PETALING JAYA: Tanjung Offshore Bhd and Bourbon Far East Pte Ltd have aborted the proposed asset injection exercise that would have resulted in a reverse takeover (RTO) of Tanjung Offshore by Paris-based oil and gas giant Bourbon SA.

In an announcement to Bursa Malaysia, Tanjung Offshore said that it had, together with Singaporean Farid Khan Kaim Khan and his business partners, Mower Tunggal Jaya PT, Megagold Indonesia PT and Zona Maju Mapan PT (BNI shareholders) and their business partners, as well as Bourbon Far East, mutually agreed to terminate the heads of agreement (HoAs) that they had entered into in relation to the proposed RTO. 

The HoAs were terminated today with immediate effect without any legal and financial recourse against each party, the announcement read.

"The parties have decided to mutually terminate the proposals as the economic and financial conditions for an agreement satisfying both parties cannot be met in view of the declining oil prices," said Tanjung Offshore.

"The mutual termination is not expected to have any material impact on the net assets and profitability of Tanjung for the financial year ending Dec 31, 2014," it added.

The announcement confirms a report by The Edge Financial Daily today, quoting a source, that Tanjung Offshore may call off the proposal after the recent meltdown in Tanjung Offshore's share price.

The stock had plunged from a high of 65 sen in June to 33 sen today, which had reportedly prompted the company's executives to reconsider the proposed RTO exercise.

The RTO was initially drawn based on the Tanjung Offshore's share price of 70.8 sen, which is almost a 55% premium to the current market price.

On June 5, Tanjung Offshore announced it had entered into two HoAs to acquire the marine offshore businesses from Bourbon Far East, Farid Khan and his business partners, and BNI shareholders and their business partners.

According to the HoAs between the parties, the assets to be injected into Tanjung Offshore included controlling or majority interests in six entities that collectively own 18 offshore support vessels and fiva anchor handling tug supply vessels.

In addition, the proposal also included an injection of a 51% stake in licensed ship manager Bourbon Offshore Mitra Sdn Bhd, a 100% stake in Bahtera Sri Kandi Sdn Bhd, a licensed contractor of Petroliam Nasional Bhd and 100% equity interest in Bahtera Niaga Indonesia (Labuan) Ltd.

Tanjung Offshore will then issue new shares to the parties at 70.8 sen each.

The RTO deal was seen as a way for Tanjung Offshore to return to the offshore services vessel (OSV) market after a restriction was imposed on it following a sale of vessels to Ekuiti Nasional Bhd (Ekuinas) for RM220 million two years ago. Hence, Tanjung Offshore would have had to obtain Ekuinas's consent to waive the non-compete clause, which will only expire in mid-2015.

Tanjung Offshore, which closed at 33 sen today, has a market capitalisation of RM122.77 million.