PETALING JAYA: Bumi Armada Bhd might need to raise about US$311mil (RM1.3bil) through a rights issue if it lands a major floating production storage and offloading (FPSO) project, said CIMB Research.
Projects that Bumi Armada is planning to bid include the US$1.2bil FPSO for India-based Oil and Natural Gas Corp (ONGC), a US$1bil Hess Corp deepwater project in Ghana, Italy-based Eni’s Zaba Zaba field offshore of Nigeria, and Petrobras’s Buzios development in offshore Brazil.
“In the event that Bumi Armada wins both the ONGC and Hess projects, we estimate it may need to inject in equity of US$311mil-US$176mil for ONGC and US$135mil for Hess,” CIMB said in a report.
“In our view, a rights issue paired with contract wins is not likely to be perceived negatively by the market,” it added.
Notably, the last rights issue exercise by Bumi Armada was in 2014, raising close to RM2bil. Shares in Bumi Armada closed one sen higher to 72.5 sen yesterday. It has a market capitalisation of RM4.25bil.
For its Ghana job, Bumi Armada had in June set up a joint-venture company, Bumi Armada Shapoorji Pallonji Ghana Ltd.
Bumi Armada owns 45% in this JV company, with another 45% held by its long-time partner India-based Shapoorji Pallonji Group while the remaining 10% is held by Cypress Energy Co Ltd. The partnership was to mitigate Bumi Armada’s financial exposure in its FPSO projects.
Notably, CIMB said Yinson Holdings Bhd was also interested in the FPSO job for the Hess’s deepwater project in Ghana, which is expected to cost about US$1bil to build.
CIMB said Bumi Armada could also raise about US$215mil by selling a 50% stake in FPSO Olombendo, which started operations in Angola in the first quarter this year.
It said the value was derived from a recent deal by Yinson, which sold a 26% stake in its FPSO unit in Ghana to Japanese parties.
The sale from Bumi Armada’s FPSO Olombendo could be utilised to settle most of the company’s RM1.5bil short-term revolving credits, CIMB said.
“This means that Bumi Armada will need to raise new funds for the US$311mil in equity capex for the ONGC and Hess projects, of which a rights issue is one of the fund-raising options,” it said.
The research house reckoned that Bumi Armada’s lacklustre share price performance over the last three months reflected the delay of its two major FPSO projects – Olombendo and Kraken.