Mystery buyer informs Otto of potential takeover interest

Offshore staff

SINGAPORE Otto Marine Ltd. has received a letter from an unnamed company that is potentially interested in buying the marine group.

Referring to itself as a “potential buyer,” the company reached out to Otto through its financial advisor, RHB Securities Singapore Pte. Ltd., to inform that a transaction that “may or may not lead to an acquisition of the issued share capital of the company” might be initiated.

The unnamed potential buyer disclosed in the letter that it was interacting with the regulator, and that it intended to submit a formal proposal to Otto’s board of directors “as soon as possible,” following regulatory approvals.

“We will disclose the identity of the offeror and the details of the proposed transaction in our proposal,” the letter read.

The intent of the letter was not just to inform Otto of possible interest from a mystery buyer’s interest. In addition, the interested company requested that Otto Marine halt trading and release a holding announcement after noticing some volatility in its share price over the last few days, citing Note 5 of Rules 3.1, 3.2, and 3.3 in the Singapore Code on Take-Overs and Mergers.

“In addition, on behalf of the offeror, we request that the company to consider halting trading of its shares until the release of the announcement in relation to the proposal and subject to the applicable listing rules,” the letter continued.

Despite this, the letter continued by noting that there is “no certainty or assurance whatsoever that there will be any transaction until we have finalized the terms of our proposal upon obtaining regulatory clearance, and present our proposal to the board.”

Otto said that its board of directors is closely monitoring the situation and will make a further announcement in connection with the lifting of the trading halt as soon as possible. In addition, it noted that it would promptly make the relevant disclosures if and when it received further information on this potential takeover bid.

It deals in three segments: shipping and chartering, which focuses on chartering a fleet of 46 vessels; subsea services, which concentrates on subsea and offshore construction in the Gulf of Mexico, Africa, and the North Sea; and its shipyard, where it operates what it says is one of the largest shipyards in Bantam, Indonesia.

In Otto’s 1Q 2016 earnings report, it said that its total new order book stood at $216 million as of March 31; however, it has lost money every year since 2013, when profit was still in the black and it reported revenue of $512 million. In 2014, that number dropped to $356 million. The following year, revenue sank further, to $244 million. It booked losses in FY 2014 and FY 2015 but said it made a “marginal profit” in 1Q 2016, reporting quarterly revenue to be $95 million.

Otto has announced several major transactions during 1H 2016. Otto announced that its subsidiary GO Offshore Pty Ltd. had secured a five-year offshore supply vessel chartering contract with an international E&P company. However, soon afterwards, it announced the signing of a memorandum of agreement to sell SOC Endeavor, a work maintenance vessel. “The sale of the vessel will reduce its inventory on-hand and is part of the ordinary course of the shipyard business,” Otto noted at the time.

06/03/2016

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