SEA9 Offers to Acquire Subsea Solutions Provider Kreuz for $358.4M

Singapore's Swiber Holdings Limited's 57.5 percent-owned subsidiary Kreuz Holdings Limited (Kreuz or the Company) and SEA9 Pte. Ltd. (SEA9), a subsidiary of The Headland Private Equity Fund 6 L.P., a pan-Asian private equity fund advised by Headland Capital Partners Limited (Headland) announced Tuesday a proposed transaction in relation to Kreuz (the Transaction). Kreuz is a provider of subsea construction and installation services and inspection, repair and maintenance services for customers in the offshore oil & gas industry.

Transaction Details

The Transaction involves a proposed scheme of arrangement (the Scheme) under the Companies Act, Chapter 50 of Singapore, and in accordance with the Singapore Code on Take-overs and Mergers. Under the Scheme, all issued and paid-up ordinary shares in Kreuz (Kreuz Shares) held by the shareholders of Kreuz (Kreuz Shareholders) as at a books closure date to be announced by Kreuz will be transferred to SEA9. Each Kreuz Share will be acquired by SEA9 at a cash consideration of $0.64 (SGD 0.80) per share, valuing Kreuz at $358.4 million (SGD 445.6 million).

The cash consideration of $0.64 (SGD 0.80) per share represents a premium of 11.1 percent and 39.6 percent above the 6-months and 12-months volume weighted average prices respectively of Kreuz Shares to Nov. 1 (the Latest Practicable Date). Furthermore, the Scheme consideration represents a price-to-net tangible assets multiple of 1.8 times calculated based on Kreuz’s unaudited Net Tangible Assets per share of $0.361 as at Sept. 30.

Rationale for the Transaction

The Transaction provides Kreuz shareholders with the opportunity to realize their investment at a premium to recent trading prices of Kreuz shares. The Transaction is also expected to allow Kreuz to continue to develop and execute upon new growth initiatives, such as investing in new vessels to support the business. As an investment adviser to Asia-focused private equity funds with relevant experience, Headland is well positioned to leverage on its expertise to support the Company as it seeks to finance and execute upon these growth initiatives.

Kurush Contractor, the CEO and executive director of Kreuz, commented “We are pleased to receive the Scheme proposal from SEA9 and we look forward to working closely with Headland and SEA9 towards ensuring quality performance with accountability to our clients. The incoming delivery of a state-of-the-art Diving Support Vessel, will enhance Kreuz’s capabilities in shallow, deep and ultra deep offshore operations globally, and support Kreuz as it seeks to execute upon its growth initiatives”.

Paul Kang, a senior partner of Headland, commented “The Transaction represents an attractive and exciting opportunity for SEA9 to invest in a focused subsea services provider. Headland and SEA9 are well positioned to partner with Kreuz to provide resources and strategic input to assist the Company in pursuing future growth initiatives”.

Voting Undertakings

Certain Kreuz Shareholders (including Swiber Holdings Limited, the holding company of Kreuz), holding approximately 73.69 percent of all the Kreuz Shares in the aggregate as at the Latest Practicable Date, have given irrevocable undertakings to SEA9 to vote in favor of the Scheme at the Scheme meeting and to vote against and reject any and all resolutions or proposals to approve, implement or carry out a competing offer by a third party.

Scheme Document

The directors of Kreuz who are considered to be independent for the purposes of the Scheme will be appointing an independent financial adviser (IFA) to advise them on the Scheme and for the purpose of making a recommendation to Kreuz Shareholders in connection with the Scheme. Full details of the Scheme, including the recommendation of the Independent Directors along with the opinion of the IFA, will be included in a Scheme document to be sent to Kreuz Shareholders in due course.

Financial Adviser

Rippledot Capital Advisers acts as SEA9’s financial adviser in relation to the Transaction.