KUALA LUMPUR: UMW Oil & Gas Corporation Bhd (UMW-OG) and Ekuiti Nasional Bhd (Ekuinas) are consolidating their oil and gas businesses under UMW-OG and this will also involve Icon Offshore Bhd (Icon) in a multi-billion-ringgit corporate exercise.
In a joint statement issued on Thursday, they said the enlarged oil & gas businesses under UMW-OG will lead to the creation of a major integrated service provider across the oil & gas value chain.
This will comprise seven jack-up rigs, one semi-submersible rig, five hydraulic workover units (HWU, 37 offshore support vessels (OSV), 14 clean petroleum product (CPP) marine transportation vessels and two liquefied petroleum gas (LPG) marine transportation vessels, respectively.
The corporate exercise will see UMW-OG acquiring Ekuinas’ indirect stake of 42.3% in Icon Offshore Bhd (Icon) for new UMW-OG shares, and 95.5% interest in Orkim Sdn Bhd (Orkim) for cash, respectively.
Icon is the largest owner and operator of offshore support vessels (OSV) in Malaysia. Orkim is the owner and operator of the largest CPP marine transportation vessels in the country.
Upon completion of the sales and purchase agreement (SPA) relating to Icon, Ekuinas will emerge with 12.6% of UMW-OG, second only to Permodalan Nasional Bhd (PNB) and funds under its management.
PNB and its funds will hold 40% of UMW-OG following the proposed demerger of UMW-OG from UMW Holdings.
The exercise will see UMW Holdings exiting the oil and gas business. See related story: http://www.thestar.com.my/business/business-news/2017/01/19/umw-to-exit-oil-and-gas-sector-distribute-umw-og-shares/
“With the newly acquired fleet of assets across the value chain, the enlarged UMW-OG will be in a position to benefit from the expected recovery of activities in the sector through its interests in offshore drilling rigs, HWUs and OSVs, and improved earnings profile through Orkim’s long term contracted cash flows.
“Upon completion of the consolidation exercise, UMW-OG will embark on a recapitalisation exercise via a rights issue of approximately RM1.8bil. To this end, Ekuinas has indicated its support for the recapitalisation plan, up to RM550mil, comprising its entitlement and application of excess rights shares,” it said.
UMW-OG will undertake a mandatory take-over offer for all the remaining Icon shares at a consideration of 50 sen a share to be satisfied either via cash or issuance of new UMW-OG shares at 80 a share.
“UMW-OG intends to secure full acceptance to reap the benefits of consolidation and does not intend to maintain the listing status of Icon,” it said.
UMW-OG intends to procure a similar support from its major shareholders, namely PNB and its funds.
“The Ekuinas support, together with PNB and funds’ entitlement after the UMW-OG demerger, would in aggregate amount to approximately RM1.3bil or more than 70% of the rights issue, if subscribed. UMW-OG will pursue underwriting arrangements for the remaining portion,” they said.
What it means for Ekuinas:
Ekuinas divests 42.3% stake in Icon Offshore to UMW Oil & Gas at 50 sen per share, swaps for new UMW-OG shares at 80 sen each.
Ekuinas will have 12.6% stake in UMW-OG.
It sells 95.5% stake Orkim to UMW-OG for RM472.7mil cash consideration. This excludes settlement of shareholders’ advance of up to RM80mil.
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