UMW Land president Dr Wafi Nazrin Abdul Hamid (pic) said this was a 30-year contract to produce fan-casing for Rolls Royce engines.
KUALA LUMPUR: Shares of UMW Oil and Gas (UMW-OG) and Icon Offshore fell in early Friday trade when they resumed trading after a one-day suspension on corporate news about the move to cancel the consolidation.
At 9.27am, UMW-OG was down 4.5 sen to 64.5 sen, but off its earlier low of 62 sen.
There were 2.04 million shares done at prices ranging from 62 sen to 65.5 sen.
As for Icon, it was down five sen to 33.5 sen.
The FBM KLCI rose 3.43 points or 0.2% to 1,762.10. Turnover was 395.30 million shares valued at RM194.82mil. There were 275 gainers, 149 losers and 250 counters unchanged.
On Thursday, UMW-OG has called off a plan to acquire oil and gas (O&G) assets from Ekuiti Nasional Bhd (Ekuinas), citing capital constraints and uncertainties in the industry.
The group, however, will proceed with the planned RM1.8bil new rights shares issuance, with its main shareholder, Permodalan Nasional Bhd (PNB), agreeing to underwrite the entire fund-raising exercise.
Ekuinas had earlier announced it hascancelled the proposed consolidation of UMW-OG, Icon Offshore and Orkim Sdn Bhd.
Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said on Thursday the UMW-OG exercise required significant capital, much larger than initially envisaged.
AmInvestment Research had on Friday downgraded its call on UMW-OG to Hold from Buy a lower fair value of 62 sen a share (from an earlier 80 sen a share), based on a 40% discount to book value vs. an earlier 20% discount on the book value of the group's rigs.
“As we had highlighted on April 26, the proposed merger between UMW-OG, Icon Offshore and Orkim has been aborted, which we are positive due to their unjustified valuations at price-to-book values (PBVs) of one time and 3.6 times respectively vs. UMW-OG's 0.8 times.
“However, the group is still undertaking a massive recapitalisation at 1.2 times its current market capitalisation by undertaking a RM1.8bil renounceable rights issue, now priced at 30 sen per rights shares on a basis of 14-to-five existing shares, bundled with a free one-for-four seven-year warrant which is exercisable at 39.5 sen,” it said.
AmInvestment Research said it concurred with UMW-OG’s need to significantly improve its balance sheet health, including additional debt refinancing for the RM308mil shareholder loan by UMW Holdings.
“However, this massive rights issue will halve the group’s net assets from RM1.04 a share currently to 50 sen a share, excluding warrant dilution. Together with the massive rights dilution, we now view the 34% discount to book value as justified,” it said.
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