KUALA LUMPUR: Destini Bhd
will venture into the paramilitary boat segment through its proposed acquisition of Everyday Success Sdn Bhd from paramilitary boat maker Destination Marine Services Sdn Bhd (DMS) for RM90mil.
The acquisition, among others, will allow Destini to participate in the RM381.3mil contract awarded to DMS to supply six patrol vessels to the Malaysian Maritime Enforcement Agency (APMM).
Destini, which makes lifeboats, fast rescue boats and life rafts, told Bursa Malaysia that Destini Armada Sdn Bhd - its unit that services marine safety and survical equipment - had signed a conditional agreement to acquire 100% of Everyday Success.
The purchase consideration of RM90mil will be satisfied via a combination of cash payment of RM15mil and the issuance of 107.14 million new 10-sen Destini shares at an issue price of 70 sen apiece to pay for the remaining RM75mil. (Destini shares ended trading unchanged at 59.5 sen on Thursday. Its highest closing price this year was 67.5 sen on June 24.)
Everyday Success is currently dormant, with intended principal activities being the provision of shipbuilding and ship repair services. DMS will inject into Everyday Success several identified/agreed assets including the project won by DMS to supply the vessels to APMM within 35 months (from June 15), assets of the shipyard facilities in Klang to implement the project, and and all permits and licences to carry it out.
“The proposed acquisition represents a gateway for Destini to further increase its range of products and expand its supply of vessel segment in terms of product complexity, technology, technical knowledge and expertise by venturing into the supply, testing and commissioning of paramilitary boats and its related MRO services to a different market segment pursuant to the implementation of the project,” Destini said.
Apart from making and selling boats and parts, Destini provides maintenance, repair and overhaul (MRO) services specialising in the safety, survival and rescue equipment for the aviation, marine and oil and gas industries.
DMS has guaranteed that Everyday Success’ cumulative after-tax profit will be at least RM25mil in aggregate for the two financial years ending Dec 31, 2015 and 2016.
“Based on the above and the value accorded to 100% equity interest in Everyday Success of about RM90mil, the purchase consideration represents a price-to-earnings multiple of 7.20 times,” Destini said.
It added that the RM381.3mil contract value of the APMM project would provide earnings visibility up to May 2018, and the identified assets would offer future earnings potential.
The proposed acquisition is expected to be completed by the fourth quarter of this year.