Nam Cheong to buy 30% stake in Indonesian shipping outfit

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KUALA LUMPUR (Sept 29): Malaysian owned, Singapore-listed shipbuilder Nam Cheong Ltd has proposed to acquire 30% of the enlarged share capital of Indonesia-listed PT Pelayaran Nasional Bina Buana Raya Tbk (BBR) for a total consideration of approximately US$30.7 million (RM78.85 million).

The purchase of the 30% stake, representing 1.6 billion new shares in BRR, will be through the subscription of a rights issue at an issue price of IDR230 apiece, Nam Cheong said in an announcement with the Singapore Exchange on Monday.

Nam Cheong will subscribe for the rights issue on behalf of Marco Polo Marine Ltd, which is currently BRR’s major shareholder.

Marco Polo, which holds 49.6% stake in BBR, is an integrated marine logistic company and engages in the business of ship chartering and shipyard services, while BBR is involved in the business of ship owning and chartering, through its two divisions of tugs and barges division, and offshore marine division.

According to the announcement, BBR will utilise part of the proceeds to purchase five small and mid-sized offshore support vessels (OSVs) for US$85 million (RM218.3 million).

Additionally, Nam Cheong said the board of directors of BBR will consist of five members, of which one will be appointed by BBR, two to be appointed by Marco Polo and one by Nam Cheong, and an existing independent director for whom the appointment is at Marco Polo’s discretion.

Nam Cheong said the proposed investment is the second significant initiative undertaken by the group in Indonesia, following the forming of a joint venture in Indonesia in September 2013, to own, operate and charter marine vessels.

“The vessel chartering business segment remains a small, yet important and fast growing part of Nam Cheong’s operations, with the revenue segment having grown 73% to RM65.1 million, between FY2012 to FY2013,” it said.

Nam Cheong’s core business in shipbuilding makes up over 90% of its revenue for 2008 to 2013.

Nam Cheong's Chief Executive Officer Leong Seng Keat said in the announcement that investing in BBR provided the group with the platform to gain a foothold in the cabotage-protected Indonesia market, given BBR’s extensive network and strong presence in the country.

Leong said, “The investment serves not only to increase our vessel sales, but also lays the groundwork for potential future vessel purchases by BBR, from the group.”

Nam Cheong was traded at S$0.44 as at 3:47pm, with a market capitalisation of S$912.5 million.