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 (US$132 million).
UMW-OG will first acquire government-linked private-equity firm Ekuiti Nasional Berhad's (Ekuinas) indirect stake of 42.3% in Icon for new UMW-OG shares, it said in a statement on Jan. 19.
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% 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 and gas industry," said Rohaizad Darus, UMW-OG's president.
UMW-OG said it will begin a recapitalization 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% of UMW-OG, while the stake of another government-linked fund, Permodalan Nasional Berhad, will rise to 39.7% from 13%.
Malaysia's oil and 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 US$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 nearly-56% 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 adviser for UMW Holdings and UMW-OG, and BNP Paribas advised Ekuinas on the deal. (US$1 = 4.4470 ringgit)