Friday, July 16, 2010

Huge Payday For Scomi Engineering Investors And...... Scomi Group

Yeah I SAW Scomi Engineering's Special Dividend announcement. Yummy! A special dividend payment of 29.5 sen. (well to be more precise it is 23.5 sen tax exempt and 6 sen less tax of 25% or 28 sen nett)

Then something just clicked.

Aha Scomi Group.

Why? I recalled the posting on Scomi Group posted last month: Scomi Creditors Allows Scomi To Postpone Repayment Of 630 Million.

Well posted on that posting, as per Scomi Group's last reported earnings, at end March, Scomi Group had 135.191 million in cash and total debts of 1.303 billion and Scomi Group had some 630 million medium-term notes that needed to be redeemed but somehow its creditors were kind enough to allow Scomi Group postpone the payments.

630 million medium-term notes to be redeemed.

Big bucks.

And yeah, it's nice to know there are still kind creditors around. :D

Now Scomi Group, as per Scomi Engineering's 2009 Annual Report, Scomi Group owns 69.31% of Scomi Group or some 192,567,567 shares of Scomi Engineering. A 28 sen dividend from Scomi Enginerring should work out to close to 54 million! (Do correct me if I am wrong or flawed in my calculations. :D )

Now I had written on Scomi Engineering before, in Nov 2009, I posted
A Quick Look At Scomi Engineering's Quarterly Earnings.

Anyway, fast forward to present day. Scomi Engineering's last reported earnings was on May 2010:
Quarterly rpt on consolidated results for the financial period ended 31/3/2010. A quick check would show that cash balances is around some 49 million and total debts is about 225.468 million.

Now Scomi Engineering had announced earlier about its disposal of assets plans, ie the disposal of Machine Shop Business for USD101 million. See announcement here:

Sounds familiar?


And then .... what about all them postings on its recent disposals of assets?

Hmmm.... doesn't it 'suddenly' not fall nicely into the small picture?

Just posted the other day: Do You Think Scomi Marine Is Doing A Fire Sale?

Oh... gosh... that 'the other day'... was just two days ago! Oh my! How time flies so quickly.... when there is no FIFA. :D

Anyway after the disposals of assets , as per my flawed calculations, Scomi Marine should be net cash of around 486 million. The experts thinks it should be around 522 million. Ok, say I am wrong and let's use that 522 million. Ya.. the more the better. :D

Now as per the 'according to source' theme mentioned in that news article highlighted in the posting, Do You Think Scomi Marine Is Doing A Fire Sale?, Scomi Marine is speculated (they use the word 'may' :P ) to make a capital repayment.

Huhu... capital repayment.

I wonder how small Scomi Group shareholding in Scomi Marine.

Well, according to Scomi Marine's 2009 annual report, Scomi Group owns some 42.71% of Scomi Marine or 313,043,478 shares.

Hmm... 42.71% of 522 million.... is how much?

Hmm... that should be around 222 million.

But ... but.. but... I don't see Scomi Marine making a full capital repayment of 522 million... I just don't see.... lol... unless I am blind of course. LOL!

Anyway... IF Scomi Marine do make a capital repayment... ya... Scomi Group would get the bulk of the money.... how much? I dunno. It depends on the IF and HOW BIG is the capital repayment.

And this is where it all clicked in...... let me see if I can get it correct... but if I am wrong... lol... I am wrong. Don't bash me up for it. :D

Let's see.... the chain of events here....

Scomi Engineering announces disposal of asset... then .... Scomi Engineering announces NICE special dividend.

Scomi Marine announces disposal of asset... err... Scomi Marine... speculated to make capital repayment.

And oh yeah.. Scomi Group is the largest shareholder....

Oh.. Scomi creditors just recently allowed Scomi Group to postpone its loan payment due...

Hmmmm........ mmmmm...... mmmmmmmmmmmmm



How many times need I say that I am NOT a SOTONG? :P


Moolah said...

