Eversendai Corporation Bhd announced to undertake the proposed acquisition of 100% equity interest in Vahana Offshore (M) Sdn Bhd (Vahana) and its subsidiaries for a purchase consideration price of RM235 million which will be fully satisfied via the issuance of 770,491,803 new redeemable convertible preference shares (“RCPS”) in Eversendai at an issue price of RM0.305 after Eversendai entered into a conditional share sale agreement with Vahana Offshore on 30th June 2020.
The RCPS shall have a tenure of 10 years with cumulative preferential dividend of 3% per annum, payable only upon Vahana achieving a consolidated net profit after tax for the relevant financial year. The RCPS is convertible into Eversendai ordinary shares at a conversion ratio of 2 RCPS to 1 ordinary share equivalent to an implied conversion price of RM0.61. The RCPS will not be listed, quoted and traded on Bursa Securities or any other stock exchange.
Vahana and its subsidiaries are principally involved in ownership, operations, chartering and management of Self-Propelled Jack-Up Barges/liftboats, and is the first Malaysian company to own and operate a Self-Propelled Jack-Up Barge also known as Liftboat which is used for maintenance, workover, well-service activities, hook-up, commissioning and decommissioning of offshore platforms in the oil and gas industry. The liftboats could also be used for installation and maintenance of the offshore wind renewable energy sector.
Currently, Vahana owns 2 liftboats, namely Vahana Aryan and Vahana Arjun and both are large liftboats equipped with the latest specifications and technology. Vahana has secured a long-term time charter contract for Vahana Aryan with Zamil Offshore for Saudi Aramco and has also secured a similar contract with Zamil Offshore for Vahana Arjun. Vahana Arjun is currently under construction and is targeted to be completed by end June 2021.
Tan Sri Dato’ A K Nathan, Executive Chairman and Group Managing Director of Eversendai Corporation Berhad, is of the view that current revenue of Eversendai is cyclical and the Proposed Acquisition will provide the Eversendai group with the opportunity to own and operate Vahana Aryan and Vahana Arjun providing the enlarged Eversendai group with an additional source of consistent recurring income to enhance its revenue and profits. The Proposed Acquisition will also resolve the existing cross borrowings and related party transactions involving Vahana and Eversendai. Once merged, it also could booster minority shareholders confidence going forward.
In the past years, Eversendai had been promoting its business into new markets that leverages on its core expertise in structural steel and mechanical works, engineering, fabrication and construction. After the merger, the Eversendai group will have more opportunities to market its core expertise to players in the energy sector through its involvement in the liftboat business providing integrated services by combining industry knowledge and sharing technical capabilities and know-how to improve and enhance the enlarged group services to prospective clients.
The combination of a liftboat owner and operator as well as the Eversendai’s core business adds a dynamic advantage and synergy for the enlarged group to meet the specific requirements in the oil and gas industry, and offshore wind renewable energy sector as the enlarged group can offer integrated services. Eversendai envisages that projects secured and to be secured from the energy sector would be a substantial contributor to the future financial performance and track record of the Eversendai group after the Proposed Acquisition.
The Proposed Acquisition is expected to be completed by the 4th quarter of 2020 upon the relevant approvals obtained from Bursa Securities Berhad and the shareholders in the upcoming AGM/EGM in September 2020.