Pacific Basin Shipping Limited — Proxy Solicitation & Information Statement 2018

Mar 13, 2018

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your Shares in Pacific Basin Shipping Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO ISSUE SHARES AND TO BUY BACK SHARES AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the 2018 annual general meeting of Pacific Basin Shipping Limited to be held at the Hong Kong Maritime Museum, Central Pier No.8, Hong Kong on Tuesday, 17 April 2018 at 10:30 a.m. is set out on pages 15 to 17 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting should you so wish.

13 March 2018

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE CHAIRMAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	RE-ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
	(RESOLUTION 2 AS PER NOTICE)
3.	GENERAL MANDATE TO ISSUE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
	(RESOLUTION 4 AS PER NOTICE)
4.	GENERAL MANDATE TO BUY BACK SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	(RESOLUTION 5 AS PER NOTICE)
5.	PRINCIPAL BUSINESS OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
6.	VOTING BY POLL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7.	NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
8.	RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX I – PARTICULARS CONCERNING DIRECTORS
	TO BE RE-ELECTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
APPENDIX II – EXPLANATORY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
APPENDIX III – NOTICE OF ANNUAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . .		15

DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions have the following meanings:

“2013 Share Award Scheme”	the share award scheme adopted by the Company on 28
	February 2 0 1 3 ( a s s u p p l e m e n t e d b y t h e C o m p a n y ’ s
	announcement in relation thereto dated 28 March 2013)
“AGM”	the 2018 annual general meeting of the Company to be held
	at the Hong Kong Maritime Museum, Central Pier No.8, Hong
	Kong on Tuesday, 17 April 2018 at 10:30 a.m., notice of
	which is set out on pages 15 to 17 of this circular
“associate”	has the meaning ascribed thereto in the Listing Rules
“Awards”	include restricted share awards and restricted unit awards,
	which are awards granted by the Board under the 2013 Share
	Award Scheme, subject to the terms and conditions thereof
	respectively
“Board”	the board of Directors or a duly authorised committee thereof
“business day”	any day on which the Stock Exchange is open for the
	business of dealing in securities
“Buy-back Mandate”	the general and unconditional mandate enabling the
	Company to buy back Shares
“Bye-laws”	the bye-laws of the Company
“Companies Act”	the Companies Act 1981 of Bermuda (as amended)
“Company” or “Pacific Basin”	Pacific Basin Shipping Limited, a company incorporated in
	Bermuda with limited liability, the Shares of which are
	listed on the Stock Exchange
“core connected person”	has the meaning ascribed thereto in the Listing Rules
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“HK$” and “cents”	Hong Kong dollars and cents respectively, the lawful
	currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China

1

DEFINITIONS

the independent non-executive directors of the Company

“INEDs” the independent non-executive directors of the Company “Issue Mandate” the general mandate enabling the Company to allot, issue and deal with the Shares “Latest Practicable Date” 9 March 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time “Notice” the notice of the AGM set out on pages 15 to 17 of this circular “Share(s)” Share(s) of US$0.01 each in the Share capital of the Company “Shareholder(s)” holders of Share(s) in issue “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Codes on Takeovers and Mergers and Share Buy-backs published by the Securities and Futures Commission

2

LETTER FROM THE CHAIRMAN

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Executive Directors: David Muir Turnbull Mats Henrik Berglund

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent Non-Executive Directors: Patrick Blackwell Paul Robert Charles Nicholson Alasdair George Morrison Daniel Rochfort Bradshaw Irene Waage Basili Stanley Hutter Ryan

Hong Kong Principal Office: 31/F One Island South 2 Heung Yip Road Wong Chuk Hang Hong Kong

13 March 2018

To Shareholders,

RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO ISSUE SHARES AND TO BUY BACK SHARES AND NOTICE OF ANNUAL GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide the Shareholders with the Notice for the purpose of considering and, if thought fit, passing five ordinary resolutions to approve, among other things, the re-election of Directors and the grant of general mandates to issue and to buy back Shares.

