Thursday 28 Mar 2024
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KUALA LUMPUR (July 1): Bumi Armada Bhd has increased the allocaton to its floating production, storage and offloading (FPSO) unit to RM1.52 billion from RM1.4 billion previously, from the RM1.98 billion worth of proceeds it raised from its rights issue last year.

In a filing with Bursa Malaysia today, Bumi Armada said the increased allocation will be used to cover capital expenditure in both the FPSO and floating gas solutions (FGS) business units.

“In addition, capital expenditure will encompass FPSOs of any liquid or gas production capacity (previously capacity of 70,000 bpd or more) in any location (previously in locations in Asia, Africa or Latin America) as well as capital expenditure in gas related vessels such as floating liquefied natural gas units, floating storage and regasification units and floating storage units, under the FGS business unit,” said the group.

The board of Bumi Armada had on June 30, 2015, approved certain changes to its utilisation of the proceeds of its rights issue, which was completed on Oct 13, 2014, at an issue price of RM1.35 each, pursuant to the circular to its shareholders dated June 23, 2014 and its abridged prospectus dated Sep 12, 2014.

Among the other changes made was the reallocation of RM80 million to its offshore support vessel (OSV) business unit, following the dissolution of its oilfield services unit.

“With respect to the previous allocation of RM200 million of the rights proceeds to the transport and installation business unit, this has been reduced to RM80 million ... the reduced allocation of RM80 million will be used to cover capital expenditure in work barges, pipe-laying and trenching equipment.

“The remaining RM120 million has been reallocated to the FPSO and the new FGS business units,” read the group’s announcement.

Bumi Armada added with respect to its previous RM55 milion rights proceeds to cover estimated expenses for the corporate exercise which include the bonus issue and the rights issue as defined in the circular and abridged prospectus, RM24.8 million has been utilised for such expenses, while the balance of RM30.2 million has been reallocated to be used for general working capital requirements.

“The reallocation of the rights proceeds reflects the group’s overall strategy of focusing on its core FPSO business and enhancing its OSV and FGS capabilities and the board believes this is an appropriate strategy to weather the current challenges in the offshore oil and gas sector, brought about by the decline in oil prices since the second half of 2014,” said Bumi Armada.

Bumi Armada (fundamental:1.05; valuation: 1.4) shares closed up 5 sen, or 4.39% to RM1.19 today with a market capitalisation of RM6.98 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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