Transocean in RM140mil reverse merger deal, Nadzmi to give up control

The lining up of the Hammar sideloaders at handing over ceremony of the 30th Hammar sideloader to Taipanco at its office in Port Klang.

KUALA LUMPUR: Transocean Holdings Bhd is paying RM140mil to take over container transportation firm Taipanco Sdn Bhd in a bid to strengthen its logistics business and financial performance.

The logistics solutions provider and tyre dealer told Bursa Malaysia that it had signed a conditional agreement to buy the entire equity interest in Taipanco from the vendors - Jee Chau Hau, Nazari Akhbar and Nor Rahah Ab Ghani - as well as a profit guarantee agreement.

Taipanco’s core business activity is container transportation, primarily servicing two major ports in the central region namely Northport and Westport. Taipanco and its subsidiaries have a total fleet size of more than 200 prime movers with more than 700 units of trailers.

Transocean said the RM140mil payment would be satisfied through the issuance of 102 million new ordinary shares and 38 million new redeemable convertible preference shares (RCPS) in Transocean.

This will result in a change of controlling shareholder. Executive chairman Tan Sri Mohd Nadzmi Mohd Salleh, who has deemed interest of 65.16% through Kumpulan Kenderaan Malaysia Bhd and Lengkap Suci Sdn Bhd, will see his stake diluted to as low as 14.76% (based on full conversion of the RCPS).

Following the corporate exercise, the vendors will end up with a collective shareholding of 55.25% of the enlarged issued share capital of Transocean. Assuming full conversion of all RCPS, their combined shareholding will rise to 64.64%.

The vendors will seek approval to be exempted from undertaking a mandatory takeover offer.

Transocean said the vendors gave an undertaking that the audited consolidated profit before tax (PBT) of Taipanco for each of the financial years ending Dec 31, 2017 to 2019, would be at least RM10mil and that the cumulative audited consolidated PBT of Taipanco for the three-year period will not be less than RM33mil.

The vendors also commit to a placement of not less than 23 million Transocean shares to independent third party investor(s). This will allow Transocean to comply with the 25% public shareholding requirement.

Giving the rationale for the proposals, Transocean said the group’s financial performance had been deteriorating over the past four years and the proposed acquisition would allow it to revitalise its business and improve its lacklustre financial performance.

“Given Taipanco’s strong profit track record and taking into consideration the profit guarantee provided by the vendors, Taipanco is expected to generate a steady source of income and cash flow to the group. The proposed acquisition represents an opportunity for Transocean to broaden its income base thereby improving the group’s weakening financial performance,” it said.

The deal will also allow the group to tap into Taipanco’s network and expertise in the container haulage business, thereby empowering it to venture into areas that would complement its existing business.

The group is expected to gain a competitive advantage by streamlining its logistics business and combining the resources of Transocean and Taipanco for greater operational and financial efficacy.