Shipping News - daily news about the international shipping business

6 July 2007
Distribution of extraordinary dividend in lieu of share buy-back program
In release No 15 of 29 June 2007, TORM announced that the contemplated share buy-back program was postponed until the third quarter due to technical reasons.
The Board of Directors of TORM has today decided not to complete the contemplated share buy-back program. The rationale behind the decision is that the technical problems in connection with the share buy-back, in particular in relation to US shareholders and ADR holders,have proven too big, and the transaction structure would impose substantial restrictions on TORM’s operational and strategic freedom of action in the coming months.
The DKK 2 billion that since the sale of the shares in Dampskibsselskabet “NORDEN” and
the purchase of the shares in OMI Corporation has been reserved for the share buy-back
program will the Board of Directors instead propose to be distributed to the shareholders as an extraordinary dividend. Completion of such a dividend distribution requires a shareholders resolution and the Board of Directors will therefore convene an extraordinary general meeting to be held on Tuesday, 14 August 2007.
Assuming that the general meeting will grant this authority, the Board of Directors intends to exercise this authority in connection with the release of the semi-annual report on 31 August 2007, resulting in distribution of the DKK 2 billion as dividends in the beginning of September 2007.
Contact Klaus Kjærulff, CEO, tel.: +45 39 17 92 00, mobile: +45 40 10 81 11.

EXTRAORDINARY DIVIDEND IN L IEU OF SHARE BUY-BACK 2/2 SAFE HARBOUR STATEMENT – FORWARD LOOKING STATEMENTS
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although TORM believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TORM cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, changes in charter hire rates and vessel values, changes in demand for “tonne miles” of crude oil carried by oil tankers, the effect of changes in OPEC’s petroleum production levels and worldwide oil consumption and
storage, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in TORM’s operating expenses, including bunker prices,
dry-docking and insurance costs, changes in governmental rules and regulations including requirements for double hull tankers or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by TORM with the US Securities and Exchange Commission, including the TORM Annual Report on Form 20-F and its reports on Form 6-K.

A rise in shipping charges has raised many problems for Sri Lankan exporters. Export sectors, especially clothing, are the biggest victims as some large shipping companies have changed their routes.

Exporters of Sri Lanka are in a crisis situation as the number of container ships moving towards the west from Colombo has fallen drastically as they are heading towards India.

Shipping charges have swelled by approximately $600 for the standard Twenty-Foot Equivalent Unit (TEU) in the last six months. This has led to crisis for the exporters from the island country, as they compete on the basis of time, price and innovation with India.

Jaynath Perera, Chairman, Sri Lanka Shippers Council, said that since some large shipping companies have altered their routes in the last six months, the export of garments, rubber, tea and coir have been affected significantly, as published by LBO on June 28, 2007.

Sri Lankan shipping agencies stated that the hiked shipping costs would come into effect from July 1, 2007.  Shipping costs for imported containers, however, are unaffected.

The shipping agencies expect the charges for containers exported from the country to rise from US$ 150 to US$ 200, as published by Colombo Page on June 28, 2007.

The clothing sector, that accounts for over 50% of the total export trade volume, is the biggest sufferer of increased as the exporters face strict deadlines from clients.

However, according to a shipping consultant and a senior member of the clothing industry’s Joint Apparel Association Forum, Rohan Masakorale, airlift shipments can be considered as an alternative but it’s 75% costlier than shipping. So, due price-sensitive nature of the industry, transporting goods by air is not their cup of tea. The port of Colombo is fighting to get back its position as the south Asia’s transshipment hub, said Rohan, as published by LBO on June 28, 2007.  

As per the news published by Colombo Page, Perera said that previously, ships used to come to Colombo to collect the Indian freight and then head towards Europe. But now, there’s a dearth of approximately 600 Twenty-Foot Equivalent Unit of cargo space every seven days out of Colombo.

Dilhan Fernando, Director, Dilmah, a leading tea exporters of Sri Lanka, said, the export prices have risen invariably and when measured in terms of the reduced capacity and flexibility, the results have been more damaging, as per the news published on Colombo Page.