ASIA PACIFIC’S leading vessel supplies player, Sinwa Limited, has ventured into heating, ventilation, aircon and refrigeration (HVAC&R) by inking a deal to buy 70% in Rapid Offshore & Marine.
Rapid Offshore & Marine is a leading HVAC&R player in the global marine & offshore industry, and has supplied HVAC&R systems for more than 20% of the global FPSO fleet.
The purchase consideration for the 70% stake will be capped at S$12.25 million and comprises of 2 tranches.
(a) A first tranche of S$7.35 million computed based on 70% of P/E Ratio of 3.5 times the audited profit after tax of the Rapid Offshore & Marine for its financial year ended 31 July 2010 to be paid as
(i) S$3.675 million new Sinwa shares; and
(ii) S$3.675 million in cash by way of cash upon completion of the acquisition;
(b) A second tranche computed based on 70% of P/E Ratio of 3.5 times the FY2011’s profit after tax, less the first tranche to be paid as:
(i) 50% to be satisfied through the issue of new Sinwa shares; and
(ii) 50% by cash.
Sinwa has an option to acquire the remaining 30% after the acquisition has been completed, exercisable during the first 6 months of 2015.
”The acquisition marks the beginning of a very exciting time for us and we are looking for M&A growth,” said Sinwa’s executive chairman Mike Sim during an investor luncheon at The Screening Room yesterday.
”All the oil majors are our customers. We provide solutions directly to BP, Shell, Mobil, as well as their vessel operators such as MODEC and Petrobras,” said Rapid Offshore & Marine director TK Naga.
Most companies that come to Singapore to build their FPSOs and oilrigs return because of our timely delivery, he said.
Sinwa CFO Albert Chew sees great potential for cross selling as Sinwa counts some 300 ship owners as clients while Rapid Offshore & Marine has close ties with ship yards.
The acquisition boosts Sinwa’s earnings by more than 20%, based on its profit after tax of S$15 million for FY2009.
”We are well established and with over 3 decades operating history,” said Mr Naga, responding to a query on competition from the likes of Viking Offshore. In contrast, Viking’s HVAC&R unit was incorporated 16 years ago in 1994.
Founded in the 1960s, Sinwa supplies a wide range of ships’ heavy deck and engine equipment, ships’ spares, general hardware and provisions to the offshore and maritime industry.
It also provides shipping agency, logistics, warehousing and related support services.
In 2006, it diversified into the oil and gas industry and has since formed joint ventures and acquired a lift boat and a seismic vessel.
Last year’s earnings were affected as its lift boat had been off-hire, but Mr Sim was pleased to announce that the boat is now mobilized in Nigeria. The contract for the seismic vessel had ended in Sep 2010.
It also charters out an anchor-handling tug, which was acquired in October 2009.