2. RE-ELECTION OF DIRECTORS (RESOLUTION 2 AS PER NOTICE)

In relation to resolution 2 in the Notice regarding re-election of Directors, Messrs. Mats H. Berglund (an Executive Director), Patrick B. Paul and Alasdair G. Morrison (both Independent Non-executive Directors) will retire at the AGM by rotation pursuant to the Company’s Bye-laws and being eligible, will offer themselves for re-election. None of the above Directors to be re-elected has any relationship with any of the other Directors, senior management or substantial or controlling Shareholders of the Company. Under resolution 2, the re-election of Directors will be individually voted on by Shareholders.

3

LETTER FROM THE CHAIRMAN

The biographical details and interests in Shares of the Directors to be re-elected at the AGM are set out in Appendix I to this circular.

For the information of the Shareholders, the Board selects INEDs based on their ability to contribute to the affairs of the Group, and of overriding importance is that each INED possesses a mindset that is independent and constructively challenges management’s views. Although some INEDs do not necessarily have a shipping background, their familiarity with the business over the years has enabled them to contribute to the management of the risks involved. Independence from executive management is particularly important as the Group has no controlling shareholder. Continuity of the INEDs provides stability to the Board decision-making process, compensating for any turnover in the executive management team. The Board believes that the long tenure of some of the INEDs does not compromise their independence but instead brings significant positive qualities as referred above. The Board, however, recognises the importance of succession to balance the mix of deep understanding of the Group’s business with fresh ideas and perspectives.

The Board also recognises that INEDs’ emoluments should not be tied to the performance of the Group, and hence it has not granted, and currently has no intention to grant, any Awards to INEDs.

3. GENERAL MANDATE TO ISSUE SHARES (RESOLUTION 4 AS PER NOTICE)

At the last annual general meeting of the Company held on 12 April 2017, an ordinary resolution was passed to grant a general and unconditional mandate to the Directors to allot, issue and deal with Shares with additional Shares up to a limit of 10% of the aggregate nominal amount of the issued Share capital of the Company as at 12 April 2017, which amounted to 403,842,827 Shares.

A total of 403,842,827 Shares were issued under the Issue Mandate to placees and four ship sellers as partial funding and consideration for the acquisition of five vessels agreed by the Group in August 2017. The placees, pursuant to a placing agreement, were issued 186,939,553 Shares on 10 August 2017 at HK$1.59 per Share which has raised US$37.6 million for the Group. During the period from August 2017 to November 2017, an aggregate of 216,903,274 Shares were issued at HK$1.66 per Share to four ship sellers or their nominees as consideration shares according to the respective ship contracts upon delivery of the vessels into the Group’s ownership.

As the current Issue Mandate has been fully utilised, the Directors believe that it is in the best interests of the Company and the Shareholders as a whole to renew the Issue Mandate. Accordingly, an ordinary resolution will be proposed at the AGM which will give the Directors a general mandate to allot, issue and deal in additional Shares up to 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the relevant resolution, which if passed shall be 17 April 2018, provided that any Shares to be allotted and issued pursuant to the Issue Mandate shall not be issued at a discount of more than 10% to the Benchmarked Price of the Shares (which shall be a price which is the higher of (i) the closing price of the Shares as stated in the daily quotations sheet of the Stock Exchange on the date of signing of the agreement to which the transaction relates; or (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five trading days immediately

4

LETTER FROM THE CHAIRMAN

preceding the earliest of (a) the date of signing of the agreement to which a transaction relates; or (b) the date on which such relevant transaction is announced; or (c) the date on which the price of the Shares to be issued pursuant to such relevant transaction is fixed).

The full text of the ordinary resolution to be proposed at the AGM in relation to the Issue Mandate is set out in resolution 4 in the Notice set out on pages 15 to 17 of the circular.

4. GENERAL MANDATE TO BUY BACK SHARES (RESOLUTION 5 AS PER NOTICE)

At the last annual general meeting of the Company held on 12 April 2017, an ordinary resolution was passed to grant a general and unconditional mandate to the Directors to buy back Shares on the Stock Exchange of up to 10% of the aggregate nominal amount of the issued share capital of the Company as at 12 April 2017. No Shares have been bought back pursuant to the Buy-back Mandate as at the Latest Practicable Date.

