MISC has entered into a conditional Share Purchase Agreement (SPA) with E&P Venture Solutions Co Sdn. Bhd. (EPV), a wholly owned subsidiary of PETRONAS Carigali Sdn. Bhd. (PCSB), in relation to a proposed disposal of 50% equity interest in Gumusut-Kakap Semi-Floating Production System (L) Limited (GKL).
The proposed share disposal entails the disposal of 305,700,001 ordinary shares of USD1.00 each in GKL, representing 50% of the issued and paid-up share capital of GKL, by MISC to EPV, for a cash consideration of USD305.7 million.
The principal activity of GKL is the owning and leasing of a semi-submersible floating production system, namely the Gumusut-Kakap Semi-Floating Production System (Gumusut-Kakap Semi-FPS).
On 4 October 2012, GKL completed the purchase of the Gumusut-Kakap Semi-FPS from MISC pursuant to a sale of asset agreement entered into between GKL and MISC. The purchase consideration for the acquisition of the Gumusut-Kakap Semi-FPS amounts to USD2,038.0 million which was satisfied via the issuance of 611,400,000 new ordinary shares of USD1.00 each in GKL at an issue price of USD1.00 each, amounting to USD611.4 million, and an amount owing to MISC of USD1,426.6 million. GKL will repay the amount owing to MISC via a short term loan obtained from PETRONAS. At this time, it is the intention of GKL to refinance the short term loan with a longer term external financing on expiry of the short term loan.
Commenting on the proposal, Datuk Nasarudin Md Idris, President and CEO of MISC said, “This initiative will enable MISC to monetise an asset currently held under construction whilst having joint control and interest in GKL to benefit from future cash flows once the Gumusut-Kakap Semi-FPS is operationalised. Total proceeds from the exercise would total USD1,732.3 million of which a large part will be used to pare down our debts. Besides savings on interest, it will also create the debt headroom for us to gear up for future growth.”
Datuk Nasarudin added, “Market conditions in the shipping industry remains challenging and we need to be fiscally fit to weather the tough operating environment. Nonetheless, in such an environment, there are also opportunities abound. Monetisation of Gumusut-Kakap Semi-FPS will help to restore the strength of our balance sheet. With an improved financial position and strong liquidity, I am confident that we will be able to exploit some of these opportunities and position ourselves for long term growth“.
The Proposed Share Disposal is subject to the approval of the shareholders of MISC at an extraordinary general meeting (EGM) on a date that will be announced later. The notice of the EGM will be issued and the circular to shareholders will be despatched once approval for the circular has been given by Bursa Malaysia Securities Berhad. Upon completion of the SPA, GKL will become a jointly-controlled entity of MISC and EPV.
About Gumusut-Kakap Semi-FPS
The Gumusut-Kakap Semi-FPS is a Semi-FPS weighing approximately 37,500 metric tonnes. It has a process facility capable of producing 150,000 barrels of crude oil per day from subsea wells and is capable of 300 million cubic feet per day gas injection and 225,000 barrels of water per day water injection. It has a power generating capacity of 69 megawatt. The Semi-FPS is designed to function as a deepwater facility in the South China Sea and is the first deepwater Semi-FPS in the Asia Pacific region. The Semi-FPS will be installed in approximately 1,200 meters water depth offshore Sabah, Malaysia and is expected to be delivered in mid 2013.
Press Release, October 5, 2012