On the Star... :P

Saturday July 17, 2010
Internal revamp at Scomi
By Jagdev Singh Sidhu

AN INTERNAL restructuring is underway at the Scomi Group Bhd which will lead to the group being more focused on the areas of business it wants to concentrate on.

Part of that exercise could well see a substantial amount of cash to be raised by subsidiaries Scomi Engineering Bhd and Scomi Marine Bhd from the sale of their assets. The proceeds will then be divvied up to Scomi Group, which will use it to fund its own realignment and expansion into the Asian oil and gas sector.

It is learnt that the money that Scomi Group would receive from its main listed subsidiaries would be used to pare down its debt and restructure bonds that were issued based on the model of a bullish oil and gas industry a few years back, when the group bought some of its oil and gas assets.

That condition has long passed and it has been reported that Scomi Group aims to strengthen the operations of Scomi Oilfield Ltd, where the debt buildup of the past has seen the group encounter repayment difficulties after the recent recession in the industry.

The number of rigs drilling for oil, especially in the US, has fallen sharply and in the process forced the group to undergo a rationalisation exercise.

It has closed and scaled down some overseas operations, especially in North America, and that rationalisation exercise is reported to have saved the company US$20mil annually starting from last year.

The new direction of the group is to concentrate on a handful of key markets which include India and Brazil.

Cash it would receive from its subsidiaries would smoothen any charges it would incur this year as part and parcel of its rationalisation exercise that aims to help the group on its new business direction.

The cash - it would receive RM56.8mil from a special dividend declared by Scomi Engineering on Thursday - would boost the cash balances of the company, which stood at RM2.5mil as at the end of March.

The cash it would receive would also go towards paring down long term debts of RM453.3mil, and would put the company on a better footing to pay a dividend from its 2011 financial year onwards.

The working capital boost from the dividends it will receive from its subsidiaries would also add to the working capital required for the Scomi group to pursue new ventures abroad.

The first part of adding more cash to the balance sheet of Scomi Group came after its subsidiary Scomi Engineering Bhd, which is 69.16% owned by Scomi Group, sold its machine shop operations to Sumitomo Corp for RM327.7mil in May.

The reason for the exit of the machine shop business, which primarily supports the group’s oil and gas operations, was to allow Scomi Engineering to focus on its public transportation business and seize growth opportunities in Brazil, India, China, the Gulf Countries and Indonesia.

One report said Scomi Engineering would be preparing for more tenders for rail transportation jobs in Brazil ahead of the next World Cup in 2014.

The group also recently put its name into the hat to participate in the massive mass rapid transportation project for Kuala Lumpur.

It seems there may be an avenue for the use of monorails in the MRT project as a linkage feeder to the main lines. Although the company has not announced any plans for the money it would receive from selling the majority of its marine logistics business in Indonesia, Scomi Marine is speculated to be considering announcing a capital repayment along the likes of its sister company Scomi Engineering.

.....see next

Moolah said...

.... Scomi Marine, which is 42.75% owned by Scomi Group, has proposed to sell the majority stake in its Indonesian marine logistics business, which is led by PT Rig Tenders Indonesia TBK, to Portside Offshore Inc (POI), a company that is controlled by an Indonesian private fund, for RM550mil.

The sale will boost its cash to RM552mil, which apart from sending a portion of money to shareholders, will also allow the company the option of reinvesting a slice of that money back into its operations in Indonesia with its new joint venture partner there - the owner of a large coal mine - or to buy panamax vessels for it to transport coal from Indonesia to other power hungry countries such as India.

It is learnt that while the cash passed on to Scomi Group would be sizeable, the subsidiaries would also be able to fund its existing operations from their existing cash flow and from the cash they would keep after declaring their huge dividends.

With Scomi Engineering, its cash requirements for bids and work in Brazil and India would be based on a project financing basis.

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