Singapore's Swissco Holdings Limited (Swissco or the Company, together with its subsidiaries, the Group), a marine service provider for the offshore oil and gas industry, announced Friday the proposed acquisition of Scott and English Energy Pte. Ltd. (Scott and English) for approximately $225 million (SGD 285.0 million) today. The Company has entered into a legally binding heads of agreement (HOA) with Double Dragon Energy Holdings Limited (Double Dragon), which will form the broad basis of the definitive sale and purchase agreement to be entered into for the proposed acquisition of the entire issued and paid-up share capital in Scott and English (Acquisition).
Scott and English is in the business of owning and leasing mobile offshore drilling units and service rigs to support major oil and gas corporations in their exploration and production (E&P) activities. It is helmed by industry veterans with many years of experience in the oil & gas industry, including Tan Fuh Gih and Tan Kim Seng. Scott and English is a wholly-owned subsidiary of Double Dragon, which is majority-held by Kim Seng Holdings Pte. Ltd. (KSH).
In connection with the Acquisition, the Company proposes to undertake a share consolidation (Share Consolidation) of two Shares into one new Share (Consolidated Share).
The consideration of $225 million (SGD 285.0 million) is to be satisfied by the allotment and issuance of 452,380,952 Consolidated Shares in the capital of Swissco (Consideration Shares) at an issue price of $0.4968 (SGD 0.630) per Consideration Share. Scott and English is valued at approximately $228 million (SGD 289 million) according to a valuation report dated Feb. 27 issued by Jones Lang LaSalle Corporate Appraisal and Advisory Limited commissioned by the Company.
An extraordinary general meeting will be convened at a later date to seek the approval of Swissco shareholders for the Acquisition. The Acquisition is also subject to the approval of SGX, as it is regarded as a very substantial acquisition under the rules of the SGX Listing Manual.
Swissco currently owns and operates a fleet of offshore support vessels (OSVs). The Board of Directors of Swissco believes that the Acquisition will lead to a diversification of its fleet business and represents an investment for long-term growth. This move upstream by the Group in the offshore oil and gas E&P sector is a step forward from the primarily OSV-focused business. The Group expects to obtain potential operational synergies and benefit from the stable and recurring income base arising from the Acquisition.
In addition, the Acquisition will potentially increase the market capitalization of the Group significantly and therefore widen its investor base. This will likely attract more extensive analyst coverage and lead to an overall increase in investor interest and trading liquidity.
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