TH Heavy Engineering mulls fundraising

KUALA LUMPUR: TH Heavy Engineering Bhd which is bidding for RM3 billion worth of projects, is looking to undertake a fundraising exercise at the later part of this year to raise RM829 million for its capital expenditure (capex).
"There are various options that we're looking at. We're looking at the capital markets also. That is something that we are still toying with, to see what is the best capital raising exercise and the route that we want to take. Of course there will be options to go to the shareholders and also tap from the other financial markets," its chairman Datuk Azizan Abd Rahman told reporters after its AGM yesterday.
However, he said, the first option for the fundraising exercise scheduled in the last quarter of the year is through Islamic instrument.
Managing director and CEO Nor Badli Mohd Alias said its capex this year comprises RM90 million for its fabrication yard and US$230 million (RM739 million) for the floating production storage and offloading (FPSO) business.
"We expect the yard capex to be completed this year and the FPSO capex to be completed by December 2015," he said.
Nor Badli said it expects 10% to 20% growth in revenue this year from last year's RM259 million, based on the projects it has in hand.
"Our present order book today is close to RM300 million. It will last us until middle of next year but from now until end of the year we are actively tendering. Our tender books now is about RM3 billion so we're quite hopeful that we'll be successful in some of these tenders," he said.
He said the RM3 billion tender book comprises six fabrication jobs, which are projects for upstream companies namely the production sharing contractors.
"All six projects will be announced by end of this year, we expect around September or October kind of timeline…looking at past history, chances of winning the bids are maybe 15% to 20%.
"Competition is intense because Petronas has changed its model. In the past Petronas usually go on direct negotiation basis, they allocate the projects. But in the last three years it has changed to open competition among the licenced players," he said, adding that there are now seven licenced players.
On its offshore crane services, Nor Badli said since its licence was reinstated last year, it has completed its first project, which is the manufacturing of a 25-tonne crane that was delivered on Tuesday.
"We're hoping for another one or two more, hopefully within the next one to two months. Our subsidiary company O&G Works Sdn Bhd is also actively bidding for other cranes and we're quite hopeful that we'll get at least some of these crane businesses…at least five cranes this year," he said.
Azizan said its core business will remain in the fabrication business and related services but with the recent award of an FPSO contract, FPSO is poised to be another major division in the company.
"Of course the income stream will not come in until 2016 because there is a provision for us to upgrade and to convert the vessels up to certain specifications, to enable us to service the contract awarded to us by Petronas and Nippon Oil," he said.
The contract from JX Nippon Oil & Gas Exploration (Malaysia) Ltd is for the provision of FPSO for the Layang Development Field with an estimated contract value of US$372 million for the chartering of Deep Producer 1 FPSO that will last till 2023.