1. INTRODUCTION
The Board of Directors (“Board”) of Bumi Armada wishes to announce that it has, together with Shapoorji Pallonji Oil and Gas Private Limited (“SPOG”), a wholly owned subsidiary of Shapoorji Pallonji And Company Private Limited (“SPCL”), established a joint venture (“JV”) company known as Shapoorji Pallonji Bumi Armada Godavari Private Limited (“SPBAG”), on 19 July 2016 in India.
The establishment of the SPBAG is regarded as a related party transaction under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“LR”) as it involves the interests of a Director of Bumi Armada, Mr Shapoorji Pallonji Mistry (“Mr Shapoor”). Further details of Mr Shapoor’s interests are set out in section 7 below.
2. DETAILS OF THE JV
The JV arrangement is for the purpose of combining the capabilities and expertise of Bumi Armada and SPOG (collectively, "Parties") in the bidding and if successful, the contracting of the design, fabrication, installation, charter, deployment, and operations and maintenance of a floating production, storage and off-loading vessel (“FPSO”) facility. SPBAG will be the entity used by the Parties to bid for FPSO projects.
In the event SPBAG is awarded an FPSO project, the Parties intend to formalise the JV arrangement through a shareholders agreement to regulate the Parties’ relationship as shareholders of SPBAG, which will include provisions on the Parties’ economic and voting rights and obligations, as well as their responsibilities in undertaking any awarded FPSO project. The estimated total financial commitment is not available at this juncture.
A further announcement will be made at appropriate time when there are further updates and details to the JV.
(i) Information on the Parties
a) Bumi Armada
Bumi Armada is incorporated as a public company in Malaysia under the Companies Act, 1965 on 12 December 1995 under its present name.
Bumi Armada’s principal activities are investment holding and provision of management services. The principal activities of the Group consist of provision of marine transportation, Floating Production Storage and Offloading operations, vessel construction, engineering and maintenance services to offshore oil and gas companies.
As at 19 July 2016, the authorised share capital of Bumi Armada is RM2,000,000,000.00 comprising 10,000,000,000 ordinary shares of RM0.20 each. The issued and paid-up share capital of BAB as at 19 July 2016 is 5,866,269,344 ordinary shares of RM0.20 each totalling RM1,173,253,869.00.
b) SPOG
SPOG was incorporated in India under the laws of India on 14 August 2012 as Cosima Properties Private Limited. The name of the company has been changed from Cosima Properties Private Limited to Shapoorji Pallonji Oil and Gas Private Limited with effect from 19 May 2015.
Its principal activities are investment holding and provision of management services. The principal activities of the Group consist of engineering, procurement, fabrication, construction, installation and commissioning services for offshore and onshore oil and gas exploration and production industry and for vessels/ facilities used for liquefaction of natural gas, storage, transportation and regasification of liquefied natural gas, to provide operation and maintenance services for floating vessels used for offshore oil and gas production, processing and storage, and for LNG carriers.
SPOG is a wholly owned subsidiary of SPCL which is owned by Mr. Shapoor and his brother, Mr. Cyrus Pallonji Mistry, directly and through their companies. The SPCL Group of Companies is a large conglomerate with multiple business segments, with over 23,000 employees and an annual group turnover of USD4 billion.
As at 19 July 2016, the authorised share capital of SPOG is INR5,05,00,000 comprising 50,000 ordinary shares of INR10 each and 5,00,000 Preference Shares of INR100 each. The issued and paid-up share capital of SPOG as at 19 July 2016 is INR4,45,00,000 comprising 50,000 ordinary shares of INR10 each and 4,40,000 Preference Shares of INR100 each.
(ii) Information on SPBAG
SPBAG is incorporated as a private limited company in India under the Companies Act, 2013 on 19 July 2016 under its present name.
SPBAG is 49% less 1 share held by Bumi Armada and 51% plus 1 share held by SPOG. The intended principal activity of SPBAG is in the contracting of the design, fabrication, installation charter, deployment, operations and maintenance of an FPSO facility.
As at 19 July 2016, the authorised share capital of SPBAG is INR5,00,000 comprising 50,000 ordinary shares of INR10 each. The issued and paid-up share capital of SPBAG as at 19 July is INR5,00,000 comprising 50,000 ordinary shares of INR10 each.
3. RATIONALE FOR THE ESTABLISHMENT OF SPBAG
The JV arrangement will enable the Bumi Armada Group to expand and carry out its FPSO business, as well as mitigate its financial and project execution risk exposure in respect of any FPSO project awarded, by leveraging on Bumi Armada and SPCL’s strong history and experience in fabrication and construction related activities.
4. EFFECTS OF THE ESTABLISHMENT OF SPBAG
The establishment of SPBAG will not have any effects on the issued and paid-up share capital of Bumi Armada and the substantial shareholdings in Bumi Armada.
The establishment of SPBAG will not have any material effects on the earnings per share, net assets per share and gearing of the Group for the year ending 31 December 2016.
5. APPROVALS REQUIRED
The establishment of SPBAG is not subject to the shareholders of Bumi Armada’s approval and/or any regulatory authorities.
6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM
Save as disclosed below, none of the Directors, major shareholders or persons connected with them has any interest, direct or indirect, in the establishment of SPBAG.
Mr Shapoor, a Non-Independent Non-Executive Director of Bumi Armada, is also a director and major shareholder of SPCL. Therefore, Mr Shapoor is interested in the establishment of SPBAG. As at the date of this announcement, Mr Shapoor does not have any direct and/or indirect interest in Bumi Armada shares.
Accordingly, Mr Shapoor has abstained and will continue to abstain, from deliberations and voting on the establishment of the SPBAG at the relevant Board meetings of Bumi Armada.
Mr Ravi Shankar Srinivasan is not deemed interested in the establishment of SPBAG. However, as he is the alternate Director to Mr Shapoor, he has abstained, and will continue to abstain, from deliberations and voting on the establishment of SPBAG at the relevant Board meetings of Bumi Armada.
7. DIRECTORS’ STATEMENT
The Board (save for Mr Shapoor and Mr Ravi Shankar Srinivasan, who have abstained from all deliberations and voting on the establishment of SPBAG), having considered all aspects of the establishment of the SPBAG, is of the opinion that the establishment of the SPBAG is in the best interest of Bumi Armada.
8. PERCENTAGE RATIO APPLICABLE TO THE ESTABLISHMENT OF THE JV COMPANY
The percentage ratio applicable to the establishment of SPBAG pursuant to paragraph 10.02(g) of the LR is 0.0004%, computed based on the audited consolidated financial statements of Bumi Armada for the financial year ended 31 December 2015.
This Announcement is dated 22 July 2016.
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