KUALA LUMPUR: UMW Oil & Gas Corp Bhd (UMW O&G) will turn into a major integrated offshore service provider as it merge with Ekuiti Nasional Bhd's (Ekuinas) oil and gas units.
In a media briefing today, UMW Holdings president and group chief executive officer Badrul Feisal Abdul Rahim said the group is exiting from the oil and gas sector following loss-making UMW O&G’s planned takeover of Icon Offshore Bhd and Orkim Sdn Bhd from Ekuinas.
He said UMW Holdings is distributing all its shares in UMW O&G to shareholders and expect this exercise to complete by June 2017. As at December 2016, UMW holds 1.2 billion UMW O&G shares or a 55.73 per cent stake.
“UMW Holdings’ long-term goals include enhancing returns from our automotive division, expanding further into high value engineering and increasing our product range and market presence for our equipment division,” Badrul said.
Also present were UMW O&G president Rohaizad Darus Permodalan Nasional Bhd (PNB) group chief executive officer Datuk Abdul Rahman Ahmad and Ekuinas chief executive officer Syed Yasir Arafat Syed Abd Kadir.
“UMW O&G will buy a 42.3 per cent stake in Icon for RM248.88 million via new shares issuance, and 95.5 per cent in Orkim for RM472.7 million cash, under a proposed consolidation,” said Rohaizad.
“UMW O&G will make a mandatory takeover offer for the remaining Icon shares at 50 sen each payable either in cash or new UMW O&G shares at 80 sen each,” Rohaizad said, adding Icon’s listing status would not be maintained.
“This merger is subjected to UMW O&G shareholders’ approval and expected to complete by the third quarter of 2017,” he added.
Ekuinas will emerge as a 23.1 per cent shareholder and has also committed RM550 million to UMW O&G’s recapitalisation.
“PNB will hold a 40 per cent direct interest in UMW O&G following the demerger from UMW Holdings,” said Abdul Rahman, who is also the newly-appointed UMW O&G deputy chairman.
After consolidating, UMW O&G will recapitalise via a RM1.8 billion rights issue to its shareholders. PNB and Ekuinas are expected to take up RM1.3 billion or more than 70 per cent of the rights issue.
Icon is now the largest owner and operator of offshore support vessels in Malaysia, while Orkim is the owner and operator of the largest clean petroleum product marine transportation vessels in the country.
Rohaizad said the enlarged oil UMW O&G will own seven jack-up rigs, one semi-submersible rig, five hydraulic workover units, 37 OSVs, 14 CPP and two liquefied petroleum gas marine transportation vessels.
In 2015, UMW O&G suffered RM368.4 million in net loss, while parent UMW Holdings posted RM2.2 million net profit.
When met on the sidelines of the briefing, an analyst said UMW Holdings’ exit from the oil and gas sector is positive as it would save costs.
“This move would take around 50 per cent of its RM500 million depreciation costs off the book. Its oil and gas unit had been dragging the overall bottomline of the group. So, this is a good move,” the analyst said.