.4% 0.8% 1.7% 0.6%
5,200-6,999 TEU 8.1% 7.3% 5.2% 2.3% 3.5% 3.0% 0.8% 1.4% 2.6% 1.9%
7,000-8,999 TEU 13.1% 16.8% 15.7% 11.8% 15.2% 6.1% 8.3% 5.1% 7.4% 6.7%
9,000-10,999 TEU 8.0% 6.1% 11.9% 11.8% 12.6% 43.0% 19.7% 13.6% 19.5% 23.5%
11,000+ TEU 66.6% 119.0% 82.4% 45.1% 28.1% 27.0% 26.2% 12.0% 12.7% 19.3%
Total 5.8% 9.3% 8.3% 6.1% 7.0% 7.4% 7.2% 4.9% 6.8% 6.6%

238

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
8
Developments in Asset Prices - Second-hand & Newbuildings
Historically, prices of second-hand container
vessels have shown a close correlation with the
developments in the time charter market.

Newbuilding prices have, to some extent,
developed in line with the container vessel
charter rates, but as shipyards have the ability to
cater for different tonnage segments, the
correlation is lower than for second-hand vessels.
Going forward we expect prices for second-hand
tonnage and, indeed, eventually newbuilding
prices to show improvement.

Maersk Broker believe that because second-hand
vessels are currently inexpensive - that is in a
historical context - prices will be very sensitive to
changes in the charter market going forward.
In the last six months, prices for, for example,
older 1,700 TEU and 2,500 TEU tonnage have
shown some improvements in line with a slightly
better charter market for this type of tonnage.

During the last few years, container vessel
newbuilding prices have experienced reductions as
demand from the main shipping markets has
diminished. This is due to the poor earnings in the
container vessel market, the dry cargo market and,
indeed, the tanker markets. At the moment the
declining price trend has stopped and yards are
trying to increase prices (to some degree they have
succeeded in relation to, for example, product
tankers). For now, it is still envisaged that the
shipyard industry will only gain increased pricing
strength once one or more of the main shipping
markets improve at the same time.
Second-hand Price Index vs. TC Rate Index
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Utilisation Rate Index, History Utilisation Rate Index, Basis Scenario September 2013
Maersk Broker Container Index Container Vessel Second-hand Index (5yr)
Newbuilding Price Index vs. TC Rate Index
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Utilisation Rate Index, History Utilisation Rate Index, Basis Scenario September 2013
Maersk Broker Container Index Container Vessel Newbuilding Index

239

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9

Demand vs. Supply - TC-rates Forecast
The Maersk Broker demand and supply analysis
forms the basis of an evaluation of the future
development in fleet utilisation. The below graph
outlines the historical utilisation index and the
estimated future utilisation index for the Maersk
Broker Basis Scenario.

Historically, the correlation between the Maersk
Broker model-based utilisation index and the
development in the Maersk Broker Container
Index has been very strong. The utilisation index
showed an increasing trend during 2003, 2004
and into 2005 backed by higher than expected
growth in cargo volumes, the distance each
container was carried (TEU miles) and increasing
port congestion.

In 2005, Maersk Broker forecasted that declining
utilisation - due to an extremely large order book
- would continue until sometime in 2010 when the
trend was expected to turn around. Actual
developments were, however, especially in late
2008 and in 2009 much more severe than
originally anticipated.

Generally, we anticipate the rest of 2013 and
2014 will be dominated by expectations for future
market improvements. The demand-supply
balance is sensitive, but current fundamental
economic developments, particularly in the USA
and Europe give us reason to believe that better
times are ahead. Nevertheless, political issues
may eventually impact such fundamentals for
forward improvements negatively.
From a historical point of view, 2014 and
certainly 2015 have the potential to become a
period in which volatility in charter rates will be
the keyword. It should, however, be noted that a
rebound cannot take place until the idle capacity
and the high number of deliveries of vessels
during 2013 have been absorbed.

The continued focus on super slow steaming is
still expected to support the tonnage segments
for the largest vessels, thus securing a more
balanced outlook.

As the end users have faced a few years with
significant financial challenges, their main effort
continues to be to attain economies of scale.
Therefore, we expect a continued high focus on
utilising the largest possible and most economical
tonnage - i.e. Post-Panamax vessels. Moreover,
it is expected that end users will continue to
utilise a high ratio of chartered container
tonnage.

The financial flexibility offered by the use of
chartered tonnage and, hence, low capital
requirement for the end users will also benefit
tonnage providers.

