Bumi Armada: Funding via rights issue will only be last resort

KUALA LUMPUR: Bumi Armada Bhd has assured its shareholders that funding through partnerships and joint ventures will be the priority amid challenges in the oil and gas industry, seeking to assuage shareholders concerned with the dilutive impact a potential rights issue exercise may pose on the company's share capital base.
"We'll look at all funding options to help us grow before we come back to shareholders," Bumi Armada CFO Kenneth Murdoch said at the company's AGM yesterday, when asked of if there is a plan for rights issue exercise.
Murdoch noted that the company already has joint venture partners to support its projects in India and Indonesia.
Operationally, he stressed that Bumi Armada has been managing its cash and operating costs effectively. "The four vessels that come into operations in 2017 will also provide strong cash flow for us," he added.
The company management declined to meet the press after yesterday's AGM.
Bumi Armada executive director Chan Chee Beng, meanwhile expects oil and gas activities to resume significantly should the global oil price stabilise at US$60 to US$70 a barrel.
"In terms of offshore production, we probably may have to look at close to US$70 rather than US$60," he said.
For Bumi Armada, executive director and head of offshore marine services Shaharul Rezza Hassan said the utilisation rate for its offshore support vessels, which has an average age of seven years, has improved to about 50% compared with 46% in Q4 2015.
Commenting on vessel disposal plans, he explained that the disposal exercise is still on-going but due to the current challenging environment, it is not easy for the company to secure buyers.
"We even started selling the vessels in 2014, we did manage to sell some older tonnage, however as the market is turning, it's difficult to get buyers. We're still actively in the market to try and find resolution to sell," he added.
Bumi Armada reported a net loss of RM234.57 million in 2015 compared with a net profit of RM218.69 million in 2014, due to allowance for doubtful debts and non-cash impairments on specific contracts and assets.
According to the company's annual report, it has 1,051 onshore and 613 offshore employees.