Thursday, Jan 15, 2004
Sapura Energy Sdn Bhd’s (“SESB”) rating upgrade to AID is supported by its strength in the marine engineering business, improving financial position and the synergies arising from its proposed acquisition by Crest Petroleum Bhd (“Crest”), one of the largest oil and gas well drilling and marine contractors in Malaysia. The rating is, however, moderated by its high debt leverage position.
SESB is a wholly-owned subsidiary of Sapura Holdings Sdn Bhd (“SHSB”), the Sapura Group’s vehicle in the energy sector. With the acquisition of the Sarku group of companies in 2002, marine engineering became the main principal business activity of the enlarged SESB group. Marine engineering is the main contributor to SESB group’s revenue; which surged to RM249.9 million as at end January 2003 from RM37.5 million previously, reflecting the effects of the consolidation of the Sarku group of companies.
Besides marine engineering, the SESB group is also involved in automation, maintenance, power and asset management. With its wide range of capabilities, SESB is able to offer its clients single or multidiscipline outsourced requirements.
In July 2003, Crest announced its proposed acquisition of SESB’s entire paid up capital of 3,000,000 ordinary shares from SHSB for a purchase consideration of RM135.5 million. Crest will also assume all the shareholders’ advances from SHSB. SESB became a wholly-owned subsidiary of Crest since 23 December 2003.
The acquisition of SESB by Crest will augur well for both entities as it will enable them to provide a complete range of services to upstream and downstream oil and gas entities. SESB’s strength in the marine engineering business will complement Crest’s offshore oil and gas drilling operations and marine installation works. Following the acquisition, Crest will emerge as the largest integrated oil and gas service provider in Malaysia.
MARC’s sensitivity analyses reveal that SESB’s cash flow is sensitive to any reduction in revenue. Nevertheless, MARC believes that the company’s cash flow position is manageable in the near to medium term backed by the RM300 million of outstanding contracts secured with multi-national companies like PETRONAS, ExxonMobil and Shell.
Being a member of the Crest group provides SESB with the opportunity to participate in jobs secured by the larger group. And financial flexibility will also be enhanced, despite SESB’s high debt leverage level of 2.6 times as at 31 January 2003.
SESB is a wholly-owned subsidiary of Sapura Holdings Sdn Bhd (“SHSB”), the Sapura Group’s vehicle in the energy sector. With the acquisition of the Sarku group of companies in 2002, marine engineering became the main principal business activity of the enlarged SESB group. Marine engineering is the main contributor to SESB group’s revenue; which surged to RM249.9 million as at end January 2003 from RM37.5 million previously, reflecting the effects of the consolidation of the Sarku group of companies.
Besides marine engineering, the SESB group is also involved in automation, maintenance, power and asset management. With its wide range of capabilities, SESB is able to offer its clients single or multidiscipline outsourced requirements.
In July 2003, Crest announced its proposed acquisition of SESB’s entire paid up capital of 3,000,000 ordinary shares from SHSB for a purchase consideration of RM135.5 million. Crest will also assume all the shareholders’ advances from SHSB. SESB became a wholly-owned subsidiary of Crest since 23 December 2003.
The acquisition of SESB by Crest will augur well for both entities as it will enable them to provide a complete range of services to upstream and downstream oil and gas entities. SESB’s strength in the marine engineering business will complement Crest’s offshore oil and gas drilling operations and marine installation works. Following the acquisition, Crest will emerge as the largest integrated oil and gas service provider in Malaysia.
MARC’s sensitivity analyses reveal that SESB’s cash flow is sensitive to any reduction in revenue. Nevertheless, MARC believes that the company’s cash flow position is manageable in the near to medium term backed by the RM300 million of outstanding contracts secured with multi-national companies like PETRONAS, ExxonMobil and Shell.
Being a member of the Crest group provides SESB with the opportunity to participate in jobs secured by the larger group. And financial flexibility will also be enhanced, despite SESB’s high debt leverage level of 2.6 times as at 31 January 2003.