It is worth noting that the traditional German
tonnage providers (KGs) continue to have
extremely limited access to equity and financing.
Accordingly, the market share of German
controlled tonnage is expected to decline going
forward.
Utilisation Rate Forecast
0
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Utilisation Rate Index, History Utilisation Rate Index, Basis Scenario September 2013 Maersk Broker Container Index

240

The Container Vessel Market - Autumn 2013 Maersk Broker Asia Ltd
10
Conclusion
After experiencing a record-breaking 2004 and
first half of 2005, the container market peaked in
mid-2005 initiating a forecasted decline in time
charter rates.

The global economy had solid years in 2004,
2005 and 2006 with strong annual GDP growth
rates. In 2007, the USA entered an economic
slow-down, which was initially driven by the
housing-market and was followed by a collapse
in the financial markets during the autumn of
2008, thus culminating in the global economic
crisis in 2009.

The global economic crisis reached its initial
climax in the first half of 2009 resulting in a full
year global economic contraction of 1.8% in the
same year. We are now experiencing a very slow
recovery, which is expected to continue
throughout 2013. The global economy is
expected to return to more normal growth rates
in line with the historical average of 3%. The
slow rebound in the USA together with the weak
- but now positive - developments in the Euro-
zone are expected to be offset by a continued
and relatively strong growth in the emerging
markets, where China is still a main driver of
growth.

Furthermore, the demand from emerging
consumer markets is to some extent expected to
reverse the historic trade balances and, hence,
decrease trade imbalances on major trade
routes.

Maersk Broker consider the main risks to the
global economic forecast to be a prolonged
duration of an economic revival in the USA and
the Euro-zone, and a potential spill-over to
emerging markets.

Maersk Broker expect cargo volumes to show
reasonable growth rates during the forthcoming
years and forecast transported TEU to grow at an
annual average of 7.8% from 2013 to 2017.

Overall, Maersk Broker estimate total tonnage
demand to grow at an annual average of 8.6%
from this year until 2017.

The current order book is sizeable, albeit
continuously declining with ordered tonnage
equivalent to 21.0% of the current fleet
(September 2013).

A large part of the ordered tonnage and thus the
new capacity is made up by very large Post-
Panamax vessels, which will eventually change
the composition of the container fleet. Whilst
demand growth from the USA and the Euro-zone
is expected to remain low this year and is likely
to improve slowly in 2014, the continued and
increasing focus on super slow steaming is
expected to support a balanced recovery.
The prolonged increase in the importance of
emerging markets with high container import
growth rates will also play a positive role for the
container vessel industry in the years to come.

Maersk Broker forecast the fleet to grow at 7.0%
in 2013; 7.4% in 2014; 7.2% in 2015; 4.9% in
2016 and 6.8% in 2017. The average fleet
growth rate for the period will be 6.6%.

Maersk Broker expect average demand growth
(tonnage demand) of 8.6% against a fleet
growth of 6.6% will rebalance the industry in
favour of demand until 2017. The Maersk Broker
Utilisation Index is estimated on the basis of the
future demand and supply aspects. As this index
has historically shown a strong correlation with
time charter rates, the estimated development in
the utilisation index indicates the future
development in time charter rates.

It is expected that the Maersk Broker Utilisation
Index will remain at a low level until sometime in
2014 - mainly as a result of the expected high
growth in container vessel supply throughout
this year, as well as the need to absorb current
idle tonnage.

After a few years with very low charter rates for
container vessels, it is estimated that the market
has bottomed out. During the remainder of 2013
and the first quarter of next year, we expect
time charter rates to remain suppressed, but
with some upward volatility as we enter 2014. In
the course of 2014, we estimate demand and
supply will come closer to equilibrium.

As with any other markets the container vessel
charter market is to some degree driven by
expectations and, thus, positive signs for the
future could translate into earlier charter rate
improvements.

During 2013 the charter market for some
tonnage segments has indeed improved as
demand for 1,700 and to some extent 2,500 TEU
container vessels have started to come closer to
matching supply. As a result, asset prices for
such type of tonnage have also shown some
improvements.

In conclusion, we expect - as we have for some
time - a balanced, but gradually improving
charter market for 2014 with further potential
upward momentum in charter rates regarding
container tonnage. We expect this scenario will
commence sometime in the second half of 2014.
Consequently, 2015 will be the year where time
charter rates finally rebound significantly and
break through the levels for historical averages
once again.



241

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11
Container TC-rates Forecast

0
5,000
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2,000-2,999 TEU 3,000-3,949 TEU 3,950-5,199 TEU
2,000-2,999 TEU, fc 3,000-3,949 TEU, fc 3,950-5,199 TEU, fc
A
v
e
r
a
g
e

U
S
D
/
D
a
y


2
0
0
-
3
9
9

T
E
U
4
0
0
-
6
4
9

T
E
U
6
5
0
-
8
9
9

T
E
U
9
0
0
-
1
,
2
9
9

T
E
U
1
,
3
0
0
-
1
,
9
9
9

T
E
U
2
,
0
0
0
-
2
,
9
9
9

T
E
U
3
,
0
0
0
-
3
,
9
4
9

T
E
U
3
,
9
5
0
-
5
,
1
9
9

T
E
U
5
,
2
0
0
-
6
,
9
9
9

T
E
U
7
,
0
0
0
+

T
E
U
1992 4,773 6,925 8,996 10,953 15,658 22,531 23,500
1993 4,769 6,967 9,190 10,836 14,736 20,282 26,220
1994 5,000 6,996 8,661 10,424 15,057 20,321 26,521
1995 5,552 7,625 9,286 11,320 15,924 21,076 27,606 33,420
1996 5,490 7,224 8,846 10,821 14,907 20,516 26,689
1997 4,559 6,062 7,437 9,160 12,524 17,411 22,006
1998 4,079 5,254 6,338 7,469 9,410 13,436 20,340 24,669 27,844
1999 3,649 4,611 5,551 6,761 8,024 11,874 14,870 24,617 26,855
2000 3,500 4,896 6,626 8,496 12,270 17,739 22,975 26,668 29,282
2001 3,524 4,909 6,439 7,496 9,585 13,891 19,437 24,893 31,053
2002 3,401 4,526 5,703 6,067 7,138 9,168 11,767 19,431
2003 3,979 5,301 6,975 8,383 11,758 16,574 20,556 22,906 26,180 31,380
2004 5,941 7,836 10,065 12,955 19,172 22,697 24,943 29,835 29,423 36,529
2005 6,978 9,757 12,686 16,039 22,458 27,292 28,288 29,921 33,000 31,442
2006 5,240 7,035 9,814 11,621 16,007 20,505 22,760 25,979 34,289 45,000
2007 5,519 7,284 9,900 12,127 15,421 20,688 25,464 27,862 35,818 51,884
2008 6,077 7,542 9,044 11,072 15,060 19,582 25,270 28,705 36,821 57,237
2009 3,312 3,649 3,758 4,254 4,707 5,453 5,491 6,699 10,915 10,929
2010 3,663 4,185 4,598 5,833 6,605 8,254 11,865 14,791 21,577 33,522
2011 4,545 4,698 6,139 8,379 10,056 12,862 14,718 19,445 27,339 39,202
2012 3,900 4,173 4,749 5,930 6,656 6,907 8,251 10,212 21,088 33,011
2013TYD 4,067 4,641 5,291 6,690 7,318 7,180 7,718 9,149 20,433 32,114
Historical TC-rates - annual averages (USD/Day)

242
APPENDIX VI
REPORT OF CLARKSON RESEARCH SERVICES
The information presented in the following report, including all data (actual, estimates and forecasts)
relating to, among others, demand, supply, utilisation and time charter rates, has been provided by
Clarkson Research Services (Clarkson). None of the Issuer, the Arrangers and the Dealers make
any representation as to the accuracy of this information. The data provided by Clarkson is based on
economic and other assumptions that may prove to be incorrect and the information has not been
independently verified by the Issuer, the Arrangers or the Dealers, nor any of its or their respective
advisors. Certain industry data contained in this section is estimated in the absence of official company
confirmation or reliable country source information, and prospective investors should not place undue
reliance on such data.
This report includes forecasts and other forward-looking estimates. These forward-looking statements
are necessarily based on various assumptions and estimates that are inherently subject to various
risks and uncertainties relating to possible invalidity of the underlying assumptions and estimates and
possible changes or development of social, economic, business, industry, market, legal, government, and
regulatory circumstances and conditions and actions taken or omitted to be taken by others. Assumptions
relating to the foregoing involve judgments with respect to, among other things, future economic and
competitive market conditions and future government and business decisions, all of which are difficult
or impossible to predict accurately. Actual results and future events could differ materially from such
forecasts and projections. Prospective investors should not place undue reliance on such statements in
the report, or on the ability of Clarkson or any other third party to accurately predict future industry trends
or performance.
243
1

