KUALA LUMPUR (June 29): Oil and gas service provider Yinson Holdings Bhd said today it is exiting its logistics and trading business to focus on its burgeoning floating production storage and offloading (FSPO) business.
Yinson said it is divesting its logistics and trading subsidiaries to the group's major shareholders and executive directors Lim Han Weng and his wife Bah Kim Lian – via Liannex Labuan Ltd – for RM228 million.
Liannex Labuan is wholly-owned by Liannex Corp (S) Pte Ltd, which in turn is wholly-owned by Lim and Bah.
In a statement today, Lim, who is the executive chairman of Yinson, said proceeds from the disposal of the group's six non-oil and gas subsidiaries would enable it to drive a centric focus business operation and reinvest the proceeds into more lucrative oil and gas (O&G) projects with higher project internal rate of return.
“Our long-term objective is to develop the Yinson into the most profitable global FSPO. We look forward to working together with our employees and stakeholders in achieving this goal,” he said.
Lim added that the divestment would enable it to achieve a firmer valuation among its O&G peers.
In a filing with Bursa Malaysia today, Yinson said proceeds from the disposal will also be used to partly repay inter-company loans owing to the group by the six companies. The companies are Yinson Corp Sdn Bhd, Yinson Transport Sdn Bhd, Yinson Shipping Sdn Bhd, Yinson Port Ventures Pte Ltd, and Yinson Vietnam Co Ltd and a 65% stake in Yinson Power Marine Sdn Bhd.
The offer is subject to several conditions including Liannex Labuan being satisfied with the outcome of the legal due diligence of the six subsidiaries and approval from Yinson's board of directors and shareholders at an extraordinary general meeting to be convened.
"The board has today acknowledged the receipt of the offer letter and will commence negotiations on the terms of the transaction. The company will make the appropriate announcements as and when there are any material developments," said Yinson.
Yinson (fundamental: 1.5; valuation: 1.5) shares fell 13 sen or 4.09% to close at RM3.05 today, giving it a market capitalisation of RM3.3 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.)