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Monday November 19, 2012

Five buy Tanjung Offshore stake

The individuals who bought block from Ekuinas do not represent any financial institution

PETALING JAYA: The buyers of the 23.8% block of shares in Tanjung Offshore Bhd that was disposed by Ekuiti Nasional Bhd (Ekuinas) via a placement exercise are five individuals whose identity remains unclear, sources close to the deal said.

The sale was carried out by Maybank Investment Bank, and the five buyers did not represent any financial institution, the sources added.

Ekuinas is also selling the Tanjung Offshore stake at a loss of approximately RM38mil, according to back-of-the-envelope calculations and taking into account the past dividends paid by Tanjong Offshore.

Ekuinas had invested in Tanjung Offshore in 2010 at a total price of around RM99.8mil or RM1.42 per share. Last week, Ekuinas announced it was selling its 70 million Tanjung Offshore shares.

Ekuinas said that following the placement exercise and dividends already received from Tanjung Offshore, it had generated a cumulative total proceeds of RM62mil from its investment in Tanjung Offshore.

That leaves a shortfall of RM37.8mil.

It should be noted though that the loss is small and has hardly dented the performance of Ekuinas.

Ekuinas had managed to record a gross internal rate of return (IRR) of 32.3% and net IRR of 20.6% for its total investment portfolio of RM1.6bil as of its financial year ended Dec 31, 2011.

Tanjung Offshore is one of 12 companies that Ekuinas has invested in.

The stated rational of Ekuinas of its divestment of Tanjong Offshore is to fully focus on the offshore support vessel (OSV) market.

Interestingly, part of Ekuinas' OSV strategy has been to acquire some assets from Tanjung Offshore itself.

Ekuinas also recently upped its holding in its own OSV vehicle, Kota Bayu Ekuiti Bhd (KBE), using the dividends it had received from Tanjung Offshore.

Ekuinas now owns 93.3% in KBE.

In the first half of 2012, KBE acquired Tanjung Offshore's wholly owned subsidiary Tanjung Kapal Services Sdn Bhd (TKS) for RM260mil.

TKS currently has a fleet of 16 offshore support vessels, plus two more under construction.

This divestment leaves Tanjung Offshore with only its non-marine businesses, namely maintenance services, engineering products, and products and services. The company will also be debt-free and will be left with a cash pile estimated at some RM75mil.

In September, Ekuinas completed a RM220.9mil investment in OMNI Petromaritime Sdn Bhd, another fast-growing Malaysian OSV service provider.

Ekuinas acquired an 82.5% stake in OMNI for RM150.9mil and injected an additional capital of RM70mil into the company to redeem the company's loan liabilities, as well as finance OMNI's future expansion plans.

The combination of OMNI and TKS will create one of the largest bumiputra OSV groups with a portfolio of 28 vessels.

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