By Harizah Hanim Mohamed
KUALA LUMPUR, Aug 21 -- Marine transportation provider EA Technique (M) Bhd has mapped out plans to take its business a notch higher by extending its current shipyard facilities, growing its port services by providing harbour tugboats, anchoring further in the downstream transportation of refined products and chemicals, and raising funds through private placement.
Managing director Datuk Abdul Hak Md Amin said these strategies were vital in growing EA Technique, as well as strengthening its position in the market, especially ahead of full commencement of the Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, Johor.
"EA Technique is currently drafting expansion plans to grow the company further. We aim at growing our non-marine transportation segment which involves shipbuilding and ship repairing.
“These activities are operated by our wholly-owned subsidiary, Johor Shipyard and Engineering Sdn Bhd, and we are actively engaging the landlords to purchase another eight hectares of land adjacent to the current plant that spread across 8.09 hectares,” he told Bernama.
The current capacity of Johor Shipyard is building one 10,000 deadweight tonnage (dwt) tanker or six units of 60 tonnes bollard pull harbour tugboats (Bollard pull is a conventional measure of the pulling power of a tugboat or watercraft).
The homegrown EA Technique is positioned in the top three among companies in the small size (15,000 dwt) tanker segment, the leader in the tugboat for port and offshore operation, and one of the successful floating storage and offloading vessel (FSO) and FSPO players in the country.
On the preparation to supply vessels to RAPID Pengerang, Abdul Hak said the company is looking into adding chemical vessels into EA Technique's fleet even though it is taking a "wait-and-see" approach towards RAPID operations before making further decision.
"We are going to enter into that (chemical) market... we do have chemical tankers now but we are looking for more business opportunities in that area. We are going to tender for their projects but for now, we would wait for Petronas or other national petroleum and natural gas companies (Saudi Aramco or Pertamina) to come out with order requirement.
"We are already talking about it and we know what are the numbers (of chemical vessels needed), what is the type of ships that they require, so we are planning ourselves to align with those demands," he said.
RAPID houses a 300,000 barrel-per-day refinery, apart from various petrochemical lines which can produce a total of 7.7 million tonnes a year of petrochemical products.
As at June 30, 2019, EA Technique's total fleet of 48 marine vessels in their portfolio (including four vessels under construction and two vessels chartered from a third party owner) with the utilisation rate for the January-March period this year stood at 76.99 per cent compared with 76.51 per cent in the same period last year.
"Most of our vessels are contracted out," he said, adding that the utilisation rate was considered very high for a shipping company.
EA Technique vessels consist of various types such as 11 oil and gas tankers, including two units of FSOs, four oil support vessels, and 29 marine vessels.
The company recently secured multiple contracts to build and supply three new product tankers and to provide a temporary storage tanker with a combined contract value of RM600 million, including the option period.
The company is also in the midst of building an ocean-going tugboat at the Johor Shipyard for Petronas Floating LNG 2, which is expected to be in Malaysia early next year.
Abdul Hak said the company's current order book stood at RM1.3 billion compared with RM1.7 billion worth of tenders in the financial year 2018.
"Of the RM1.3 billion, RM802.89 is firm contracts while the remaining RM545.37 million is the value of extension period," he said, adding that success rate for contracts secured is quite high as the company previously won contracts worth about RM600 million.
On the private placement exercise, Abdul Hak elaborated that EA Technique's plans for cash call was due to its strategies to reduce the current gearing level of 1.7 times and at the same time raise cash for fresh capital to support its plan to venture further into the tanker vessel segment.
EA Technique plans to undertake a debt settlement exercise owed to its major shareholder, Johor Corporation (JCorp) indirect-subsidiary, Sindora Bhd, totalling RM57.16 million via the issuance of 121.62 million new shares at 47 sen apiece in the company.
Commenting on concerns raised over the company's public shareholding spread, which must not be below 25 per cent, Abdul Hak said the exercise would not affect the public spread of the company.
"We have already submitted to Bursa Malaysia the planned corporate exercises and at the moment it is still in the approval process. We hope to get the greenlight from the bourse soon,” he added.
EA Technique is expected to issue up to 106.36 million new shares, representing about 17 per cent of its enlarged total number of issued shares.
A total of 19.15 million placement shares would be placed to Abdul Hak, 25.53 million placement shares to Sindora, while the remaining 61.68 million placement shares would be placed to independent third party investors.
EA Technique has proposed to issue up to 365.98 million free warrants on the basis of one warrant for every two existing shares held on the entitlement date to be determined later.
Based on the exercise price of 47 sen per share, the proposed private placement is expected to raise gross proceeds of RM50 million.
Of the proceeds, RM39.36 million will be used to part-finance the construction of three vessels, RM9.13 million for working capital and RM1.5 million to defray expenses.