Tanjung Offshore seeks waiver of clause from Ekuinas

KUALA LUMPUR: Tanjung Offshore Bhd has written to equity firm Ekuiti Nasional Bhd (Ekuinas) for a waiver of a clause which would effectively throw a spanner in the plans for the proposed reverse takeover offer (RTO) of Tanjung Offshore by several parties, including a unit of Paris-based Bourbon SA.
"We've written our request to them (Ekuinas)," Tanjung Offshore executive director Muhammad Sabri Ab Ghani told reporters after a joint venture (JV) signing ceremony between Tanjung Offshore and Fircroft Group (UK) here yesterday.
Tanjung Offshore had entered into a non-compete clause which disallows Tanjung Offshore from going into the offshore supply business for three years, when it sold its marine vessels services arm, Tanjung Kapal Services Sdn Bhd, to Ekuinas in 2012. Tanjung Kapal is now known as Icon Offshore Bhd and is due to be listed on the local stock exchange.
Just two years into the clause, however, the RTO on the table now would effectively see Tanjung Offshore getting back into the offshore supply vessel business.
Ekuinas has reportedly said that any request to vary contractual provisions must be deliberated by its board of directors which will make its decisison after taking into account all factors, "in the best interest of the company."
The clause notwithstanding, it was also reported that the deal is being opposed by a group of minority shareholders who hold close to 4% in the company because they want the option of being able to sell their shares directly to the new owners through a mandatory general offer. Tanjung Offshore had said that it is seeking a waiver of having to launch a MGO.
"There's no concrete result as of now. But the talk or discussion (for the proposed acquisition of marine offshore businesses) is there. We initiated the potential business acquisition but nothing is firm. A lot of things have to be done," Sabri said, commenting on the proposed RTO when asked.
Earlier at the event, Tanjung Offshore Service Sdn Bhd, a subsidiary of Tanjung Offshore entered into an agreement with Fircroft Engineering Service Ltd to incorporate a JV company Fircroft Tanjung Sdn Bhd, to provide manpower supply for the oil and gas industry and petrochemicals industry in Malaysia.
Sabri said Fircroft Tanjung is expected to contribute 30% to 40% to Tanjung Offshore's revenue in the third year. The JV company is estimated to be profitable in the first year.
The initial investment involves an operating expenditure (opex) of RM3 million in the first year and moving forward, a higher capital expenditure and opex would be needed as the business grows.
Fircroft, a technical recruitment agency for the global natural resource and engineering sectors, is targeting to recruit 300 contract skilled workers in the downstream and upstream business, from over 100 initially. About 80% of the workforce will be local.