THE INTERNATIONAL CONTAINERSHIP INDUSTRY
The information and data contained in this report relating to the international container shipping
industry has been provided by Clarkson Research Services Limited, or CRSL, and is taken from
CRSLs database and other sources. We do not have any knowledge that the information provided by
CRSL is inaccurate in any material respect. CRSL has advised that: (i) some information in CRSLs
database is derived from estimates or subjective judgments; (ii) the information in the databases of
other maritime data collection agencies may differ from the information in CRSLs database; (iii)
whilst CRSL has taken reasonable care in the compilation of the statistical and graphical information
and believes it to be accurate and correct, data compilation is subject to limited audit and validation
procedures and may accordingly contain errors. In this report,$ refers to United States dollars.

Unless otherwise indicated, the following information relating to the international containership
industry reflects information and data available as of November 1, 2013.

Overview of the Container Shipping Market

Container shipping is responsible for the movement of a wide range of goods between different parts of
the world in a unitized form and, since its beginnings in the 1950s, containerization has become an
integral part of the global economy. The use of containers in global trade has resulted in considerable
production and efficiency gains and has become important to the process of globalization. A wide
range of cargoes are transported by container but most notably container transportation is responsible
for the shipment of a diverse selection of manufactured and consumer goods. These cargoes are
transported by container to end users in all regions of the world, and in particular from key producing
and manufacturing regions to end users in the worlds largest consumer economies. Participants in the
container shipping industry include liner shipping companies, who operate container shipping
services and in many instances own containerships, containership owners, often known as charter
owners, who own containerships and charter them out to liner companies, and shippers who require
the seaborne movement of containerized goods.

Containership Demand

The expansion of global container trade is heavily influenced by global economic growth, increases in
economic consumption at a global and regional level, and the process of globalization. In 2008, global
container trade peaked at 135 million TEU, having increased at a compound annual growth rate of
9.5% in the period 1998 to 2008. During this period rapid growth in exports from China drove a
significant part of the increase in container trade, along with growth in container trade volumes in and
out of Russia and the Baltic, and to and from other emerging markets such as Brazil. Intra-Asian
container trade volumes also grew rapidly during this period. In 2009, global container trade was an
estimated 122 million TEU following a significant contraction of 9.2% due to the worldwide recession.
Global trade subsequently rebounded by 13.1% to 138 million TEU in 2010. Global trade grew by a
further 7.2% in 2011 to stand at 148 million TEU, and reached 153 million TEU in 2012, representing
growth of 3.2%. The rate of global trade growth is currently expected to stand at 4.8% in full year 2013
and 6.1% in 2014, although these projections are subject to a wide range of risks from the global
economy.

244
2

67
69
76
84
95
105
117
129
135
122
138
148
153
160
170
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
24%
0
20
40
60
80
100
120
140
160
180
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3

(
f
)
2
0
1
4

(
f
)
%
growth
million
TEU
Source: Clarkson Research, November 2013
World Container Trade and Annual Growth
Container trade
Annual % increase

Note: The full year 2013 and 2014 forecasts are as of the start of November 2013 and subject
to change. Complete trade and economic data for 2013 is not yet available, estimates are
subjective and there is no guarantee that current trends will continue.

Trade Routes and Growth Trends

Global container trade is spread over a range of long-haul, regional, and intra-regional routes, which
can be separated into four categories. The individual mainlane container trades on the major east-
west routes are the worlds largest in volume terms. The Transpacific trade route is the worlds largest
container trade with 14% of the total container volume in 2012, followed by the Far East-Europe trade
route and the Transatlantic trade route. Due to the higher cargo volumes on these routes, they are
generally served by very large Post-Panamax ships with capacity of 8000 TEU and above, and by other
large Post-Panamax and Panamax containerships generally with capacity from 8000 TEU down to
approximately 4500 TEU. There are also some 3000-4500 TEU containerships which continue to serve
these trades. Non-Mainlane east-west routes include trade lanes between the Indian Sub-Continent or
the Middle East and North America, Europe or the Far East, and are generally served by a range of ship
sizes, from smaller Post-Panamax containerships below 8000 TEU to vessels of Panamax size and
below. North-south trade routes form the second layer of the global liner network, connecting the
northern hemisphere with South America, Africa and Oceania, and are generally served by vessels of
between 1000-5000 TEU, but also increasingly by vessels of 5000 TEU and above. Intra-regional trade
routes include both intra-Asian and intra-European trades, where containerships below 3000 TEU in
size generally provide the majority of transportation. Intra-Asian container trades collectively constitute
the largest portion of global containership volumes. Ports involved in these trades, and some north-
south trades, often impose infrastructural and other limitations on the vessel types that can be utilized,
such as draft restrictions or the lack of availability of handling equipment. As mentioned above, 2012
experienced increased demand for global container trade, although the rate of volume growth slowed
from 2011. Recent data suggests that European demand has begun to pick up, having proved weak
through the first five months of 2013, and overall, the rate of global demand growth is projected to
increase in full year 2013 from 2012. At present, gradually increasing container trade volumes are then
expected across trade lanes in 2014, although this projection is subject to a wide range of risks from the
global economy.

