MISC unit MHB expected to be listed at RM3.80 a share

MISC Bhd (3816) is expected to list subsidiary Malaysian Marine and Heavy Engineering Bhd (MHB) on the main market of Bursa Malaysia by the end of next month with an indicative price of RM3.80 per share.

MISC shareholders, after over two hours of meeting in Kuala Lumpur yesterday, had approved the proposed initial public offering (IPO), which includes an increase in authorised share capital, a share split, a dividend and bonus issue, an offer for sale and a public issue as part of the listing exercise.

According to the MISC circular to its shareholders, the IPO is expected to raise up to RM2.1 billion, with MHB's market capitalisation being RM6.08 billion upon listing.

From the total gross proceeds, about RM995 million - which is from the public issue - will directly go to MHB's coffers.

MISC, meanwhile, expects to receive up to RM1.16 billion from the strategic investor allocation and proposed share sale to institutional investors.
Last month, MISC - the shipping arm of Petroliam Nasional Bhd (Petronas) - had agreed to sell up to 9.9 per cent of the enlarged issued and paid-up capital of MHB to French oil and gas engineering group Technip under the IPO.

In the circular, MISC said it intends to utilise more than four-fifths of the proceeds for capital expenditure to buy new petroleum tankers, while the remaining for working capital and other expenses.

MHB, which is the holding company for MISC's engineering and construction business, plans to spend over four-fifths of the proceeds for its yard optimisation programme, while the balance for capital expenditure in Turkmenistan and listing expenses.

The optimisation programme involves the upgrading of infrastructure of the Pasir Gudang yard, implemented in phases from 2006 to 2014.

The estimated cost and working capital of the programme is RM2.72 billion. Up to March 31 this year, MHB invested about RM548 million in the programme.

"With the completion of the programme, the MHB group expects to to generate higher income from its existing business segments and have the facilities to expand its offerings of deepwater and floating solutions and high-end LNG carrier repairs and refurbishments," the company said in the circular.

It added that the capital expenditure in Turkmenistan is to support increased activities there that require the purchase of heavy equipment.

Petronas president and chief executive officer (CEO) Datuk Shamsul Azhar Abbas, who is also MISC chairman, and MISC president and CEO Datuk Nasarudin Md Idris declined to speak to reporters after the shareholders' meeting.

However, shareholders met said the meeting took more than two hours as shareholders sought clarification on the IPO price, the timing of the listing, articles in the circular and other related matters.

MISC shareholders are offered the MHB shares at a 5 per cent discount of the IPO price.

By Hamisah Hamid

Business Times