TH Heavy to receive RM374m from FPSO novation agreement with Yinson
PETALING JAYA: TH Heavy Engineering Bhd (THHE) today said it will receive RM374 million cash as proceeds of its novation agreement with Yinson Holdings Bhd for the floating, production, storage, offloading facility for the Layang Development awarded by JX Nippon Oil & Gas Exploration (Malaysia) Limited.
Some RM352.8 million have been earmarked as payment for scheme creditors.
In explaining the circumstances which led to the novation agreement, THHE explained that it was unable to achieve the original handover date to JX Nippon scheduled on June 30, 2016 due to the inability to complete the conversion works of FPSO Layang Vessel because of THHE’s inability to raise the necessary funding.
The physical completion of the FPSO Layang Vessel is 42.92%. As the conversion of the FPSO Layang Vessel has yet to be fully completed, it is presently not fit for use and not of sea-going condition.
Post completion of the Proposed JX Nippon Contract Novation and other components of the proposed regularisation plan of THHE, the FPSO Layang Vessel will continue to be held as a capital asset of THHE.
Worth noting is that the registered owner of the FPSO Layang Vessel is Floatech (L) Limited, which is THHE’s 80%-owned subsidiary company. The remaining 20% interest is owned by Globalmariner Offshore Services Sdn Bhd (GMOS). GMOS, which is also a scheme creditor, has appealed to the High Court to prevent the novation agreement between THHE and Yinson from proceeding. The result of the appeal and subsequent actions by both GMOS and THHE will have a bearing on the outcome of the novation agreement.
In the off chance the novation agreement does not go through, THHE will have to pay delay liquidated damages to JX Nippon to the tune of US$18.6 million (RM75.3 million).
THHE's unaudited consolidated statements of financial position as at Sept 30, 2017, the group’s borrowings and trade and other payables as at Sept 30, 2017 is RM350.9 million and RM654.9 million respectively.
The group's share price closed half a sen to 11 sen, with some 10.8 million shares changing hands.
http://www.thesundaily.my/news/2018/01/25/th-heavy-receive-rm374m-fpso-novation-agreement-yinson
