Mermaid Maritime Plc

[karlmarx]

Is it likely for Mermaid to buyout its 66.24% JV partner's (Seadrill) stake in AOD, and assume responsibility AOD's US$210m debts due April 2018, if no third party buyers are to be found?

http://infopub.sgx.com/FileOpen/Mermaid_...eID=470698

[karlmarx]

After a rebound in FY16 earnings, Mermaid is close to seeing red again. The oversupplied market for subsea vessels and drilling vessels appears to have worsened, as Mermaid posted a 41% fall in revenue in 3Q17. Deferred contracts by oil majors reduced the amount of work available while new builds entered the market; intensifying the competition and lowering charter rates. Utilisation rate of subsea vessels were only 22%. The continued reduction in day rates of the drilling vessels in AOD saw profits halved to US$1.1m.

http://infopub.sgx.com/FileOpen/SGX%20Fo...eID=478241

http://infopub.sgx.com/FileOpen/3Q2017%2...eID=478250

[karlmarx]

Mermaid pays US$20m for a 49% stake in a company -- PTGC Co -- which owns lands in the capital of Cambodia.

No balance sheet or P&L information of PTGC was provided. No indication of the location of land(s) held by PTGC. No information given on the owner of PTGC, Mr. Leng Kheang.

http://infopub.sgx.com/FileOpen/Mermaid_...eID=482787

The management must feel pretty confident on the outlook of their industry to throw so much money into an unrelated business. What are the possible reasons for such a move? Looking at the CV of the CEO, I'm not so sure about their capabilities. But a little digging on their history brought up some interesting facts.

CEO of Mermaid is Chalermchai Mahagitsiri, son of Prayudh Mahagitsiri. The Mahagitsiri family also control the PM group -- known for its JV with Nestle -- as well as Thoresen Thai Agencies, a golf course, properties, and other industrials. Prayudh the industrialist was an early supporter of Thaksin Shinawatra. He entered parliament in 2001 on Thaksin's TRT party list slate; he only provided donations and didn't need to do campaigning. Shortly after the 2001 elections, Thaksin set up Thailand Asset Management Corporation (TAMC) to take away bad loans from banks. Prayudh had a copper smelting project whose development stalled due to bad debt. TAMC gave Prayudh a 15B baht haircut on the debt. A few months later, Prayudh bought a golf course which cost 1B baht and paid in cash.

At about the same time in late 2001, Thaksin's government started selling shares of state-owned enterprises. One of these was PTT -- Thailand's state-owned oil and gas company -- which you may recognise as a petrol retailer in your travels to Thailand. Prayudh and his wife secured 3.6m out of 920m PTT shares placed at 35baht/share. While the percentage of shares placed to Prayudh is small, he and his wife were the second largest recipients. Up till 2004, Prayudh spent up to 500m baht in the IPO of these state-owned enterprises. While the amount is small to his net worth, there was public anger directed towards Thaksin and his close associates which benefited from such crony arrangements. By the way, the ex-CEO of PTT -- Prasert Bunsumpun -- currently sits on the board of Mermaid and Thoresen Thai Agencies as non-exec chairman.

In 2007, Numerous TRT MPs such as Prayudh were banned from politics for 5 years following the judiciary and military's move to oust Thaksin. The people who put Thaksin and his allies out of power are still firmly in charge. The extent that this shift in politics has on Prayudh's business interest -- such as Mermaid -- is something worth looking into.