As the existing Buy-back Mandate is going to expire at the conclusion of the AGM, the Directors believe that the renewal of the Buy-back Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, an ordinary resolution will be proposed at the AGM which will give the Directors a general and unconditional mandate to exercise the powers of the Company to buy back Shares at any time until the earlier of (i) the conclusion of the next annual general meeting of the Company following the passing of such resolution; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Companies Act or the Bye-laws to be held; or (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the Shareholders in general meeting, as stated in the ordinary resolution up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the Company at the date of passing of the relevant resolution, which if passed shall be 17 April 2018.

The explanatory statement required under Rule 10.06(1)(b) of the Listing Rules to provide the Shareholders with all the information reasonably necessary for them to make an informed decision on whether to vote for or against the ordinary resolution approving the Buy-back Mandate is set out in Appendix II to this circular.

The full text of the ordinary resolution to be proposed at the AGM in relation to the Buy-back Mandate is set out in resolution 5 in the Notice set out on pages 15 to 17 of this circular.

5. PRINCIPAL BUSINESS OF THE GROUP

The Group is one of the world’s leading owners and operators of modern handysize and supramax dry bulk vessels. The Company currently operates approximately 220 dry bulk ships of which 106 are owned and about 114 are chartered.

The Company is listed and headquartered in Hong Kong, and provides a quality service to over 500 customers, with approximately 3,400 seafarers and 335 shore-based staff in 12 key locations around the world.

5

LETTER FROM THE CHAIRMAN

6. VOTING BY POLL

Pursuant to Rule 13.39 of the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll. Therefore, the chairman of the AGM will demand a poll for each and every resolution put forward at the AGM pursuant to Bye-law 66. The Company will appoint the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, as the scrutineer to handle vote-taking procedures at the AGM. The results of the poll will be published on the HKExnews website at www.hkexnews.hk and the Company’s website at www.pacificbasin.com no later than 23:00 on the date of the AGM.

7. NOTICE OF ANNUAL GENERAL MEETING

The Notice is set out on pages 15 to 17 of this circular.

There is enclosed a form of proxy for use at the AGM. A member entitled to attend and vote at the AGM may appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company. Whether or not you intend to be present at the AGM, you are requested to complete the form of proxy and return it to Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the AGM. The completion and return of the form of proxy will not prevent you from attending and voting in person at the AGM should you so wish.

8. RECOMMENDATION

The Directors believe that the proposals mentioned above, including the proposals for the reelection of Directors, the renewal of the Issue Mandate and the Buy-back Mandate are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of all of the resolutions to be proposed at the AGM.

Yours faithfully, By order of the Board

David M. Turnbull Chairman

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APPENDIX I PARTICULARS CONCERNING DIRECTORS TO BE RE-ELECTED

EXECUTIVE DIRECTORS

Mats H. Berglund – age 55, Chief Executive Officer

Mr. Berglund graduated from the Business School of Gothenburg University in 1986 with a “Civilekonom” degree (equivalent to a Master of Business Administration in Business and Finance). In addition, he attended the Advanced Management Program at Harvard Business School in 2000. After graduating from Gothenburg University he joined Swedish family owned conglomerate Stena in 1986. From 1986 to 2005 he occupied managerial and leadership positions in various Stena group shipping businesses in Sweden and the USA, including group controller of Stena Line, vice president and chief financial officer of both Concordia Maritime and StenTex (a Stena-Texaco joint venture), president of StenTex, and vice president and president of Stena Rederi AB (Stena’s parent company for all shipping activities). From 2005 to 2011, Mr. Berglund served as the senior vice president and head of Crude Transportation, for New York-listed Overseas Shipholding Group. Between March 2011 and May 2012, he served as chief financial officer and chief operating officer at Chemoil Energy, a Singapore-listed global trader of marine fuel products.

