This article first appeared in The Edge Financial Daily on May 23, 2017
KUALA LUMPUR: Yinson Holdings Bhd is partnering PetroVietnam Technical Services Corp (PTSC) to jointly undertake bareboat works valued at US$1 billion (RM4.31 billion) under a time charter contract Yinson’s unit secured from Talisman Vietnam 07.03 B.V. (TLV) to provide and charter a floating production storage and offloading (FSPO) facility.
Its indirect wholly-owned unit, Yinson Clover Ltd (YCL), inked a consortium agreement (CA) with PTSC last Friday to effect the tie-up, which would result in both companies forming a joint venture company (JVC) for the works they would undertake. PTSC will hold a 51% stake in the JVC, while YCL will own the remaining 49%.
YCL was the unit that secured the TLV deal, which Yinson announced on April 26. On the same day, YCL inked an agreement to novate all its rights and obligations under the time charter contract to PTSC.
At the time, Yinson said it was the intention of PTSC and YCL to jointly undertake the bareboat scope of work via a JVC on the ratio mentioned above, and that the JVC will enter into a bareboat charter contract with PTSC for the bareboat works upon incorporation.
The bareboat charter contract will be for 10 years, with five extension options of one year each, exercisable by TLV. The entire 15 year charter is valued at US$1 billion.
The CA shall enable the parties to establish contractual arrangements for the rights, obligations and responsibilities in relation to the respective scope pending the finalisation and award of the bareboat charter contract to the JVC, and the shareholder agreement to be executed, said Yinson in its Bursa Malaysia filing yesterday.
PTSC shall award the bareboat charter contract within four months from May 1, it added.
The project is estimated to cost about US$648 million, said Yinson; US$111 million of that is expected to be contributed by the parties in the form of shareholders’ loan and/or equity participation, in proportion to their stake in the JVC, with the balance to be funded by borrowings by the JVC.
The proposed joint venture is expected to contribute positively to the Yinson Group.