Tanjung Offshore terminates Bourbon deal

PETALING JAYA: Tanjung Offshore Bhd has terminated a proposed asset injection exercise that would have seen it return to the offshore support vessel market citing its inabilty to agree on economic and financial conditions satisfying both parties, in view of declining oil prices.
The price of Brent crude oil has fallen some 48% since hitting US$115 in June this year.
Tanjung Offshore and the vendor group comprising Farid Khan Bin Kaim Khan and his business partners, Mower Tunggal Jaya PT, Megagold Indonesia PT and Zona Maju Mapan PT and their business partners and Bourbon Far East Pte Ltd have, via an exchange of letter, mutually agreed to the termination letter with immediate effect without any legal and financial recourse against each other.
Under the proposed exercise, a slew of marine assets, including controlling interests in six entities, would be pumped into Tanjung Offshore through an issurance of new shares of 70.8 sen each, which would result in an RTO of the company by Bourbon SA.
"The mutual termination is not expected to have any material impact on the net assets and profitability of Tanjung for the financial year ending Dec 31, 2014," Tanjung Offshore said in a filing with Bursa Malaysia yesterday.
Tanjung Offshore's bid had come under the limelight earlier this year when the deal required the group to secure a non-compete clause waiver from Ekuiti Nasional Bhd (Ekuinas), after disposing of its OSVs to Ekuinas for RM220 million.
A business daily yesterday reported that the plunge in Tanjung Offshore share price, from a peak of 65 sen in June to 32 sen last Friday prompted the company's executives to have second thoughts about the proposed RTO exercise.
The report said the market value of Tanjung Offshore has halved in the past six months and this would not augur well for the company as its assets are being valued substantially lower.
The stock closed up 1 sen to 33 sen yesterday, with some 268,000 shares traded.