Mr. Berglund joined the Company as Group’s Chief Executive Officer and Executive Director on 1 June 2012 and his term of office is expiring at the conclusion of the 2018 annual general meeting. The Company intends to extend his term of appointment for a further three years until the conclusion of the 2021 annual general meeting (subject to retirement by rotation at the annual general meeting of the Company in accordance with the Bye-laws). Pursuant to his service agreement with the Company, Mr. Berglund currently receives remuneration at the rate of US$1,050,683 per annum. Mr. Berglund is also eligible to receive an annual bonus of up to 100% of his salary, which will be paid at the discretion of the Board. In addition, an aggregate of 18,391,000 Shares in the Company in the form of restricted Awards has been granted to Mr. Berglund pursuant to the 2013 Share Award Scheme of the Company, of which (i) 5,768,000 Shares have vested; (ii) 2,830,000 Shares will vest on 14 July 2018; (iii) 3,402,000 Shares will vest on 14 July 2019; (iv) 3,623,000 Shares will vest on 14 July 2020; and (v) 2,768,000 Shares will vest on 14 July 2021 respectively. Mr. Berglund’s remuneration was agreed between the Company and Mr. Berglund and was determined by reference to the levels of remuneration of other senior executives of the Company and in the market generally.

Save as aforesaid, Mr. Berglund did not hold any other directorships in the last three years in public companies the securities of which are listed on any securities market in Hong Kong or overseas. Mr. Berglund does not have any relationship with any other Directors or senior management or any substantial or controlling shareholders of Pacific Basin and save as disclosed in the paragraph below relating to interests of the Directors to be re-elected at the AGM, he does not have any interest (within the meaning of Part XV of the Securities and Futures Ordinance) in the Shares.

Save for the information disclosed above, the Board and Mr. Berglund have indicated that there is no other information to be disclosed pursuant to any of the requirements under Rule 13.51(2)(h) to (v) of the Listing Rules, and there are no other matters that need to be brought to the attention of the Shareholders.

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APPENDIX I PARTICULARS CONCERNING DIRECTORS TO BE RE-ELECTED

INDEPENDENT NON-EXECUTIVE DIRECTOR

Patrick B. Paul – age 70

Mr. Paul graduated from St. John’s College, Oxford University in 1969 and is a qualified accountant. In a 33 year career with PricewaterhouseCoopers, he held a number of senior management positions in Hong Kong, including chairman and senior partner of the firm for seven years. He is currently an independent non-executive director of Johnson Electric Holdings and The Hongkong and Shanghai Hotels (both Hong Kong-listed) as well as House of Fraser Group Ltd.

Mr. Paul joined the Company as an Independent Non-executive Director in March 2004 and his term of office is expiring at the conclusion of the 2018 annual general meeting. The Company intends to extend his term of appointment for a further three years until the conclusion of the 2021 annual general meeting (subject to retirement by rotation at the annual general meeting of the Company in accordance with the Bye-laws). Mr. Paul currently receives HK$450,000 per annum for being an Independent Non-executive Director and he is entitled to a fee of HK$75,000 per annum for being a member of both the remuneration and nomination committees, and a further fee of HK$275,000 per annum for being a member of and acting as chairman of the audit committee. His total remuneration of HK$800,000 per annum will be payable in arrears in quarterly instalments on 31 March, 30 June, 30 September and 31 December. Mr. Paul’s remuneration was agreed between the Company and Mr. Paul and was determined by reference to the levels of remuneration of other senior executives of the Company and in the market generally.

Mr. Paul has served the Company as an Independent Non-executive Director for more than 9 years, however the Board considers that he continues to be independent and is able to carry out his duties as an Independent Non-executive Director of the Company for the following reasons:

• (a) Mr. Paul is able to confirm his independence in respect of each of the factors set out in Rule 3.13 of the Listing Rules;

• (b) Mr. Paul has demonstrated continued independent judgement which contributes positively to the development of the Company’s strategy and policies;

• (c) Mr. Paul has not had and does not have any executive or management role or functions in the Company and its subsidiaries, nor has he been employed by any member of the Pacific Basin group;

• (d) Mr. Paul does not receive any remuneration from the Company apart from Director’s fees and does not participate in the Group’s staff incentive plan or pension scheme;

• (e) Mr. Paul does not receive any remuneration from a third party in relation to his directorship;

• (f) Mr. Paul does not have any financial, business, family or other material relationships with the Group, its management, advisers and business;

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APPENDIX I PARTICULARS CONCERNING DIRECTORS TO BE RE-ELECTED

• (g) Mr. Paul does not hold any cross directorships or other significant links with other directors through involvement with other companies;

• (h) Mr. Paul holds less than 1% of the total issued share capital of the Company;

• (i) Mr. Paul does not serve as a director or employee of a significant competitor of the Group; and

• (j) After due and careful consideration, the Company’s Nomination Committee considers Mr. Paul suitably independent to carry out his duties as an Independent Non-executive Director.

