Yinson unit, THHE ink novation contract for Layang FPSO

PETALING JAYA: Yinson Holdings Bhd's associate company Yinson Energy Sdn Bhd (YESB) has entered into a novation agreement with JX Nippon Oil & Gas Exploration (Malaysia) Ltd and TH Heavy Engineering Bhd (THHE) for the novation of the leasing for Layang floating production storage and offloading (FPSO) facilities.
Pursuant to the novation documents, YESB will assume THHE's right and obligations under the charter contract.
It is a firm charter period of eight years with 10 extension periods of one year each. The estimated aggregate value of the charter contract, assuming all extension options are exercised, is US$860 million (RM3.37 billion).
Yinson targets to complete the novation by end May 2018 and the FPSO is expected to commence operations at the Layang field in 2019.
However, it noted that borrowings undertaken in connection with the novation will increase its gearing for the financial year ending Jan 31, 2019.
For THHE, it will receive novation proceeds of RM374 million, which will be used for repayment to creditors and working capital.
Yinson shares closed unchanged at RM3.96, while THHE was down 13.3% to 6.5 sen.