TGOFFs - undertake a major fund-raising exercise

It will undertake a major fund-raising exercise, comprising a bond issue and share placement, to acquire a controlling stake in a foreign O&G firm.

It was reported earlier that Tanjung Offshore was in the final stages of acquiring a controlling stake in a foreign O&G company that owns and manages several offshore oil rigs for close to RM1bil. According to a source, if successful, the new asset would become Tanjung Offshore’s main business.

Tanjung Offshore was formerly an offshore supply vessel (OSV) operator and owner, before selling that business to Ekuiti Nasional Bhd (Ekuinas).

Ths bond issue would raise more than RM500mil. The balance of the acquisition cost would be satisfied via cash and the share placement.

As of March 31, Tanjung Offshore had cash and cash equivalents of RM126.37mil. A large portion of this was from the disposal of its shipping assets in 2012.

For its first quarter to March 31, Tanjung Offshore recorded a net profit of RM2.64mil versus RM5.43mil previously. Revenue increased 35.58% to RM90.02mil. For 2012, the company posted losses of RM11.59mil. Some 77.82% of its 2012 revenue came from engineering equipment services, and the balance from maintenance services.

The company underwent a business rationalisation plan to reduce high operational costs last year while also divesting overseas businesses. It had been making losses for the past two years but returned to the black in the first quarter.

It would be undertaking a private placement of 10% of its shares and was in the process of identifying third-party investors. The private placement would raise a minimum RM17.73mil or a maximum RM22.76mil.

It was also currently (July 2013) identifying suitable business entities or assets, and intended to carry out acquisitions to complement its existing businesses.

In 2012, Tanjung Offshore entered into an agreement with Ekuinas, via Kota Bayu Ekuiti Sdn Bhd, for the disposal of its entire stake in Tanjung Kapal Services Sdn Bhd (TKS) for RM220mil. The deal was completed on July 20, 2012.

Since then the company has been seeking a new core business.

In 2012, too, Ekuinas sold its entire 24% stake, or 70 million Tanjung Offshore shares, generating proceeds of RM62mil, including dividends. The state-funded private equity firm had paid RM99.8mil, or RM1.42 a share, for the stake in Tanjung Offshore in 2010.

Along with the divestment, Ekuinas acquired TKS, later merging it with OMNI Petromaritime Sdn Bhd to create Icon Offshore Bhd, Malaysia’s third largest OSV operator with 30 vessels at present. It was Ekuinas’ largest ever investment at RM484.1mil.

Icon Offshore is slated for a listing for 2014.