Save as aforesaid, Mr. Paul did not hold any other directorships in the last three years in public companies the securities of which are listed on any securities market in Hong Kong or overseas. Mr. Paul does not have any relationship with any other Directors or senior management or any substantial or controlling shareholders of Pacific Basin and he does not have any interest (within the meaning of Part XV of the Securities and Futures Ordinance) in the Shares.

Save for the information disclosed above, the Board and Mr. Paul have indicated that there is no other information to be disclosed pursuant to any of the requirements under Rule 13.51(2)(h) to (v) of the Listing Rules, and there are no other matters that need to be brought to the attention of the Shareholders.

INDEPENDENT NON-EXECUTIVE DIRECTOR

Alasdair G. Morrison – age 69

Mr. Morrison obtained a Bachelor of Arts degree in 1971 (subsequently Master of Arts) from Cambridge University. He also attended the Program for Management Development at Harvard Business School in 1983. Mr. Morrison served with the Jardine Matheson Group for 28 years from 1971 to 2000, holding various senior positions including that of group managing director from 1994 to 2000. He then joined Morgan Stanley occupying the following senior positions: a managing director of Morgan Stanley Dean Witter Asia Limited, a member of the bank’s global management committee, chairman of Morgan Stanley Asia and, from 2002 to February 2006, concurrently chairman and chief executive officer of Morgan Stanley Asia. Mr. Morrison spent five years as senior advisor to Citigroup Asia Pacific until January 2015 and was a non-executive director of Grosvenor Group Limited in the UK. Currently he is an independent non-executive director of the Hong Kong-listed MTR Corporation and a senior advisor of Bain Capital Asia.

9

APPENDIX I PARTICULARS CONCERNING DIRECTORS TO BE RE-ELECTED

Mr. Morrison joined the Company on 1 January 2008 as an Independent Non-executive Director and his term of office is expiring at the conclusion of the 2018 annual general meeting. The Company intends to extend his term of appointment for a further three years until the conclusion of the 2021 annual general meeting (subject to retirement by rotation at the annual general meeting of the Company in accordance with the Bye-laws). Mr. Morrison currently receives HK$450,000 per annum for being an Independent Non-executive Director and he is entitled to a fee of HK$175,000 per annum for being a member of the audit committee, and a further fee of HK$75,000 per annum for being a member of both the remuneration and nomination committees. His total remuneration of HK$700,000 per annum will be payable in arrears in quarterly instalments on 31 March, 30 June, 30 September and 31 December. Mr. Morrison’s remuneration was agreed between the Company and Mr. Morrison and was determined by reference to the levels of remuneration of other senior executives of the Company and in the market generally.

Mr. Morrison has served the Company as an Independent Non-executive Director for more than 9 years, however the Board considers that Mr. Morrison continues to be independent and is able to carry out his duties as an Independent Non-executive Director of the Company for the following reasons:

• (a) Mr. Morrison is able to confirm his independence in respect of each of the factors set out in Rule 3.13 of the Listing Rules;

• (b) Mr. Morrison has demonstrated continued independent judgement which contributes positively to the development of the Company’s strategy and policies;

• (c) Mr. Morrison has not had and does not have any executive or management role or functions in the Company and its subsidiaries, nor has he been employed by any member of the Pacific Basin group;

• (d) Mr. Morrison does not receive any remuneration from the Company apart from Director’s fees and does not participate in the Group’s staff incentive plan or pension scheme;

• (e) Mr. Morrison does not receive any remuneration from a third party in relation to his directorship;

• (f) Mr. Morrison does not have any financial, business, family or other material relationships with the Group, its management, advisers and business;

• (g) Mr. Morrison does not hold any cross directorships or other significant links with other directors through involvement with other companies;

• (h) Mr. Morrison does not hold any Shares;

• (i) Mr. Morrison does not serve as a director or employee of a significant competitor of the Group; and

• (j) After due and careful consideration, the Company’s Nomination Committee considers Mr. Morrison suitably independent to carry out his duties as an Independent Non-executive Director.

