Coastal Contracts to provide US$220m aid to JV company

KUALA LUMPUR: Coastal Contracts Bhd’s wholly owned subsidiary, Coastal Marine Pte Ltd (CMPL), is proposing to provide financial assistance of up to US$220 million (about RM924 million) to its joint-venture company Coastoil Dynamic SA de CV (Coastoil Dynamic) following the award of a new onshore gas conditioning plant project in Mexico.

Prior to this, Coastoil Dynamic has entered into a service agreement with Pemex Exploracion and Produccion to undertake a RM4.5 billion project at Ixachi field, Tierra Balanca in Veracruz known as EMC Papan Plant.

In a filing with Bursa Malaysia yesterday, UOB Kay Hian Securities (M) Sdn Bhd, on behalf of Coastal Contracts, said the proposed provision of financial assistance will provide Coastoil Dynamic with the required funds in an expedient manner to finance the project.

“The availability of expedient funding by Coastal Group would allay unnecessary delays throughout the construction period of the Papan Plant project and to ensure the timely completion of the plant,” it said.

The proposed provision of financial assistance is envisaged to be funded via Coastal Group’s internally generated funds, bank borrowings, issuance of bonds, and/or project financing.

The estimated allocation of the project financial assistance is US$175 million (RM735 million) for construction cost and US$45 million (RM189 million) for contingencies and working capital.

The plant is expected to contribute positively to Coastoil Dynamic and provide a steady income stream to the group, it added. – Bernama