NauticAWT has entered in a sale and purchase agreement to acquire the entire issued and paid-up capital of Marine Engineering Services Pte Ltd (MESPL) for an aggregate consideration of S$850,000 ($594,700) from parent firm IMC Offshore Engineering.
Singapore-based MESPL is principally engaged in the business of providing facilities and project engineering services for the marine and offshore oil and gas industries. According to NauticAWT, this acquisition is a supplementary deal that will help expand its core business operations within the subsea and surface facilities business segment.
MESPL has been collaborating with NauticAWT to provide topside and facilities engineering services on a jacket requalification project located in the Khafji Joint Operations area of Saudi Arabia and Kuwait.
The purchase of the firm is being funded by the internal resources of NauticAWT – proceeds from the IPO – as well as bank borrowings.
According to a filing dated 2 October 2015, MESPL has an issued and paid-up capital of S$20,110 comprising 200 ordinary shares. Based on the audited financial statements of MESPL for the financial year ended 31 December 2014 (FY2014), the net tangible liability value was approximately S$7.2 million with a net loss of approximately S$2.8 million.
Assuming that the waiver of indebtedness had taken effect on 31 December 2014, the net tangible asset value of MESPL is approximately S$1.4 million as of FY2014, with a net profit of approximately S$5.8 million.
The aggregate consideration for acquisition is being satisfied via a mixture of cash payments amounting to S$500,000 and the issuance and allotment of a number of new shares in the capital of NauticAWT with an aggregate value of approximately S$350,000 no later than 3 December 2015.
This is based on an issue price representing a 10 per cent discount to the 30-day volume weighted average price of NauticAWT’s shares for trades done on Catalist immediately prior to but excluding 1 December 2015.
The consideration paid for the firm in light of these financials suggests that NauticAWT saw this as a chance to expand their portfolio by purchasing what is, in essence, a distressed asset that could benefit their business portfolio.