Nam Cheong Invests $31M in BBR to Further Expand into Indonesian Market

Nam Cheong Limited (Nam Cheong, or together with its subsidiaries, the Group), a leading global offshore marine player listed on the Main Board of the Singapore Exchange Securities Trading Limited (the SGX) and Malaysia’s largest Offshore Support Vessel (OSV) builder, announced Monday that it has entered into a binding Heads Of Agreement (the HOA) with Marco Polo Marine Limited (MPML) in relation to a proposed investment in MPML’s indirect subsidiary, PT Pelayaran Nasional Bina Buana Raya Tbk (BBR).

This is the second significant initiative undertaken by Nam Cheong to further extend its interests in the attractive Indonesian oil and gas market, following the forming of a joint venture in Indonesia in September 2013 to own, operate and charter marine vessels.

MPML is an SGX Mainboard listed integrated marine logistic company, principally engaged in the business of ship chartering and shipyard services while BBR is an indirect subsidiary of MPML in which MPML holds a 49.6 percent deemed interest. BBR is a reputable shipping company based in Indonesia and listed on the Bursa Efek Indonesia (Indonesia Stock Exchange), primarily engaged in the business of ship owning and chartering through its two divisions of Tugs and Barges Division, and Offshore Marine Division.

Under the HOA, Nam Cheong has agreed to subscribe up to 1.6 billion new shares in BBR’s rights issue, at an issue price of $0.0230 (IDR 230) per share, which was determined on a “willing-buyer, willing-seller basis”. Upon the completion of the rights issue, the Group may hold up to approximately 30 percent of the enlarged share capital of BBR, for a total consideration of approximately $30.7 million (approximately SGD 39.0 million), funded through the Group’s internal resources.

Rationale

Leong Seng Keat, Nam Cheong’s CEO said, “It is our plan to develop strategic partnerships with regional players to strengthen our position in cabotage-protected countries. Investing in BBR provides us with the platform to gain a foothold in the cabotage-protected Indonesia market given BBR’s extensive network and strong presence in the country.”

With the proposed investment of $30.7 million (approximately SGD39.0 million), BBR will utilize part of the proceeds to purchase five small- and mid-sized OSVs, which are appropriate for plying Indonesian waters, from Nam Cheong for $85.0 million (approximately SGD 108.0 million).

Leong added: “The investment serves not only to increase our vessel sales but also lays the groundwork for potential future vessel purchases by BBR from the Group.