KUALA LUMPUR (Sept 26): Bumi Armada Bhd's wholly-owned units have received up to RM317 million (US$75 million) in financing from its largest shareholder.
In a bourse filing today, the group said its wholly-owned subsidiaries Bumi Armada 98/2 Holdings Pte Ltd (BA98/2) and Armada Floating Gas Storage Malta (AFGSM) received the financing from Mezzanine Equities N.V. (MENV), which is a wholly-owned subsidiary of Usaha Tegas Sdn Bhd (UTSB).
UTSB is an indirect major shareholder via Objektif Bersatu Sdn Bhd, which maintains a 34.9% stake in Bumi Armada as of Aug 30, 2019, and is the group's largest shareholder.
BA98/2 is to receive up to RM128 million (or US$30 million) in a three-year term loan facility, while AFGSM will receive up to RM189 million (or US$45 million) in a six-year term loan facility.
"The purpose of the BA98/2 facility is to fund Bumi Armada's 30% equity interest in a joint-venture project with Shapoorji Pallonji Oil & Gas Pte Ltd, in connection with the charter and operation of a floating production storage and offloading facility for deployment at NELP Block KG - DWN 98/2 Development Project Cluster-II field located on the east coast of Kakinada, offshore India," the group said.
In addition, MENV has been granted options to acquire the group's 30% interest in the project at a fair value that will be determined by an independent valuer. The options may be exercised by MENV within three years from the date the funds have been granted or until the BA98/2 facility has been repaid in full.
The loan is secured on Bumi Armada's 30% stake in the India joint venture.
"Bumi Armada may sell its interest in the project to any third party during the option period, subject to obtaining MENV's consent (in addition to any other consent required under applicable law or contractual requirement), and MENV is required to act reasonably in considering whether to provide such consent.
"All proceeds arising from a valid exercise of the options must be applied towards repayment of the BA98/2 facility," it added.
Meanwhile, AFGSM's loan will be used to refinance its existing US$45 million bridge loan for its floating storage unit (FSU) in Malta.
"[The loan] is expected to require security over certain project assets, including a mortgage over the Malta FSU and an assignment over AFGSM's rights under the Malta FSU charter contract. A further announcement will be made upon AFGSM and MENV concluding the definitive financing and security documents for the AFGSM Facility," it said.
The Malta FSU is currently servicing a long-term charter contract, which has 16 years of life left on it, with ElectroGas Malta Ltd.
The two loans are not expected to have an impact on Bumi Armada's earnings, net assets, gearing, issued and paid-up share capital and substantial shareholder stakes.
It is worth noting that Bumi Armada's non-independent and non-executive directors Chan Chee Beng and Maureen Toh Siew Guat are nominees of UTSB. Toh is also a director of UTSB.
As a result, both Toh and Chan have abstained from deliberations and voting on the two credit facilities.
As of 2:46pm, shares in Bumi Armada rose 1.5 sen or 4.41% to 35.5 sen, giving it a market capitalisation of RM2.09 billion. It saw 69.73 million shares traded.