Ezra Holdings and Emas Offshore Production Services (Vietnam) have entered into an agreement for the sale of a combined equity share of 80% in PV Keez to PetroFirst.
PV Keez is a single purpose company incorporated in Singapore and owns the floating production storage and offloading (FPSO) unit Lewek EMAS, which is chartered to Premier Oil as operator of the Chim Sao field, offshore southern Vietnam.
PetroFirst is a joint venture between First Reserve, a global private equity and infrastructure investment firm focused exclusively on energy, and Petrofac, an international service provider to the oil & gas production and processing industry quoted on the London Stock Exchange.
PetroFirst was established to deploy capital in certain energy infrastructure projects. The venture currently includes two floating, production, storage and offloading vessels and a mobile offshore production unit vessel.
Emas reported in April 2016 that, together with its holding company Ezra, the companies accepted a non-binding letter of intent to sell at least their current combined 78.4% equity interest in PV Keez to a global infrastructure investment firm. However, at the time, the name of the buyer was not revealed.
Under the terms of the sales and purchase agreement, Emas has agreed to sell its common equity interest of approximately 41.7% in PV Keez, whereas Ezra has agreed to sell a common equity interest of approximately 38.3%, as well as its entire stake in the redeemable cumulative preference shares of the same company.
The transaction is entered into on an arm’s length basis and is subject to customary conditions including approvals from Ezra’s shareholders. Completion of the transaction is expected to take place on or before September 30, 2016.
In the announcement made in April 2016 it was stated that completion was expected to take place no later than on June 30, 2016. As the final documentation was completed on July 1, the closing date has accordingly been somewhat delayed.
Pursuant to the terms of the sales and purchase agreement, the purchaser and the vendors, respectively, have been granted certain put and call options in respect of the shares that are subject of the transaction.
Emas will use the net proceeds arising from the transaction or debt repayment, working capital and general corporate requirements.
Ezra said that the transaction is consistent with Emas’ strategy of moving away from the ownership of FPSO assets and instead to leverage on the experience in FPSO conversion. The transaction will also enable Emas to refocus the company’s business in the offshore support sector during the current challenging times in the oil and gas sector, Ezra added.
Under the agreement, the aggregate consideration to be received by Emas will be an amount in cash equal to $17.75 million less the aggregate amount of shareholders’ loan made by Emas to PV Keez including all accrued interests outstanding as at May 31, 2016 amounting to $6.9 million, and to be paid on the closing date; and deferred consideration, subject to certain exceptions, in the maximum aggregate amount of $63 million to be determined on the basis of 20.9% of certain excess operating cash flows in PV Keez generated from the vessel, if any, to be received by Petrofirst in the form of shareholder distributions or shareholder loans during the period from January 1, 2021 to (and including) December 31, 2025, and such amounts, if any, net of relevant costs, taxes and other specified amounts, to be paid annually.