Scomi Group Bhd (SGB) and its associate company, Scomi Marine Bhd (SMB), have proposed to merge their businesses under a new company (newco) in a bid to create a larger upstream drilling services provider.
SGB said in a statement the newco would have a more diversified income stream as well as combined expertise, which include the provision of high-performance drilling fluids solutions; modern drilling waste management services; completion, well-bore, clean up and cementing services as well as offshore supply vessels to support the oil and gas industry.
The corporate exercise to be carried out over the next few months would involve an internal restructuring and capital repayment within SMB, the restructuring of legal entities within oilfield services group and the creation of the newco to take over SMB and oilfield services Eastern Hemisphere businesses.
It said the newco would assume the listing status of SMB and the enlarged entity would create a simplified and more competitive upstream drilling services company.
Post-merger, SGB said the newco would be in a stronger financial position and was expected to have greater flexibility in its future fund-raising exercises, thus allowing it to capitalise on business expansion opportunities locally and abroad.
The newco would enable shareholders of both SGB and SMB to have direct participation and also aimed to financially restructure SGB and pare down its debts and strengthen its balance sheet. SGB would have at least a 32.9% stake in the newco post-merger.
The board of SMB also intends to propose a cash distribution of up to US$45mil (RM134.7mil) to SMB shareholders via a capital repayment exercise.
Shareholders of SMB stand to gain 18.3 sen per share, assuming if SMB distributes the proceeds in full.
The proceeds of the capital repayment are from the disposal of SMB's marine logistics subsidiaries to PT Rig Tenders Indonesia TBK, a 80.54%-owned unit of Scomi Marine Services Pte Ltd, which in turn is a wholly-owned subsidiary of SMB.