10

APPENDIX I PARTICULARS CONCERNING DIRECTORS TO BE RE-ELECTED

Save as aforesaid, Mr. Morrison did not hold any other directorships in the last three years in public companies the securities of which are listed on any securities market in Hong Kong or overseas. Mr. Morrison does not have any relationship with any other Directors or senior management or any substantial or controlling shareholders of Pacific Basin and he does not have any interest (within the meaning of Part XV of the Securities and Futures Ordinance) in the Shares.

Save for the information disclosed above, the Board and Mr. Morrison have indicated that there is no other information to be disclosed pursuant to any of the requirements under Rule 13.51(2)(h) to (v) of the Listing Rules, and there are no other matters that need to be brought to the attention of the Shareholders.

INTERESTS AND LONG POSITION IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION

As at the Latest Practicable Date, the interests of the Directors to be re-elected at the AGM in the Shares, underlying Shares and debentures of the Company and its associated corporations, as recorded in the register maintained by the Company under Section 352 of the Securities and Futures Ordinance or as notified to the Company were as follows:

				Approximate
				percentage of
				issued share
	Long/Short	Personal	Total Share	capital of the
Name of Director	Position	interests	interests	Company
Mats H. Berglund	Long	18,391,000	18,391,000	0.41%
Patrick B. Paul	Long	380,000	380,000	Less than 0.01%

At no time during the year was the Company, its subsidiaries, or its associated companies a party to any arrangement to enable the Directors and chief executive of the Company to hold any interests or short positions in the Shares or underlying Shares in, or debentures of, the Company or its associated corporations.

11

EXPLANATORY STATEMENT

APPENDIX II

This appendix contains the particulars that are required by the Listing Rules to be included in an explanatory statement to accompany the Notice at which a resolution is to be proposed in relation to the Buy-back Mandate.

BUY-BACK MANDATE

The relevant sections of the Listing Rules which permit companies with a primary listing on the Stock Exchange to buy back their Shares on the Stock Exchange, subject to certain restrictions, are summarised below:

(a) Shareholders’ approval

The Listing Rules provide that all proposed buy-backs of Shares by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by specific approval of a particular transaction. The Listing Rules require an explanatory statement such as is contained herein to be sent to Shareholders to give Shareholders adequate information to enable them to decide whether to approve the grant of such a mandate.

(b) Source of funds

In buying back its Shares, the Company may only apply funds entirely from the Company’s available cashflow or working capital facilities which will be funds legally available for such purpose in accordance with its memorandum of association and Bye-laws and the laws of Bermuda.

Under Bermuda law, buy-backs may only be effected out of the capital paid up on the Shares to be bought back or out of funds of the Company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of Shares made for the purpose.

Any premium payable on a buy-back over the par value of the Shares to be bought back must be provided for out of funds of the Company otherwise available for dividend or distribution or out of the Company’s share premium account.

(c) Maximum number of Shares to be bought back

As at the Latest Practicable Date, the issued share capital of the Company comprised 4,442,271,102 Shares. Subject to the passing of resolution 5 approving the Buy-back Mandate as set out in the Notice appearing on pages 15 to 17 of this circular and on the basis that no further Shares are issued or bought back prior to the AGM, the Company would be allowed under the Buy-back Mandate to buy back a maximum of 444,227,110 Shares until (i) the conclusion of the next annual general meeting; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Companies Act or the Bye-laws to be held; or (iii) the revocation or variation of the authority given under resolution 5 by an ordinary resolution of the Shareholders in general meeting, whichever is earliest.

