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| 1. | What are Business Trusts? | | | Business Trusts are business enterprises set up as trusts, instead of companies. They are hybrid structures with elements of both companies and trusts.
Like a company, a business trust operates and runs a business enterprise. But unlike a company, a business trust is not a separate legal entity. It is created by a trust deed under which the trustee has legal ownership of the trust assets and manages the assets for the benefit of the beneficiaries of the trust.
Purchasers of units in the business trusts, being beneficiaries of the trust, hold beneficial interest in assets of the Business Trust. |
| 2. | What are the benefits of investing in a Business Trust? | | | Business Trusts allow investors to have a direct exposure to cashflow-generating assets, such as utilities, shipping or aircraft. The structure unitises big ticket assets into liquid and affordable units which are traded on the SGX, giving investors a new alternative to existing yield plays.
Business Trusts typically have high payout ratio because of its ability to distribute cash flows in excess of accounting profits and this imposes discipline on Trustee-Manager when considering acquisitions.
In addition to maintaining the payout, Trustee-Manager as the responsible entity is also expected to actively manage the business for growth via acquisitions and expansion to enhance returns to investors. The incentives of Trust-Managers are typically structured to align their interests with unitholders. |
| 3. | What is the Pacific Shipping Trust (PST)? | | | Pacific Shipping Trust (PST) is the first business trust to be listed on the Singapore Exchange (SGX). PST was constituted as a business trust on 25 Apr 06 with the Monetary Authority of Singapore (MAS).
It is in the business of owning primarily container vessels and chartering them out to reputable liner operators either on long term bareboat charters or time charters.
PST is sponsored by Pacific International Lines Pte Ltd (PIL), Singapore's second largest container shipping company and the 19th largest in the world. PIL owns and operates more than 97 container vessels with close to 140,000 TEUs slot capacity. Turnover of the PIL Group reach more than S$3.8 billion in 2006.
Currently PST owns 12 container vessels – a young fleet with an average age of four years - which it bought and bareboat chartered back to PIL for periods ranging between eight and 10 years.
PST can leverage on PIL's relationships in the shipping industry as it seeks to expand through further ship acquisitions either from PIL or third parties. |
| 4. | How can I invest in PST? | | | To invest in PST which is listed on the Singapore Exchange (SGX), an individual must first have a securities account with the Singapore Central Depository (Pte) Ltd.
Opening A Securities Account
You can open only one direct securities account with CDP and any number of sub-accounts with any of the Singapore Exchange - Securities Trading (SGX-ST) Member Companies. If you hold an NRIC issued by Singapore (either pink or blue), you may also approach an Authorised Trading Centre (ATC) personally to apply for a securities account.
You must be at least 21 years old and must not be an undischarged bankrupt. You need to bring along your NRIC / Passport / Re-entry Permit and other relevant supporting documents. There will be a CDP Securities Account Opening Form that you are required to complete and sign in the presence of an authorised personnel.
Overseas applicants may submit their applications via post. However, application forms and supporting documents must be certified by one of the following:
- Notary Public
- Advocate and Solicitor
- Singapore Embassy
- Justice of Peace
- Company Registrar or Company Secretary of companies seeking listing on SGX for original shareholders and employees of the companies
- Member of an exchange which has established an information sharing agreement with SGX-ST Authorised officer of banks
Where there is any reason to doubt the authenticity of an application, CDP reserves the right to reject the application.
The Central Depository (Pte) Limited
4 Shenton Way #02-01
SGX Centre 2
068807
8.30 am to 5.00 pm (Monday to Friday)
9.00 am to 12.30 pm (Saturday)
Closed on Sundays and Public Holidays
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| 5. | Are the distributions/earnings in PST guaranteed? | | | Unlike bonds, PST earnings or distributions are not guaranteed. However, the yield for PST as at 31 March 2008 was 9.5% based on the initial public offering price of US$0.45 per Unit; and 10.5% based on the 31 March 2005 closing price of US$0.41, which is higher as compared to other asset classes in the market. |
| 6. | Must I hold on to the PST units until maturity? | | | There is no maturity date for PST units. Investors in PST may buy or sell their units through the Singapore Exchange via their brokers. |
| 7. | What is PST annual financial period? | | | PST's annual financial period begins on 1 January and ends on 31 December. |
| 8. | When is PST's distribution? | | | PST will distribute such taxable income (if any) on a quarterly basis to Unitholders, with the amount calculated as at 31 March, 30 June, 30 September, and 31 December each year. |
| 9. | What is PST's stock code and stock symbol? | | | PST stock code is P48U and stock symbol is PFST.SI. |
| 10. | What are the risks for investing in PST? | | | With uncertainties over the impact of the US economic slowdown on the rest of the world, PST units are valued as it offers earnings visibility and steady high distribution yields. The long-term charters provide stable income and reduce risk, as such; there is minimal risk to the revenue stream, costs or utilization. In addition, the charters also insulate PST against charter rate volatility.
PST is not responsible for operating the vessel and the interest rate is fixed and fully hedged for the term of the charter contract. The charter expiries are also staggered over the years to reduce exposure to risk.
The risks of investing in Business Trusts will largely depend on the kind of assets and investment focus that the Business Trust has. These include, but are not limited to, risks that the value of the units may fluctuate and that the projected distributions may not be achieved, as well as other risks. |
| 11. | What is the total number of PST units on issue? | | | A total of 337,000,000 Units are on issue as at 26 May 2006. |
| 12. | How will I benefit from the tax exemption for Unitholders? | | | Under Section 13A of the Income Tax Act, Chapter 134 of Singapore, the Charter Income derived by PST from chartering the vessels to ship operators would be exempt from tax. The distributions to Unitholders out of the Tax-Exempt Income less allowable expenses will also be tax-free.
All individual Unitholders (including individuals who hold Units jointly with other individuals but not as a partnership) will receive gross distributions from PST without tax being deducted at source. The gross distributions received by the individuals as investment income will be exempted from Singapore income tax.
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About PST
