Perisai ... Dec12

It is proposing to acquire a 51% stake in Emas Victoria (L) Bhd which owns a floating production, storage and offloading (FPSO) facility for RM271mil, and at the same time, dispose of a 50% stake in SJR Marine (L) Ltd, which owns a pipelay barge Enterprise 3, for RM112mil. The vendor for both these proposals are EOC Ltd, a unit of Singapore-based Ezra Holdings Ltd, which has a 16.1% stake in Perisai. The proposed acquisitions are expected to be completed by the first half of 2013, and is expected to contribute positively to the earnings of Perisai for the financial year ended Dec 31, 2013.

However, although the proposed acquisition would be immediately earnings accretive, dilution from Perisai’s enlarged share base due to issuance of new shares to fund the purchase, and a 50% reduction of profits from its proposed sale of a pipelay barge, would result in mild earnings per share (EPS) contraction in the financial year ending Dec 31, 2013 (FY13). Nevertheless, earnings growth trajectory at the EPS level will resume from FY14.

Perisai proposed to acquire a 51% stake in Emas Victoria (L) Bhd, which owns an FPSO facility, for RM271mil, and a 51% equity interest in Victoria Production Services Sdn Bhd for RM51. At the same time, Perisai plans to dispose of a 50% stake in SJR Marine (L) Ltd, which owns pipelay barge Enterprise 3, for RM112mil. The purchase price will be satisfied by the issuance of 145 million new Perisai shares, and US$37mil (RM112mil) proceeds from the sale of the SJR Marine stake.

Both transactions are with EOC Ltd, a unit of Singapore-based Ezra Holdings Ltd, which has a 16.1% stake in Perisai.

The proposed acquisitions are expected to contribute positively to the earnings of Perisai in FY13.

Perisai had on Nov 30 2012 signed three transactions with EOC.

First is for Perisai's acquisition of 51% equity interest in EOC's FPSO unit named Lewek Arunothai for US$89mil (RM271mil) which is housed under Emas Victoria. The purchase price will be satisfied by the issuance of 145 million new Perisai shares, and US$37mil proceeds from the sale of the 50% stake of SJR Marine. The 145 million new Perisai shares will be issued at RM1.10 each.

Perisai is also buying a 51% stake in Victoria Production Services Sdn Bhd for RM51. Like Emas Victoria , this company is also in the ship and boat leasing business. Victoria Production will be carrying out the operation and maintenance services for Hess' development block situated at the North Malay Basin . The project is expected to commence in the third quarter of 2013.

Third is for Perisai's disposal of its 50% equity interest in SJR Marine to EOC for US$37mil (RM112mil). Perisai currently owns 100% of SJR Marine. Currently, Enterprise 3 is chartered on a bareboat basis to an oil and gas service provider. The bareboat charter is for 4 years until June 2013. Perisai will eventually sell the remaining stake in SJR Marine to exit the pipe installation segment and focus on drilling and the FPSO operations. Perisai's sale of the 50% equity interest in SJR Marine is slated for completion in August 2013.

In Nov 2012, Perisai's 40%-owned Larizz Petroleum Services secured a contract from US-based Hess Exploration & Production BV for the provision of Lewek Arunothai for Hess's development block at Terengganu's Kamelia field in the North Malay Basin . Larizz is the local agent for EOC. Lewek Arunothai, which will be used to support early production activities, is targeted to be at the project site in mid-2013. Lewek Arunothai is currently being converted and refurbished at a shipyard in Singapore and is expected to be completed by the third quarter of 2013. The estimated costs of conversion is US$143.1mil (RM435.81mil) The contract is for three years with extension options of up to three years. It has a value of US$272mil for the primary charter, with potential for a further US$271mil if the full extension is exercised.

Meanwhile, Perisai will grant EOC a call option to acquire the remaining 50% equity interest in SJR Marine at the same price as the disposal consideration within the next 2 years from the date of completion of the proposed disposal. In the event the call option is not exercised, SJR Marine will source for third party buyers for the Enterprise 3 on terms to be mutually agreed upon within 12 months upon the expiry of the call option granted to the vendor. If SJR Marine is unable to dispose of Enterprise 3 within the 12-month period, Perisai will have a put option to require the vendor to purchase the remaining 50% equity interest in SJR Marine at the same price as the call option for cash.