12

EXPLANATORY STATEMENT

APPENDIX II

REASONS FOR BUY-BACK

The Directors believe that it is in the best interests of the Company and the Shareholders as a whole to seek a general authority from the Shareholders to enable the Company to buy back Shares on the Stock Exchange. Such buy-backs, depending on market conditions and funding arrangements at the time, may lead to an enhancement of the net asset value of the Company and/or its earnings per share and will be made only when the Directors believe that such a buy-back will benefit the Company and the Shareholders.

FUNDING OF BUY-BACKS

Buy-backs must be funded out of funds legally available for the purpose in accordance with the Company’s memorandum of association and Bye-laws and the laws of Bermuda.

If the Buy-back Mandate is exercised in full, there might be a material adverse impact on the working capital of the Company as compared with the position disclosed in the Company’s most recently published audited accounts for the year ended 31 December 2017. However, the Directors have no present intention to buy back any Shares and they would exercise the power to buy back in circumstances only where they consider that the buy-back would be in the best interests of the Company and the Shareholders as a whole and in circumstances where they consider that the Shares can be bought back on terms favourable to the Company.

DISCLOSURE OF INTERESTS

None of the Directors or, to the best of the knowledge of the Directors, having made all reasonable enquiries, any associates of the Directors has a present intention, in the event that the proposed Buy-back Mandate is approved by the Shareholders, to sell Shares to the Company.

No core connected persons of the Company have notified the Company of a present intention to sell Shares to the Company and no such persons have undertaken not to sell any Shares to the Company in the event that the Buy-back Mandate is granted by the Shareholders.

DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make buy-backs pursuant to the Buy-back Mandate in accordance with the Listing Rules, the Bye-laws and the applicable laws of Bermuda.

SHARE BUY-BACK MADE BY THE COMPANY

No buy-back has been made by the Company of its Shares (on the Stock Exchange or otherwise) in the six months prior to the date of this document.

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EXPLANATORY STATEMENT

APPENDIX II

SHARE PRICE

During each of the previous twelve months preceding the Latest Practicable Date, the highest and lowest prices at which Shares were traded on the Stock Exchange were as follows:

	Highest	Lowest
	(HK$)	(HK$)
2017
March	1.94	1.55
April	1.78	1.46
May	1.66	1.31
June	1.73	1.53
July	1.82	1.57
August	1.93	1.59
September	2.03	1.70
October	1.95	1.76
November	1.82	1.51
December	1.79	1.60
2018
January	1.94	1.70
February	2.27	1.64
March (up to the Latest Practicable Date)	2.43	2.08

TAKEOVERS CODE

If as a result of a Share buy-back a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory general offer in accordance with Rule 26 of the Takeovers Code. As at the Latest Practicable Date, the largest Shareholder of the Company, Aggregate of Standard Life Aberdeen plc affiliated investment management (“SLA”), is interested in 531,558,000 Shares (representing approximately 11.96% of the Company’s issued share capital of 4,442,271,102). Based on the said interests of SLA in the issued share capital of the Company as at the Latest Practicable Date, and on the basis that no further Shares are issued or bought back prior to the AGM, in the event that the Directors exercise in full the power to buy back Shares in accordance with the terms of the resolution to be proposed at the AGM, the interests of SLA in the issued share capital of the Company will be increased from approximately 11.96% to approximately 13.30% which is below the 30% threshold prescribed under the Takeovers Code and SLA would not be obliged to make a mandatory general offer under Rule 26 of the Takeovers Code as a result of such increase.

The Directors have no intention to exercise the Buy-back Mandate in such a way and to such extent that would give rise to an obligation on the part of SLA or any other Shareholder to make a mandatory general offer under Rule 26 of the Takeovers Code.

