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Thursday, May 15, 2014

PDZ buys 20% equity interest in Efogen for RM18m (Edge)

PDZ Holdings Bhd intends to buy a 20% equity interest in offshore vessel operator Efogen Sdn Bhd for RM18 million cash.

PDZ entered into a conditional share acquisition agreement to purchase four million shares from Johany Jaafar, the founder, managing director and chief executive officer of Efogen.

Johany's shareholding will be reduced to 20% after the share sale. Businessman Tan Sri Abdul Rashid Abdul Manaf, a former legal adviser to Tun Daim Zainuddin, holds the remaining 60% stake.

As part of the agreement, Johany has guaranteed that Efogen's consolidated net operating profit after tax and minority interest would not be less than RM11.74 million for the financial year ending April 30, 2015 (FY15).

Efogen posted audited profit after taxation and minority interest (Patami) of RM5.2 million for FY13 and unaudited Patami for a 10-month financial period ended (FPE) Feb 28 of RM4 million.

In the event of a shortfall, Johany as the vendor to the proposed sale is under obligation to indemnify PDZ for the amount.

The filings with the Companies Commission of Malaysia reveal that Efogen's balance sheet for FY13 had borrowings of RM125 million, including long-term debt of RM86.24 million. This represents a gearing ratio of 3.89 times. 

Efogen is principally involved in the chartering of vessels for oil and gas offshore support services.

PDZ said the acquisition represented the first step towards its plans to grow its present core business in the container liner, shipping and shipping management services and providing offshore supply vessel services to the oil and gas industries.

Interestingly, the share purchase came on the heels of Pelaburan Mara Bhd (PMB) acquiring a 30% stake in PDZ less than a month ago. PMB bought part of its shareholdings from former majority shareholder, Tan Sri Robert Tan Hua Choon.

Rumours first surfaced earlier in the year that Efogen was keen on undertaking a reverse takeover exercise in PDZ. However, it was learnt that the deal hit a snag amid concerns that the regulators may not grant the green light considering Efogen's financials.

This article first appeared in The Edge Financial Daily, on May 15, 2014.

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