245
3


-20%
-10%
0%
10%
20%
30%
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3

(
f
)
2
0
1
4

(
f
)
% growth
Source: Clarkson Research, November 2013
Container Trade Lane Annual Volume Growth
Transpacific E/B Far East-Europe W/B
North-South Intra-Regional

Note: The full year 2013 and 2014 forecasts are as of the start of November 2013 and subject to change.
Complete trade and economic data for 2013 is not yet available, estimates are subjective and there is no
guarantee that current trends will continue.

Containership Supply

The most significant portion of the global container capable fleet is comprised of fully cellular
containerships which as of November 1, 2013, totalled 5,135 vessels with an aggregate capacity of 17.1
million TEU. The remainder of the fleet is made up of a range of non-fully cellular vessel types,
including multi-purpose vessels, or MPPs, capable of carrying container and breakbulk cargo, roll-on
roll-off cargo vessels, or Ro-Ros, and general cargo vessels, which often have container carrying
capacity. Unless noted otherwise, the remainder of the discussion in this section focuses on fully
cellular containerships. As of November 1, 2013, liner companies accounted for the ownership of
52.4% of containership fleet capacity, and charter owners, who own containerships and charter them
out for operation by liner companies, accounted for 47.6% of total fleet capacity.

Overall fully cellular containership standing slot capacity expanded at a compound annual growth rate
of 10.5% in the period between the start of 1985 and end of 2009. Fully cellular fleet capacity is
estimated to have expanded by 9.6% in 2010 and by 7.9% in 2011. Fully cellular fleet capacity grew by
5.9% in 2012, and is currently expected to grow by 7.0% in full year 2013 and 5.6% in 2014.


0%
5%
10%
15%
20%
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3

(
f
)
2
0
1
4

(
f
)
% growth
Source: Clarkson Research, November 2013
Containership Fleet Capacity Growth

Note: The full year 2013 and 2014 forecasts are as of the start of November 2013. These
figures are subject to change as a result of actual delivery delay and cancellation, re-
negotiation of contracts and levels of scrapping. Due to technical and contractual issues, there
is currently considerable uncertainty surrounding the delivery of the orderbook.
246
4


As of November 1, 2013, the containership orderbook comprised 479 vessels and 3.7 million TEU,
representing 21.6% of the existing fleet in terms of capacity. The size of orderbook, however, differed
widely across containership size segments, as demonstrated below, with the most significant portion of
the orderbook as a proportion of existing fleet capacity being in the larger vessel sizes.

Number '000 TEU % of fleet '000 TEU % of flt '000 TEU % of flt '000 TEU % of flt '000 TEU % of flt
Post-Panamax 8000 & above 252 2,970.6 53.8% 187.0 3.4% 1,062.5 19.2% 1,327.4 24.0% 393.7 7.1% 14%
Post-Panamax 3000-7999 98 488.7 13.4% 118.9 3.3% 252.4 6.9% 91.9 2.5% 25.6 0.7% 33%
Panamax 3000 & above 11 38.3 1.0% 18.0 0.5% 14.1 0.4% 3.1 0.1% 3.1 0.1% 32%
Sub-Panamax 2000-2999 44 103.1 6.1% 19.3 1.1% 25.6 1.5% 48.4 2.9% 9.7 0.6% 35%
Handy 1000-1999 65 92.9 5.4% 8.5 0.5% 45.6 2.6% 32.1 1.8% 6.7 0.4% 30%
Feeder/Max 100-999 9 7.0 1.0% 4.6 0.7% 1.8 0.2% 0.6 0.1% 0.0 0.0% 50%
Total 100+ TEU 479 3,700.5 21.6% 356.3 2.1% 1,402.0 8.2% 1,503.5 8.8% 438.7 2.6% 21%
ContainershipOrderbook by Year of Delivery
% Non-Delivery
(2012)
ContainershipType Size (TEU)
Total Orderbook 2013 2014 2015 2016

Source: Clarkson Research, November 2013.
Note: Orderbook data is correct as of November 1, 2013 and does not take into account potential delivery problems. Going
forward, the orderbook will be influenced by delays, cancellations and the re-negotiation of contracts. Due to these technical and
contractual issues, there is currently considerable uncertainty surrounding the orderbook. The orderbook includes some orders
originally scheduled for delivery prior to 2013.

