KUALA LUMPUR: In an environment of low oil prices, the end of Tanjung Offshore Bhd’s two-month- old boardroom tussle has not added any sheen to the integrated oil and gas services provider’s appeal to investors. 

Analysts say the episode that saw the filing of multiple lawsuits has shaken investors’ confidence in the company. 

In addition, the company has yet to secure a core business following the disposal of its marine business to Ekuiti Nasional Bhd (Ekuinas) in 2012 for RM220 million.

Also, a reverse takeover (RTO) by Paris-based Bourbon SA, which would have seen 18 offshore supply vessels (OSVs) and five anchor handling tug supply vessels injected into Tanjung Offshore (fundamental: 1.85; valuation: 0.6) was aborted.

The reason given was that the economic and financial conditions for an agreement satisfying both parties could not be met in view of the declining oil prices, Tanjung Offshore disclosed in an announcement last December.

A bank-backed analyst said the time may not be right yet to recommend Tanjung Offshore to investors after the just-ended boardroom tussle.

“Investors want certainty and stability when it comes to investing in an oil and gas firm. They are not sure who is helming the company at the moment with so many boardroom changes in the past few months,” he said.

Another oil and gas analyst said Tanjung Offshore had been plagued by many legal issues. “From the business standpoint, there are many other companies, which are more appealing now.”

For its financial year ended December (FY14), the company’s net profit shrank 90.27% to RM1.06 million from RM10.91 million the year before. This was on the back of lower revenue of RM107.43 million, a decrease of 67.23% from RM327.79 million.

The company said in a statement dated Feb 26 that the decrease in revenue was mainly due to the disposal and closure of unprofitable subsidiaries and divisions.

It noted that the group’s operations are mainly driven by Gas Generators (M) Sdn Bhd and Tanjung Offshore Services Sdn Bhd (TOSSB).

The group was in net cash position with cash and bank balances of RM40.9 million as at Dec 31 compared with RM22.52 million a year ago. This translated into cash per share of 10.78 sen.

Its net assets per share stood at 51 sen as at Dec 31. 

Tanjung Offshore’s counter closed 2.97% or 1.5 sen lower at 49 sen last Friday, giving it to a market capitalisation of RM185.74 million.

It is worth noting that Muhamad Sabri Ab Ghani, who had resigned as the group’s executive director on March 23, was reinstated as chief executive officer of TOSSB, effective April 1, according to a document sighted by The Edge Financial Daily.

TOSSB, which is a wholly-owned subsidiary of Tanjung Offshore, offers services such as customised engineered equipment packages, drilling and platform services, project management of contracts, spares and parts for equipment and other related services.

Together with several appointments of new directors, Sabri’s resignation did not just draw an abrupt end to the boardroom tussle on March 23 but it also paved the way for the company’s third largest shareholder, Tan Sri Tan Kean Soon (also former independent non-executive director), to be appointed as the new executive director.

The company had also lifted the suspension of three officials — Sabri, Kean Soon and Datuk Harzani Azmi (group adviser) from their executive functions and roles in the company on Mar 23.

What also muddied the water was the recent resignation of two other officials — Tan Wee Koh (executive director), 47, and Shahrizal Hisham Abdul Halim (independent and non-executive officer), 43, last Tuesday for “personal reasons”.

Interestingly, the resignations came before the release of the special auditor’s findings. 

The Audit Committee of the company, in consultation with Bursa Malaysia, had on March 20, 2015, appointed Ferrier Hodgson MH Sdn Bhd as a special auditor to review matters highlighted by the Independent Committee (IC).

The IC, which was established on Jan 8, comprised George William Warren Jr (former independent non-executive director), Datuk Ab Wahab Ibrahim (non-executive director) and Shahrizal Hisham Abdul Halim (independent non-executive director). 

It is worth noting that Warren had also resigned on March 23.

Tanjung Offshore entered the limelight when it suspended Sabri, Kean Soon and Harzani on Jan 28 on the recommendation of the IC. 

The IC had pointed at possible conflicts of interest and breaches of fiduciary duty by Kean Soon and Sabri, while it said there were deficiencies in the approval process where Harzani was concerned.

The formation of the IC, among other things, was to review some of the past deals in Tanjung and to engage professionals to perform independent valuation, if necessary.

Tanjung Offshore had also lodged the IC findings with the police, Bursa Malaysia and Securities Commission against Kean Soon, Sabri, and Harzani.

This article first appeared in The Edge Financial Daily, on April 6, 2015.