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

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NOTICE IS HEREBY GIVEN that the 2018 Annual General Meeting of Pacific Basin Shipping Limited (the “Company”) will be held at the Hong Kong Maritime Museum, Central Pier No.8, Hong Kong on Tuesday, 17 April 2018 at 10:30 a.m. for the following purposes:

ORDINARY RESOLUTIONS

1. To receive and adopt the audited financial statements and the reports of the Directors and auditors for the year ended 31 December 2017;

2. To re-elect Directors and to authorise the Board of Directors of the Company to fix their remuneration;

3. To re-appoint Messrs. PricewaterhouseCoopers, Certified Public Accountants, as the auditors of the Company and to authorise the Board of Directors of the Company to fix their remuneration;

As special business, to consider and, if thought fit, pass the following resolutions as Ordinary Resolutions:

1. “ GRANT OF A GENERAL MANDATE TO ISSUE SHARES

THAT :

• (a) subject to paragraph (c) of this resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to allot, issue or otherwise deal in new shares of US$0.01 each in the capital of the Company (the “Shares”) or securities convertible into Shares, or options, warrants or similar rights to subscribe for any Shares, and to make or grant offers, agreements, options and warrants which would or might require the exercise of such powers be generally and unconditionally approved;

• (b) the approval in paragraph (a) of this resolution shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements, options and warrants which would or might require the exercise of such power after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to Shares issued as a result of a Rights Issue (as defined below), the exercise of the subscription or conversion rights attaching to any warrants issued by the Company or Shares issued to satisfy awards granted under the share award scheme of the Company or any scrip

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

dividend providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares, shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this resolution, provided that any Shares to be allotted and issued pursuant to the approval in paragraph (a) above shall not be issued at a discount of more than 10% to the Benchmarked Price of the Shares, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

• “Benchmarked Price” shall be a price which is the higher of:

• (i) the closing price of the Shares as stated in the daily quotations sheet of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on the date of signing of the agreement to which the transaction relates; or

• (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five trading days immediately preceding the earliest of:

  • (A) the date of signing of the agreement to which the transaction relates; or

  • (B) the date on which the relevant transaction is announced; or

  • (C) the date on which the price of the Shares to be issued pursuant to the transaction is fixed.

“Relevant Period” means the period from the passing of this resolution until the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Companies Act 1981 of Bermuda or the Company’s Byelaws to be held; and

• (iii) the revocation or variation of the authority given under this resolution by an ordinary resolution of the Shareholders in general meeting.

“Rights Issue” means the allotment, issue or grant of Shares pursuant to an offer of shares open for a period fixed by the Directors of the Company to holders of the Shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

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NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

1. “ GRANT OF A GENERAL MANDATE TO BUY BACK SHARES

THAT :

• (a) subject to paragraph (b) of this resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to buy back the Shares on Stock Exchange or on any other stock exchange on which the Shares may be listed and recognised for this purpose by the Securities and Futures Commission of Hong Kong and the Stock Exchange be generally and unconditionally approved;

• (b) the aggregate nominal amount of the Shares which may be purchased or bought back by the Company pursuant to the approval in paragraph (a) of this resolution during that Relevant Period shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (c) for the purposes of this resolution, “Relevant Period” means the period from the passing of this resolution the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Companies Act 1981 of Bermuda or the Company’s Byelaws to be held; and

• (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the Shareholders in general meeting.”

By Order of the Board Mok Kit Ting, Kitty Company Secretary

Hong Kong, 13 March 2018

Notes:

1. Every member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more persons as their proxy to attend and vote on behalf of themselves. A proxy need not be a member of the Company.

2. To be valid, a form of proxy, together with the power of attorney or other document of authority, if any, under which the form is signed, or a certified copy thereof, must be deposited with the Company’s Hong Kong branch registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjournment thereof (as the case may be).

1. In order to determine the entitlement to attend and vote at the meeting, the register of members of the Company will be closed from 12 April to 17 April 2018, both days inclusive, during which period the registration of Shares will be suspended. All completed transfer forms accompanied by the relevant share certificates, must be lodged with the Company’s Hong Kong branch registrar, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 11 April 2018.

1. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting in person at the meeting or any adjourned meeting or upon the poll concerned if the Shareholders so wish. In such event, the instrument appointing the proxy shall be deemed to be revoked.

2. A circular containing the information regarding, inter alia, the Directors proposed to be re-elected, the general mandate to issue Shares and the general mandate to buy back Shares will be sent to the Shareholders together with the Company’s 2017 Annual Report.

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