1. INTRODUCTION
The Board of Directors of TAS Offshore Berhad (TAS) wishes to announce that its wholly owned subsidiary TA Ventures (L) Ltd had on 19 September2014 entered into a Joint Venture Agreement (JV) with Chan Baihang to build and sell offshore support vessels.
2. DETAILS OF THE JOINT VENTURE
TA Ventures (L) Ltd had entered into a Joint Venture Agreement with Chan Baihang for the construction of offshore support vessels in China for sale, whereby Chan Baihang will make financial contribution of forty percent (40%) towards the respective payments due under the building contracts for the vessels whereas TA Ventures (L) will contribute the remaining sixty percent (60%) thereto.
The proceeds from sale of these vessels after making payments to the Shipyard in China per building contract and the incidental related expenses, will be distributed in the ratio of sixty percent (60%) to TA VENTURES (L) Ltd and forty percent (40%) to Chan Baihang.
3. INFORMATION ON CHAN BAIHANG
Chan Baihang, a businessman hails from Guangdong, China, is involved in numerous businesses. He owns transportation companies, construction firm, and is also involves with both chartering and building for sale of offshore vessels.
4 ESTIMATED TOTAL COST OF PROJECT
The estimated total cost of the Joint Venture is around Ringgit Malaysia One Hundred and Twenty Two million.
5. RATIONALE FOR THE JOINT VENTURE
TAS Group is involved with built to stock operation. This operation is capital intensive and the Joint Venture will enable TAS Group to move faster in this direction and at the same time minimise the risk exposure to this operation.
6. PROSPECTS OF THE JV
Built-to stock operation results in shorter delivery period for the prospective buyers. The JV will enable TAS to move further and faster in this operation mode. The vessels concerned are in demand by the oil and gas industry and thus, we foresee a good prospect for this JV.
7. RISK FACTOR
The Directors do not foresee any extraordinary or material risk factors pertaining to the JV, save for the business/operating risks normally associated with the shipbuilding industry.
8. EFFECTS OF THE JV
8.1 Share Capital and substantial shareholders’ shareholdings
The JV will not have any effect on the issued and paid-up share capital of TAS as well as the substantial shareholders’ shareholdings in TAS.
8.2 Earnings and earnings per share
The JV is expected to contribute positively to TAS's earnings for the financial years ending 31 May 2015 and 2016.
8.3 Net assets and Gearing
The JV is not expected to have any material effect on the net assets per share and gearing of TAS for the financial year ending 31 May 2015.
9. APPROVALS REQUIRED
The JV is not subject to the approval of shareholders of TAS nor any relevant authorities.
10. DIRECTORS AND MAJOR SHAREHOLDERS’ INTEREST AND PERSONS CONNECTED TO DIRECTORS AND MAJOR SHAREHOLDERS
None of the directors, major shareholders or persons connected with them has any interest, direct or indirect, in the Joint Venture.
11. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the JV is expected to be completed by the end of 2016.
12. BOARD OF DIRECTORS STATEMENT
Having considered the rationale and all other aspects of the JV, the Board of Directors of TAS is of the opinion that the JV is in the best interest of TAS.
This announcement is dated 22 September 2014.