Overall, since the start of 2000, the containership orderbook has represented an average of 37% of fully
cellular fleet capacity. Towards the end of 2007, the containership orderbook as a proportion of fully
cellular fleet capacity reached a high of 60.8%, decreasing to 50.6% at the start of 2009, 38.2% at the
start of 2010 and 27.2% at the start of 2011 before increasing marginally to 30.4% at the start of July
2011, and then decreasing to 28.5% at the start of 2012, 21.2% at the start of 2013 and 21.6% as at the
start of November 2013.


Orderbook
0%
10%
20%
30%
40%
50%
60%
70%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
Orderbook as % of Fleet (RHS)
Source: Clarkson Research, November 2013
Historical Containership Orderbook
million
TEU

Note: Orderbook data is correct as of November 1, 2013. The historical orderbook is subject to change as a
result of statistical reporting delays.

Although establishing accurate data is difficult, approximately 21% of scheduled deliveries in terms of
TEU capacity expected to enter the fleet in 2012 at the start of that year have been confirmed as non-
delivered during 2012. This figure was 50% for containerships below 1000 TEU in size, 32% for
containerships between 1000 TEU and 2999 TEU, 32% for Panamax containerships and 18% for Post-
Panamax containerships. This is partly due to statistical reporting delays but also because of delays in
construction and cancellations of orders. The right-hand column of the previous table illustrates the
difference between scheduled start year and actual containership deliveries in 2012. Delivering the
orderbook presents a number of challenges, with factors both technical and financial facing both
shipyards and owners contributing to delays in and cancellations of the containership scheduled
deliveries.

247
5

In the period from 1996 to 2008, an average of 313 containership orders was placed each year, with the
average annual level of capacity ordered totaling 1.2 million TEU. In 2007, a historical high level of
3.2 million TEU of containership capacity was ordered. In 2008 the volume of ordering slowed to 1.2
million TEU, while containership contracting activity in 2009 was negligible. Contracting activity
picked up in the second half of 2010, taking total contracting in 2010 to 0.6 million TEU. Contracting
levels remained high in the first half of 2011 and a total of 1.8 million TEU was contracted in the full
year. Contracting activity in 2012 once again slowed and a total of 0.4 million TEU was contracted in
the full year. In the first ten months of 2013, 203 containerships of a combined 1.7 million TEU were
contracted.

In the period from 1996 to 2008, an average of 30 containerships was scrapped each year. A substantial
volume of ageing containership capacity was sold for scrap in 2009, with the full year seeing 202
containerships with a combined capacity of 0.38 million TEU sold for scrap, significantly higher than
historical levels. In 2010, 86 containerships with a combined capacity of 0.13 million TEU were sold
for scrap and in 2011, 60 containerships with a combined capacity of 0.08 million TEU were sold for
scrap. In 2012, 178 containerships with a combined capacity of 0.33 million TEU were sold for
demolition. In the first ten months of 2013, 152 containerships of a combined 0.34 million TEU have
been scrapped. As of November 1, 2013, the average age of a vessel in the containership fleet was 10.9
years. The majority of ageing containership capacity is at the smaller end of the fleet below 4000 TEU,
where some capacity may be more at risk of becoming outdated as larger ships prove more efficient at
serving increased trade volumes. Overall, 4.1% of containership fleet capacity is currently aged 20
years or more.

