Friday 29 Mar 2024
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KUALA LUMPUR (Sept 23): Loss-making TH Heavy Engineering Bhd (THHE) has entered into a framework agreement with several companies to mutually unwind and terminate joint ventures (JVs) it entered into with them as it diversifies from the upstream oil sector.

THHE said that pursuant to the framework agreement, the parties have agreed to terminate the JVs formed in 2013, namely the Berlian McDermott JV, THHE Fabricators JV, THHE McDermott Projects Services JV, and THHE McDermott Engineering JV.

"THHE has begun diversifying away from the upstream sector of the oil into downstream and other non-oil and gas businesses such as marine vessel construction and repairs," the company said in a filing to Bursa Malaysia.

"THHE's immediate plan of diversifying into non-oil gas business such as marine vessel construction and repairs will mitigate the recurring volatility of the upstream sector of the oil and gas industry and provide a more recurring income," it added.

As at Aug 30, 2016, THHE and its subsidiaries have an outstanding main fabrication order book of RM132.5 million and outstanding minor fabrication, crane manufacturing and repairs and supply of equipment order books of RM9.4 million.

"The group is exploring various ways to raise funds required to complete the floating production, storage and offloading (FPSO) Layang conversion works and to monetise and unlock the value of the group's assets to generate cash flows and improve its working capital," it said.

Moving forward, the group expects the fabrication business to remain challenging in view of the present competitive environment and capital expenditure cut as announced by oil majors.

It plans to expand into the refurbishment and maintenance works and non-oil and gas related fabrication works.

Barring any unforeseen circumstances and subject to framework agreement, the proposals are expected to be completed within the third quarter of 2016.

THHE's share price closed unchanged at 18.5 sen, valuing the company at RM207.4 million.

 

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