KUALA LUMPUR, MALAYSIA, 25 AUGUST 2017 – UMW OIL & GAS CORPORATION BERHAD (“UMW-OG” or the “Company”) held an Extraordinary General Meeting (“EGM”) today at Menara Kembar Bank Rakyat, in Kuala Lumpur. The Company’s shareholders approved all resolutions put forward as follows:
1.The renounceable rights issue of up to 6,053,600,000 new ordinary shares in UMW-OG together with free detachable warrants.
2.The issuance of up to 4,847,539,594 new Islamic redeemable convertible preference shares in UMW-OG (“RCPS-i”) to be subscribed by Permodalan Nasional Berhad (“PNB”), Amanah Saham Bumiputera (“ASB”) and/or the other funds under PNB’s management together with free detachable warrants.
3.The exemption for PNB, ASB and persons acting in concert with them from the obligation to undertake a mandatory take-over offer for all the remaining UMW-OG shares and warrants not already owned by them.
4.The amendment to the Memorandum and Articles of Association of the Company’s Constitution to introduce the RCPS-i.
The approval of all the resolutions is an important milestone for UMW-OG’s recapitalisation exercise, which is undertaken in order to raise approximately RM1.8 billion gross proceeds for the UMW-OG Group through the issuance of up to 6.053 billion rights shares at an issue price of RM0.30 per rights share, and which will be fully supported by PNB. Following the approval of the resolutions by the shareholders of UMW-OG, the exemption for PNB, ASB and persons acting in concert with them will need to be approved by the Securities Commission Malaysia (“SC”) before the recapitalisation exercise can proceed. The application for the exemption is expected to be filed with the SC in due course.
The issuance of the rights shares will be together with up to 1.513 billion free detachable warrants. The exercise is on the basis of 14 rights shares for every five (5) UMW-OG shares held by entitled shareholders, and the free warrants would be issued on the basis of one (1) warrant for every four (4) rights shares subscribed.
If required, the issuance of RCPS-i to PNB, ASB and the Funds at the same price as the new UMW-OG Shares of RM0.30 per RCPS-i will also be undertaken to ensure the success of the recapitalisation exercise such that the targeted RM1.8 billion gross proceeds is achieved.
Rohaizad Darus, President, UMW-OG shared, “As informed earlier this year, RM1.5 billion or approximately 83% of the proceeds raised will be used towards debt reduction, with the remainder for working capital purposes. This recapitalisation exercise will help to lower the group’s debt level from about RM4.1 billion to RM2.6 billion. The decision today at the EGM is crucial to ensure the Company is able to weather the current situation and move forward more competitively. For that, we thank our shareholders for continuing to have faith in UMW-OG.”
The rights issue was first announced when its former parent company, UMW Holdings Berhad, announced its intention to undertake the demerger exercise. PNB and the funds under its management, are now the direct major shareholders of UMW-OG with the completion of the exercise on 11 July 2017.
Rohaizad also added, “The market outlook for 2017 appears to be better than last year with all seven (7) of our drilling rigs currently under contract.”
After a sharp contraction in drilling activities in 2015 and 2016, the recapitalisation exercise marks a key step towards restoring the financial health of the Company; reducing debt levels to manageable levels such that the Company will be able to withstand industry shocks whilst further strengthening the Company’s balance sheet. Looking ahead, the Company will continue to defend its leading position in Malaysia while progressively returning back to its previous markets in Southeast Asia. At the same time, the Company will continue to explore the Middle East market to widen its safety net to enable the Company to remain relevant and resilient should there be another industry downturn.
UMW-OG RECAPITALISATION EXERCISE REACHES ITS MILESTONE
KUALA LUMPUR, 19 January 2017 - UMW Oil & Gas Corporation Berhad (“UMW-OG”) and Ekuiti Nasional Berhad (“Ekuinas”), through its investment vehicles, are pleased to announce that they have entered into two separate share purchase agreements (“SPAs”) to consolidate their oil & gas businesses under UMW-OG.
Under the SPAs executed between the parties, UMW-OG will acquire Ekuinas’ indirect stake of approximately 42.3% in Icon Offshore Berhad (“ICON”) for new UMW-OG shares, and 95.5% interest in Orkim Sdn Bhd (“Orkim”) for cash, respectively. ICON is the largest pure play owner and operator of offshore support vessels (“OSV”) in Malaysia, while Orkim is the owner and operator of the largest clean petroleum product (“CPP”) marine transportation vessels in the country.
