Tanjung proposed to sell marine op to Ekuinas for RM 220 million

(TGOFFS opening stock price today (24.4.2012) was 93 sen)

Tanjung Offshore Bhd has proposed to sell its marine business to major shareholder E-Cap (Internal) One Sdn Bhd for RM220mil under a demerger exercise.

In a filing with Bursa Malaysia, Tanjung Offshore said it had entered into a conditional agreement for the purchase and sale of shares with Kota Bayu Ekuiti Sdn Bhd (KBE), a wholly-owned by E-Cap, which in turn is a major shareholder of Tanjung Offshore, for the disposal by Tanjung of 10 million ordinary shares of RM1 each in Tanjung Kapal Services Sdn Bhd (TKS), representing the entire equity interest in TKS, to KBE for a cash consideration of RM220mil.

E-Cap is wholly-owned by Ekuinas Capital Sdn Bhd, which in turn is a wholly-owned subsidiary of Yayasan Ekuiti Nasional, which also has 100% equity interest in Ekuiti Nasional Bhd.

Additionally, TKS would also settle the advances from Tanjung Offshore of about RM43.8mil.

“Tanjung intends to distribute approximately RM130mil out of the total proceeds arising from the proposed disposal to its shareholders,” it said.

Upon completion of the proposed disposal, the business that remains within Tanjung Offshore would be the non-marine business, comprising the equipment, engineering and maintenance services division.

“It is expected that the proceeds from the proposed disposal will assist the group in raising the much-needed funds to turn around the non-marine business which Tanjung is currently undertaking,” it said.

Meanwhile, E-Cap intends to offer the shareholders of Tanjung Offshore, other than E-Cap and/or its affiliates such number of redeemable convertible preference shares (RCPS) of 1 sen each held in KBE which is to be determined based on the aggregate percentage of the total issued and paid-up capital held by the remaining shareholders as at an entitlement date to be determined (OFS entitlement date), multiplied by the value of RM220mil, at an offer price of RM1 per RCPS on a non-renounceable basis based on the shareholdings of the remaining shareholders in Tanjung Offshore at the OFS entitlement date.

“The proposed offer sale is intended to allow the remaining shareholders to continue to participate in the future growth of TKS.

“E-Cap intends to seek a listing of KBE on the Main Market of Bursa Malaysia, the timing of which has not been determined at the date of this announcement but, in any event, shall be within 24 months from the date of issue of the RCPS, subject to obtaining all relevant approvals,” it said.

Tanjung Offshore said although its non-marine business was the major contributor to the group in terms of revenue, the non-marine business had been loss-making since 2009.

“Given the performance of the non-marine business coupled with the need to raise funds to meet the immediate funding requirements of the group for future expansion of the non-marine business, the company is embarking on the group rationalisation plan which entails, inter-alia, the proposed disposal after due consideration of other methods of raising funds given the capital structure of the company, financial position of the group as well as the performance of Tanjung shares.”

It added that with the proposed disposal, Tanjung would be able to address the immediate funding requirements of the group in view that the group’s ability to bid for jobs for the non-marine business in the near term was restricted by its tight cashflow position and high gearing level, especially with the recent shutdown of Citech Energy Recovery Systems UK Ltd.

Source: www.thestar.com.my