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06-01-2011, 08:12 AM
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Business Times - 06 Jan 2011
Sinwa acquires 70% of Rapid Offshore & Marine
Acquisition set to add heft to Sinwa's earnings by Q2
By JOYCE HOOI
MARINE supply and logistics firm Sinwa Limited may not have had the best of luck with partnerships, but it is upbeat that its latest deal will be a winner.
Yesterday, Sinwa announced an acquisition of a 70 per cent stake in Rapid Offshore & Marine through a mix of shares and cash. The maximum consideration, based on 70 per cent of a P/E ratio of 3.5 times of specified audited net profits, is $12.25 million.
Rapid is a heating, ventilation, air-conditioning and refrigeration (HVAC&R) firm that services the offshore and marine industry. To date, it is said to have completed HVAC&R systems for more than 20 per cent of the global floating production, storage and offloading (FPSO) vessel fleet.
The acquisition is expected to start adding heft to Sinwa's earnings by Q2 this year.
The deal, expected to be finalised by March 1, will be carried out in two tranches. The first tranche of $7.35 million will be paid in equal parts cash and new Sinwa shares.
The remainder - also equal parts cash and new Sinwa shares - will be paid in a second tranche after the audited accounts of FY2011.
The deal also comes with a put option for Rapid's chairman and chief executive officer - