KUALA LUMPUR (March 13): Co-founder of Eco World Development Group Bhd, Tan Sri Abdul Rashid Abdul Manaf, will emerge as the controlling shareholder of struggling oil and gas services and equipment group EA Technique (M) Bhd (EATech), with a 53% stake.
This confirms The Edge Malaysia’s article on Feb 6 which says that Rashid will be the white knight of EATech, which has been classified as a Practice Note 17 (PN17) company since Feb 28, 2022.
On Monday (March 13), EATech announced its rationalisation plan to Bursa Malaysia, which entails a proposed consolidation of every 15 ordinary shares in EATech into one consolidated share, and a proposed shares issuance of up to 53 million new EATech shares, representing approximately 60% of the enlarged total number of issued shares after the issuance.
As at the latest practicable date (LPD) to the rationalisation plan, the issued share capital of EATech is RM179.76 million comprising 530.5 million shares. Based on the company’s issued share capital as at LPD, the proposed share consolidation will result in the 530.5 million shares to be consolidated into 35.37 million shares.
On the same day, EATech had entered into subscription agreements with Rashid’s investment vehicle Eco Offshore Services Sdn Bhd (EOSSB), Tan Sri Abdul Halim Ali, and Khiruddin Ibrahim Said, to subscribe for 53.05 million shares at a subscription price of RM1.131 apiece.
EATech will raise approximately RM60 million through the issuance of shares.
EOSSB will subscribe 46.86 million shares, which will give it a 53% stake in EATech’s consolidated and enlarged share capital of 88.42 million shares. EOSSB will be paying around RM53 million to subscribe for the shares.
Meanwhile, Halim and Khiruddin will each subscribe 3.09 million of the issued shares.
Rashid will also be extending a mandatory general offer (MGO) to acquire the rest of the shares in EATech he does not own, pursuant to Section 218(2) of the Capital Market Services Act 2007. However, it is his intention to maintain the listing status of EATech upon completion of the MGO.
Therefore, both Sindora Bhd and Kulim (Malaysia) Bhd, who collectively will hold a total of approximately 52.48% of the total number of issued shares in EATech as at LPD, had given the undertakings that they will not accept the MGO.
Halim and Khiruddin had also provided Rashid and EOSSB with undertakings not to accept the MGO.
From the RM60 million that will be raised through the issuance of shares to the subscribers, RM32 million is allocated to be utilised for the repayment to the scheme creditors, pursuant to the scheme of arrangement (SOA).
The estimated returns to scheme creditors totals to approximately RM77.1 million. EATech has commenced on its asset disposal program to raise net proceeds of up to RM46 million. The group proposes to utilise the RM32 million proceeds to settle the balance amount due to scheme creditors.
EATech will also utilise RM26 million for repayment to Sindora. Due to a corporate guarantee provided by Sindora to Malaysia Marine and Heavy Engineering Bhd (MMHE), Sindora had up to the LPD, settled on behalf of EATech RM44.3 million owed to MMHE for works engaged in relation to an engineering procurement, construction, installation and commissioning for the conversion of vessel to a floating storage and offloading facility.
Accordingly, under the SOA, Sindora will recover approximately RM1 million in place of MMHE.
Pursuant to a settlement agreement entered into between EATech and Sindora on Feb 27, 2023, it is thereby agreed that of the total sum of RM44.3 million owing, Sindora will recover approximately RM1 million under the SOA and waive a sum of RM2.0 million, leaving a balance owing by EATech of approximately RM41.3 million.
EATech shall undertake to repay Sindora a total of RM26 million via proceeds raised through the proposed shares issuance whilst the balance debt of RM15.3 million shall be settled over a three-year term.
EATech proposes to settle the RM15.3 million via internally generated funds.