1. INTRODUCTION
Further to Bumi Armada’s announcement on 22 July 2016 with respect to the establishment of Shapoorji Pallonji Bumi Armada Godavari Private Limited (“SPBAG”), a joint venture (“JV”) company of Bumi Armada and Shapoorji Pallonji Oil and Gas Private Limited, a wholly-owned subsidiary of Shapoorji Pallonji And Company Private Limited (“SPCL”), the Board of Directors (“Board”) of Bumi Armada wishes to announce that Bumi Armada Offshore Holdings Limited (“BAOHL”), a wholly-owned subsidiary of the Company, has, together with S.P. Engineering Services Pte. Ltd. (“SPES”), an indirect subsidiary of SPCL, established another JV company known as Armada 98/2 Pte. Ltd. (“Armada 98/2”), on 15 March 2017 in Singapore.
The establishment of Armada 98/2 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 former Director of Bumi Armada, Mr. Shapoorji Pallonji Mistry (“Mr. Shapoor”) by virtue of him being a director of Bumi Armada within the preceding 6 months of the date on which Armada 98/2 was established. Further details of his interests are set out in section 6 below.
2. DETAILS OF THE JV
Armada 98/2 has been set up for the purpose of owning and undertaking the engineering, procurement and construction of a floating production, storage and off-loading vessel (“FPSO”) and to charter the same on a bareboat charter basis to SPBAG (“Bareboat Charter”), in the event SPBAG is successfully awarded an FPSO project (“Project”).
In the event that SPBAG is awarded the Project, BAOHL and SPES (collectively, “Parties”) intend to formalise the Armada 98/2 JV arrangement through a shareholders agreement to, amongst others, regulate the Parties’ relationship as shareholders of Armada 98/2, which will include provisions on the Parties’ economic and voting rights and obligations, as well as their responsibilities in connection with Bareboat Charter of the FPSO by Armada 98/2 to SPBAG. The estimated total financial commitment for such JV arrangement is not available at this juncture.
A further announcement will be made at appropriate time when there are further updates and details on the Armada 98/2 JV.
(i) Information on the Parties
a) BAOHL
BAOHL is a wholly-owned subsidiary of Bumi Armada incorporated in the Republic of The Marshall Islands on 17 June 2010 and is principally involved in the business of owning, chartering and managing of ships and vessels and provision of marine support and other services to offshore oil and gas companies.
As at 15 March 2017, the authorised share capital of BAOHL is US$50,000 comprising 50,000 registered shares of US$1.00 each. The issued and paid-up share capital of BAOHL as at 15 March 2017 is US$10,000 comprising of 10,000 registered shares of US$1.00 each.
b) SPES
SPES was incorporated in Singapore under the Companies Act (Cap. 50) on 2 September 2013. Its principal activities are engineering, design and consulting activities.
SPES is an indirect 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 US$4 billion.
As at 15 March 2017, the issued and paid-up share capital of SPES is US$50,000 comprising 50,000 ordinary shares and US$27,175,000 comprising 27,175,000 preference shares.
(ii) Information on Armada 98/2
Armada 98/2 is incorporated as a private limited company in Singapore under the Companies Act (Cap 50) on 15 March 2017 under its present name.
Armada 98/2 is 49% less1 share held by BAOHL and 51% plus 1 share held by SPES. The intended principal activity of Armada 98/2 is ship owning, chartering and managing ships and vessels, marine support and other services to oil and gas industries.
As at 15 March 2017, the issued and paid-up share capital of Armada 98/2 is US$5,000 comprising 5,000 ordinary shares.
3. RATIONALE FOR THE ESTABLISHMENT OF ARMADA 98/2
This establishment of Armada 98/2 forms part of the overall arrangement between the Company and SPCL in relation to the bidding of the Project where, subject to a successful award of the Project, Armada 98/2 will be the entity to own and carry out the engineering, procurement and construction of the FPSO for charter to SPBAG, and which SPBAG will in turn charter to the client. Overall, this 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 if the Project is 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 ARMADA 98/2
The establishment of Armada 98/2 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 Armada 98/2 will not have any material effects on the earnings per share, net assets per share and gearing of the Bumi Armada Group for the financial year ending 31 December 2017.
5.APPROVALS REQUIRED
The establishment of Armada 98/2 is not subject to any approval from the shareholders of Bumi Armada 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 Armada 98/2.
Mr. Shapoor was previously a Non-Independent Non-Executive Director of Bumi Armada. He resigned from the Board on 21 February 2017. He is also a director and major shareholder of SPCL. Therefore, Mr. Shapoor is deemed to be interested in the establishment of Armada 98/2 by virtue of his directorship in Bumi Armada within the preceding 6 months of the date on which Armada 98/2 was established. As at the date of this announcement, Mr. Shapoor does not have any direct and/or indirect interest in Bumi Armada shares.
Mr Shapoor had abstained from deliberations and voting on the establishment of Armada 98/2 at the relevant Board meetings of Bumi Armada when he was still a director of Bumi Armada.
Mr Ravi Shankar Srinivasan who was the alternate director of Mr Shapoor, had also resigned from the Board on 21 February 2017, was also not involved in any deliberations and voting on the establishment of Armada 98/2 at the relevant Board meetings of Bumi Armada.
7. DIRECTORS’ STATEMENT
The Board, having considered all aspects of the establishment of Armada 98/2, is of the opinion that the establishment of the Armada 98/2 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 Armada 98/2 pursuant to paragraph 10.02(g) of the LR is 0.0003%, computed based on the audited consolidated financial statements of Bumi Armada for the financial year ended 31 December 2015.
This announcement is dated 16 March 2017.
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