GOCean

After injecting more than rm10.6 million into the company in the past one year, Datuk Francis Tan is now planning to give the loss making company up to rm501.8 million in business over the next one year via his privately held palm oil trading business. SAWIT RAYA Sdn Bhd.

The transactions are RPTs simply because Tan the MD of GOcean is a common shareholder of the GOCEAN and SAWIT RAYA.

The RPTs involve GOcean buying some rm250 million worth of palm kernel for crushing as well as rm130 million of crude palm kernel oil, palm kernel expeller, refined palm oil and by products from SAWIT Raya in which Tan holds a 90% stake.

On the other hand, GOCean will be selling back to SAWIT RAYA some rm120 million worth of CPO kernel, palm kernel expeller, refined palm oil and by products. GOcean will also charge SAWIT RAYA some rm1.8 billion in totaling services.

Since it involves GOCean buying some rm380 million worth of products and services from SAWIT RAYA while selling rm122 million in return, GOCean will be a net buyer of some rm258 million worth of produce from SAWIT RAYA.

Should GOCean be able to sell the feedstocks after processing them it purchased from SAWIT RAYA, naturally this would be a new income stream for it.

The transactions are not by any means guaranteed.

Since Tan emerged as a major shareholder, Tan has been seen as a possible white knight for the company.

Some quarters believed that Tan’s ultimate goal is to use GOCean as vehicle for the backdoor listing of SAWIT RAYA.

SAWIT RAYA was initially involved in the transportation of palm oil product and repacking of edible oil for the retail market. In 2007, the company invested in a refining and dry fractional plant in Selangor.

Tan has a strong grip in GOCean given his 15.38% stake. He subscribed for the company’s placement for rm4.46 million or 11 sen per share.

An unsecured loan of rm6.2 million that he had given to the company could be converted into shares at a later stage, extending his holdings to about 25% assuming the shares are issued at 17 sen per share.

Datuk Seri Ng, the second largest shareholder with a 5.38% stake. Ng subscribed to 14.181 million shares in the 30% placement, and he is a director in several companies link to Tan.

Going forward, it remains to be seen what Tan will do with GOceean, but management has indicated that it will focus on palm kernel crushing at the moment.