As a result of the slowdown in demand through 2009, the portion of the fleet not in operation (or
idle) grew from 0.42 million TEU at the end of 2008 to peak at an estimated 1.52 million TEU of
capacity in December 2009, representing approximately 572 vessels, according to AXS-Alphaliner,
equal to 11.8% of the global fleet by capacity, according to Clarkson Research. However, the
proportion of idle capacity declined through most of 2010 and the first half of 2011 as carriers
reintroduced capacity on reactivated or newly implemented services, and in some cases upgraded
capacity on existing services, to meet the apparent increase in trade volumes. However, owners once
again increased the number of idle containerships in the second half of 2011 and by mid-March
2012, 302 containerships of a combined 0.91 million TEU were in lay-up according to AXS-
Alphaliner, equal to 5.9% of the global fleet by capacity according to Clarkson Research. The total
idled capacity has subsequently declined, with just over 3% of the global fleet by capacity (0.52 million
TEU) in lay-up at the end of October 2013.

Following the downturn in container trade volumes in late 2008 and 2009, a significant number of
container shipping services began to be operated by liner companies at slower vessel speeds than in the
past, with additional ships added to services in order to maintain fixed regular port call schedules. This
management of supply not only reduced liner company bunker costs but also helped absorb
containership capacity, as slow steamed services offer the same amount of running capacity whilst
requiring additional standing vessel capacity. As of November 2013, slow steaming remains in place on
a range of container shipping services and appears to have been most prevalent on services on the
longer mainlane trades such as the Far East-Europe and the Transpacific, where there is the greater
possibility to add extra ships and adjust the service speed to an appropriate level, than on shorter-haul
trades. Along with the idling of capacity, slow steaming of services was another of a range of initiatives
to manage supply during the period of surplus capacity.

During this period, redeployment of supply across trade lanes has also been a key feature of the
containership sector. With deliveries of new capacity dominated by larger containerships and trade
volumes growing more rapidly on north-south and intra-regional trade lanes traditionally served by
medium-sized and smaller containerships, a significant degree of vessel redeployment, known as
cascading has been required. As new very large Post-Panamax vessels have been delivered into
service on the Far East-Europe trade lane, vessels have been redeployed from the Far East-Europe to
other trade lanes including the Transpacific, from where medium-sized capacity has in turn been
redeployed notably to north-south trade lanes, from where in turn some smaller vessels have been
redeployed to intra-regional trade lanes for example.



248
6

Containership Markets

Containership Timecharter Rates

Pricing of containership transportation services occurs against a background of a highly competitive
global containership charter market. Containership charter rates depend on the supply of, and demand
for, containership capacity, and can vary significantly from year to year. Containership economies of
scale mean that the daily timecharter rate per TEU for a larger containership is less than for a ship with
lower TEU capacity. The containership charter market experienced significant upward movement in
timecharter rates in the period between the start of 2002 and the middle of 2005. The market recovered
from the decreases in charter rates seen in 2001 to levels beyond previous market highs before
decreasing again mid-way through 2005, stabilizing in the first half of 2006, and then slipping further
during the second half of 2006. The first half of 2007 saw the containership charter market recover to
rate levels similar to those seen in late 2005 and early 2006. However, the onset of the global economic
downturn and the resulting slowdown in container trade growth created a relative oversupply of
capacity, leading to a rapid decrease in containership earnings in the latter half of 2008, which
continued in the first half of 2009, with earnings remaining depressed during the rest of the year. In
2010, containership charter rates registered an upward trend over the year as a whole and made further
gains in early 2011 before decreasing sharply in the second half of 2011 and remaining depressed
through 2012 and the first ten months of 2013. Based on an index covering a range of containership
sizes, timecharter daily rates improved 84% during 2010 only to decrease by around 29% during 2011
and remain relatively steady though 2012. The estimated one year timecharter rate for a 3500 TEU
containership at the end of December 2010 was $14,500 per day. At the end of December 2011, the
rate had declined to $6,500 per day and after fluctuating slightly through the following year, it still
stood at $6,500 per day at the end of 2012. By the end of October 2013, the benchmark timecharter rate
had increased marginally to $7,500 per day. This compares to a ten year historical average of $20,928
per day.


0
10
20
30
40
50
60
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
$'000/day
Source: Clarkson Research, November 2013
Containership 6-12 Month Timecharter Rates
1700 TEU geared
2750 TEU gearless
3500 TEU gearless
4400 TEU gearless

Note: Estimates based on market assessments for theoretical fully cellular ships by brokers. These estimates are
based on a given point in time and are no guide to or guarantee of future rates. Geared vessels have their own cranes
for the purpose of loading and unloading containers.