Upon completion of the SPA relating to ICON, Ekuinas will emerge as an approximately 12.6% shareholder in UMW-OG, second only to Permodalan Nasional Berhad (“PNB”) and funds under its management (collectively, “PNB & Funds”), which is expected to hold a direct interest in UMW-OG of approximately 40% (following the proposed demerger of UMW-OG from UMW Holdings Berhad as announced earlier today). Following this, UMW-OG will undertake a mandatory take-over offer for all the remaining shares of ICON at a consideration of RM0.50 a share to be satisfied either via cash or issuance of new UMW-OG shares at RM0.80 a share. UMW-OG intends to secure full acceptance to reap the benefits of consolidation and does not intend to maintain the listing status of ICON.
The enlarged oil & gas businesses under UMW-OG will lead to the creation of a major integrated service provider across the oil & gas value chain, comprising 7 jack-up rigs, 1 semi-submersible rig, 5 hydraulic workover units (“HWU”), 37 OSVs, 14 CPP and 2 liquefied petroleum gas (“LPG”) marine transportation vessels, respectively. With the newly acquired fleet of assets across the value chain, the enlarged UMW-OG will be in a position to benefit from the expected recovery of activities in the sector through its interests in offshore drilling rigs, HWUs and OSVs, and improved earnings profile through Orkim’s long term contracted cash flows.
Upon completion of the consolidation exercise, UMW-OG will embark on a recapitalisation exercise via a rights issue of approximately RM1.8bn. To this end, Ekuinas has indicated its support for the recapitalisation plan, up to RM550mm, comprising its entitlement and application of excess rights shares (“Ekuinas Support”). UMW-OG intends to procure a similar support from its major shareholders, namely PNB & Funds. The Ekuinas Support, together with PNB & Funds’ entitlement after the UMW-OG demerger, would in aggregate amount to approximately RM1.3bn or more than 70% of the rights issue, if subscribed. UMW-OG will pursue underwriting arrangements for the remaining portion.
Commenting on the transaction, Rohaizad Darus, President of UMW-OG, said, “This exercise aims to create a major integrated offshore service provider with diversified earnings through exposure in the upstream and downstream segment of the oil & gas industry. The recapitalisation exercise would strengthen our balance sheet and enhance our competitiveness to ride on the expected recovery of the industry. The merger of the three companies is also timely in answering Petronas’ call for consolidation of Malaysian oil & gas industry.”
Syed Yasir Arafat Syed Abd Kadir, Chief Executive Officer of Ekuinas, said, “We are firm believers in the call for consolidation in the oil & gas sector, and are pleased with this transaction that aims to achieve just that. While the industry has gone through some rough patches in recent times, the outlook is improving, thus providing an opportune time for us to pursue the consolidation exercise. The transaction enables us to crystallise our investments and at the same time participate in and increase our commitment through injection of fresh capital via consolidation. This demonstrates our belief in the longer term prospects of the industry, and particularly, the new UMW-OG.”
The transaction is subject to various conditions, including but not limited to lenders’ consent and UMW-OG’s shareholders’ approval. Barring unforeseen circumstances, the transaction is expected to complete in Q3 2017.
On another note, UMW-OG has also announced the appointment of Dato’ Abdul Rahman Ahmad as its Deputy Chairman.
UMW-OG AND EKUINAS JOINTLY ANNOUNCE THE CONSOLIDATION OF THEIR OIL & GAS BUSINESSES
KUALA LUMPUR, 4 May 2017 - UMW Oil & Gas Corporation Berhad (“UMW-OG” or “Company”) announced today that the Company has agreed with Ekuiti Nasional Berhad (“Ekuinas”), through its investment vehicles, that it will not proceed with the proposed consolidation exercise involving UMW- OG, Icon Offshore Berhad (“ICON”) and Orkim Sdn. Bhd. (“Orkim”). Earlier, on January 19, 2017, both parties had entered into two separate Share Purchase Agreements to facilitate the consolidation exercise, which parties have mutually agreed to terminate.
The Board arrived at this decision after considering the significant capital requirements of UMW-OG and taking into account the need to have greater clarity on the industry consolidation framework and certainty of the industry environment before any such consolidation can be pursued.
President of UMW-OG, Rohaizad Darus, said “While the creation of a major integrated O&G service provider is the right strategic approach for the longer term, after a detailed review, we believe UMW-OG need to fully focus on strengthening its balance sheet and reducing its debt position to meet its lenders’ requirements. As such, we have decided not to pursue with the consolidation at this time but may continue to explore opportunities to collaborate in the future once there is more certainty in the industry environment and consolidation framework.”
