Yangzijiang eyes stake in PPL Shipyard
Singapore listed Chinese shipbuilder Yangzijiang Shipbuilding, together with an undisclosed Middle East investor, plans to buy an indirect stake of as much as 50.1% in Singapore-based rig builder PPL Shipyard at a cost of $155m, in an effort to venture into the offshore engineering market.
The Jiangsu-based shipyard has made an offer to oil and gas equipment and services provider Baker Technology to acquire the entire share capital of Baker Technology"s fully-owned vehicle, PPL Holdings.
PPL Holdings owns a 15% stake in PPL Shipyard. The remaining 85% is held by Sembcorp Marine.
Yangzijiang Shipbuilding has entered into a placement agreement with the unnamed Middle East investor whereby Yangzijiang Shipbuilding would place 83.5m shares to the investor at S$1.30 per share to finance the deal. The $77.6m capital raised from the share placement would be entirely used for the acquisition, the company said in a statement.
The Middle East investor and Mediterranean Success Group, an entity which is wholly owned by Yangzijiang Shipbuilding non-executive director Yu Kebing, would take up the remaining 45% and 4.9% interests in PPLH for $69.6m and $7.6m, respectively, the company added.
Yangzijiang Shipbuilding said the strategic acquisition would be in the best interests of the group. Post acquisition, Yangzijiang"s ability to work with PPL Shipyard"s business on the design and construction of offshore drilling rigs would strengthen Yangzijiang"s capabilities in the area.
PPL Shipyard is mainly engaged in the business of design and construction of offshore drilling rigs. The company has completed a total of 40 jack-up rigs, six semi-submersibles and four swamp barges since its inception in the early 1980s. The net book value of the shipyard is $343m in 2009.
Yangzijiang Shipbuilder is ranked as China"s fourth largest shipyard in terms of completion tonnages last year, according to China Association of the National Shipbuilding Association. The shipyard has order backlog of 31 vessels with a total of 426,264 dwt stretching to 2011.
A number of Chinese companies are setting their sights on the lucrative offshore engineering market in an effort to capitalise on the enormous untapped energy reserves off China"s coasts. Some newcomers hope to speed up their expansions through the acquisition of foreign offshore players.
China"s largest container producer, China International Marine Containers, raised its interest in Yantai Raffles to 50% in January, in order to take advantage of the expertise of the Singapore-based offshore fabrication yard to increase its involvement in offshore sector.