There are limitations and risks to future projections, depending on developments in the world economy
and global trade patterns, and the development of ordering, deliveries and scrapping in the future. With
the decrease in demand for container volume in 2009, supply far outweighed demand for the global
movement of containers, causing significant downwards pressure on the entire container shipping
sector. The impact of the differential between growth in demand and supply on the containership
charter market pushed rates sharply downwards. Demand growth outpaced capacity expansion in 2010
leading to upwards pressure on rates, while supply growth and demand growth were relatively matched
in 2011 on an annual basis. However in 2012, and in the first ten months of 2013, demand growth has
proved weaker than the growth in supply, and combined with the majority share of idle capacity
249
7

constituted by charter owner vessels, this has suppressed any significant upwards movement in charter
rates.

Vessel Values: The Newbuild & Secondhand Containership Market

Newbuild Prices: The development of containership newbuild prices reflects both the demand for
vessels as well as the cost of acquisition of new containerships by owners from shipyards, which is
influenced by the cost of materials and labor, availability of shipbuilding capacity, and the impact of
demand from other shipping sectors on shipyards. Economies of scale in containership building mean
that the cost per TEU involved in building larger containerships is less than for vessels with smaller
TEU capacity.

The newbuild price for a benchmark 6600 TEU containership increased from $60.0 million at the start
of 2003 to a peak of $108.0 million in the period June to September 2008. However, following the
onset of the global economic downturn, this figure fell to $66.0 million at the end of January 2010. By
the end of 2010 it had increased to $79.5 million. The figure subsequently softened slightly in 2011,
and continued to decrease, falling to $58.0 million at the end of 2012. By the end of October 2013 the
benchmark newbuilding price estimate had risen slightly to $65.0 million. The ten year historical
average price for a 6600 TEU containership newbuild is estimated at $83.1 million. The following
graph shows the historical development of containership newbuild prices.

0
20
40
60
80
100
120
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
$ millon
Source: Clarkson Research, November 2013
Containership Newbuilding Price Development
6600 TEU 5100 TEU
2750 TEU 1700 TEU
1000 TEU

Note: Prices are evaluated at the end of each calendar month. Newbuild prices assume European spec., standard
payment schedules and first class competitive yards quotations.


Secondhand Prices: Over the long-term, as the containership charter market has played an increasingly
important role in the container shipping industry as a whole, the market for the sale and purchase of
secondhand containerships has also expanded. Secondhand vessel prices are influenced by newbuild
prices and also by vessel charter rates or earnings, although there is sometimes a lag in the relationship.

Activity on the secondhand market for containerships has grown from the relatively low levels of the
past. A portion of this activity has been constituted by the sale of containerships by liner companies to
charter owners. These sales have commonly been accompanied by timecharter back arrangements
whereby the liner company sells the vessel, removing the asset from its balance sheet, then, as part of
the transaction, arranges a timecharter of the vessel from the party to which it has sold the ship. The
liquidity of the secondhand sales market is much greater for small and medium-sized containerships
than for large vessels. Only 299 of the 1,749 secondhand containership sales recorded between the start
of 2000 and the start of November 2013 have involved ships with 3000 TEU or more in capacity. Large
containerships are generally newer, and more likely to remain owned by their original owner either for
their own end use or on an initial relatively long-term charter.

250
8

Secondhand containership sales volumes show some volatility. In 2010, a total of 171 secondhand
vessels with a combined capacity of 373,667 TEU were sold, while a total of 94 vessels with a
combined 259,437 TEU were sold in 2011 and 152 vessels with a combined 253,988 TEU were sold in
2012. The following graph shows the development of secondhand prices for five-year old 3500 TEU,
1700 TEU and 1000 TEU containerships. Trends in secondhand prices for older containerships
typically move according to similar cycles. The price for a benchmark five-year old 1700 TEU
containership decreased from $37.5 million at the end of May 2008 to $14.0 million at the end of 2009.
There was an upward trend in secondhand containership prices in 2010 and the prices then remained
steady in the first eight months of 2011, with the price of a benchmark 1700 TEU containership
peaking at $24.0 million, before falling to $17.0 million by the end of 2011. The five-year old 1700
TEU price at the end of 2012 was estimated to be approximately $13.0 million and $14.25 million at
the end of October 2013, compared to a ten year historical average of $24.7 million.


0
10
20
30
40
50
60
70
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
$ million
Source: Clarkson Research, November 2013
Containership Secondhand Price Development
Five-year old 3500 TEU
Five-year old 1700 TEU
Five-year old 1000 TEU

Note: Prices are evaluated at the end of each calendar month. There have been periods of uncertainty surrounding
secondhand prices and the values provided between October 2008 and December 2009 are subject to wider than
usual confidence margins.



251