In this context, UMW-OG also announced a recapitalisation exercise of RM1.8 billion, the details of which are available in UMW-OG’s announcement made via Bursa Securities. Upon the completion of the previously announced proposed demerger of UMW-OG from UMW Holdings Berhad (“UMWH”) which shall proceed as planned, Permodalan Nasional Berhad (“PNB”) together with the unit trust funds under its management (“Funds”), will emerge as a 45.5% direct shareholder in UMW-OG. PNB has informed UMW-OG that it will underwrite the entire recapitalisation exercise subject to terms agreeable to PNB and exemption be granted from having to undertake mandatory general offer. Proceeds from the recapitalisation exercise will be utilised to reduce substantially the debt of UMW-OG with some amount being applied towards working capital requirements.
In conjunction with the recapitalisation exercise, UMW-OG is also embarking on a refinancing exercise for its remaining debts so that the maturity profile of these debts will better reflect the long term nature of its assets. Such refinancing exercise will result in the release of a sum of cash currently pledged against certain banking facility. UMW-OG may utilise the released pledged cash to reduce further borrowings of the UMW-OG Group which may include the intercompany loan provided by UMWH amounting to RM308 million. Accordingly, following the recapitalisation and refinancing exercise, UMW-OG expects to reduce its total borrowings by RM1.8 billion, from RM4.1 billion to RM2.3 billion, which will improve its gross gearing position significantly from 1.81 times to 0.56 times.
UMW-OG ANNOUNCED TODAY IT HAS AGREED WITH EKUINAS TO NOT PROCEED WITH THE PROPOSED CONSOLIDATION
KUALA LUMPUR, MALAYSIA, 15 MAY 2017 – UMW OIL & GAS CORPORATION BERHAD (“UMW-OG” or the “Company”) held its 7th Annual General Meeting (“AGM”) today at Menara Berkembar Bank Rakyat, in Kuala Lumpur. The Company’s shareholders approved all resolutions put
1. The re-election of Dato’ Abdul Rahman bin Ahmad, Rohaizad bin Darus and Cheah Tek Kuang to the Board of Directors;
2. The payment of Directors Fees for the financial year ended 31 December 2016;
3. The payment of Non-Executive Directors’ fees from 1 January 2017 to the 8th AGM of the Company;
4. The payment of Directors’ remuneration (excluding Directors’ fees) to the Non-Executive Directors up to an amount of RM723,930 from 1 January 2017 until the 8th AGM of the Company; and,
5. The re-appointment of Messrs. Ernst & Young as the Company’s Auditors for the ensuing year.
In the 2016 financial year (“FY2016”), the Group recorded total revenue of RM321 million, a decrease of RM519 million or 62%, compared to the RM840 million reported in the preceding year. The revenue reduction was the direct result of full impact from the significantly lower levels of exploration, development and production activities in the oil and gas industry, whereas in 2015, the Group continued to receive income from existing unfinished contracts.
As a result, the Group posted a loss before tax of RM1,181 million for the financial year ended 31 December 2016, as compared to a loss before tax of RM348 million in the preceding year. The losses were resulted by weak demand for the Group’s drilling and oilfield services due to prolonged low oil prices as well as asset impairment amounting to RM780 million.
UMW-OG also announced the retirement of its Chairman, Tan Sri Asmat Kamaludin and the appointment of Dato Abdul Rahman Ahmad as the new Chairman.
Rohaizad Darus, President, UMW-OG shared, “2016 was another challenging year for the drilling rig business, facing not only a further decline in demand, but also declining charter rates. Similarly, workover and oilfield services divisions were also affected by the lower demand. As the company is an asset based business, significant lower utilisation of our assets will negatively impact both the top and bottom lines.”
Rohaizad also added, “Despite all the challenges, the market outlook for 2017 appears to be better than 2016. With the likelihood of continued production limit this year by OPEC and other major oil producing nations, the floor price of oil will be sustainable. This will give certainty for oil companies to invest again and for the service industry to benefit. We are already seeing this recovery with all of our 7 drilling rigs already under contract within just six months of the production cut, compared to only 2 contracted late last year. While the recovery is expected to be slow with the day rate remains depressed, we feel that it is the best time to position ourselves to maximise the benefits of the recovery. By strengthening our financial position via rights issue and refinancing our existing debts, we will be able to have the financial stamina to stay ahead longer to implement our strategic plan and embracing the changes of this cyclical industry.”
Looking ahead, the Company will continue to defend its leading position in Malaysia while progressively returning back to its previous markets in Southeast Asia. At the same time, the Company will continue to explore the Middle East market to widen its safety net to enable the Company to remain relevant and resilient should there be another industry downturn.