Malaysian offshore drilling services company UMW Oil & Gas Corp Bhd (UMW-OG) said it would buy Icon Offshore Berhad in a deal that values the offshore support vessel provider at 588.6 million ringgit ($132 million).
UMW-OG will first acquire government-linked private equity firm Ekuiti Nasional Berhad’s (Ekuinas) indirect stake of 42.3 percent in Icon for new UMW-OG shares, it said in a statement on Thursday.
It then plans to take over the remaining shares of Icon for 50 sen per share using either cash or new UMW-OG shares at 80 sen per share.
UMW-OG also plans to buy Ekuinas’ 95.5 percent interest in Orkim Sdn Bhd, an operator of clean petroleum product transportation vessels which it values at 495 million ringgit.
“This exercise aims to create a major integrated offshore service provider with diversified earnings through exposure in the upstream and downstream segment of the oil & gas industry,” said Rohaizad Darus, UMW-OG’s president.
UMW-OG said it will commence a recapitalisation exercise via a rights issue of about 1.8 billion ringgit, to be supported by its major shareholders, once it completes its acquisitions.
Following the rights issue, Ekuinas will hold 23.1 percent of UMW-OG, while the stake of another government-linked fund, Permodalan Nasional Berhad, will rise to 39.7 percent from 13 percent.
The Malaysian oil & gas industry has taken a hit from the slump in crude oil prices. A cost cutting drive by state oil firm Petroliam Nasional Bhd (Petronas) of up to $12 billion over four years added to the problems.
Last year, analysts had expressed concern about UMW-OG’s high gearing levels. The company has since restructured a large portion of its short-term debt into long-term debt and has also received a 308 million ringgit cash injection from its parent UMW Holdings.
Separately, UMW Holdings – which owns a near 56 percent stake in UMW-OG – said it would exit the oil and gas business by distributing UMW-OG shares to shareholders and selling its other energy holdings.
Maybank IB is the advisor for UMW Holdings and UMW-OG while BNP Paribas advised Ekuinas on the deal.