Singapore, 26 July (Argus) — Malaysian shipping firm MISC is enlarging its stake in its marine engineering arm to support the latter's market debut later this year.
MISC, itself a listed affiliate of state-owned oil firm Petronas, will raise its share capital in Malaysia Marine and Heavy Engineering (MMHE) from 100mn ringgit ($31.3mn) to 2.5bn ringgit ahead of the listing on Malaysia's stock exchange in this year fourth quarter. MMHE will make a 300mn ringgit cash dividend payout to MISC following the share capital revision.
Petronas said in April this year it was planning an initial public offering (IPO) of MMHE and its petrochemicals business but gave no details. MISC now wants to sell a 25.5pc stake in MMHE, with 9.1pc available to institution investors and 16.4pc open to Malaysian investors, including existing MISC shareholders and employees.
MMHE, which recorded a 284mn ringgit profit in its fiscal year ending 31 March, is focused on the oil and gas sector and operates marine engineering yards in southern Malaysia and Turkmenistan. Its Pasir Gudang shipyard in Johor province is the only Malaysian facility to have built infrastructure for the deepwater industry. Tapping the country's deep waters is vital to Malaysia's hopes of remaining a net energy exporter, as it faces declining crude output from maturing fields and existing crude reserves estimated to last around 20 years.
The engineering firm's marine conversion business is also specialising in converting oil tankers into floating production storage and offloading vessels or mobile drilling units. MMHE is upgrading both its engineering yards and plans to use the IPO proceeds to help fund the infrastructure improvements. A yard optimisation programme at Pasir Gudang, which started in 2006 and is due to be completed in 2014, is budgeted to cost 2.7bn ringgit. New equipment for the Kiyanly yard in Turkmenistan will support Petronas' upstream activities in central Asia.
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