Oil & gas: Neptune sells out to MMA Offshore for up to $21.2m
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Small cap oil and gas service provider Neptune Marine Services (ASX:NMS) has struck a deal to sell its key operating subsidiaries to vessel provider MMA Offshore (ASX:MRM) for potentially as much as $21.2m.
The services being sold include asset integrity and inspection, diving, survey, remotely operated vehicles, engineering, subsea stabilisation, NEPSYS™ dry underwater welding and manufacturing, assembly and testing services.
Neptune made the tough decision to sell because although the outlook in the Australian subsea market has improved from a year ago, the company had faced “significant challenges” in recent years.
“The acquisition of the Neptune business by MMA provides NMS shareholders with an opportunity to retain an exposure to the combined business, which offers synergies that will potentially provide new opportunities for the business in any sustained improvement in market conditions,” Neptune CEO Robin King said.
MMA managing director Jeffrey Weber said the acquisition was a key part of MMA’s strategy to expand its subsea service offering to existing and new clients.
“Combining MMA’s vessel assets with NMS’s subsea equipment and technical expertise will result in a stronger service offering to both MMA’s and NMS’s existing clients and provide an opportunity for MMA to capture a greater proportion of the value chain,” he said.
“Importantly, the services that NMS provides do not directly compete with our existing clients in the sector and we continue to see these partnerships as a key platform in our subsea strategy going forward.
“As the offshore market improves, we expect the combined business to benefit from a recovery in offshore and subsea investment.”
MMA expects to report full-year FY19 EBITDA (earnings before interest, tax, depreciation and amortisation) of about $27m.
The company said in a trading update in May that a number of vessel contract extensions had recently been awarded, which contributed to increasing MMA’s level of contracted utilisation for the remainder of the 2019 calendar year from 39 per cent at the half year to 49 per cent currently.
Neptune, on the other hand, booked a $3.1m loss for the fiscal year ended March 2019 despite revenue improving 24.76 per cent to about $84.4m. Notably its loss was a nearly 90 per cent improvement on FY18.
Neptune said the cash and scrip deal with MMA would be worth between $18.5m and $21.5m, including $5m cash, depending on the 30-day volume weighted average price of MMA shares through to two days before the deal is completed.
The company promised it would be redistributing all of the cash and MMA shares to its investors.
The sale still needs shareholder sign-off.
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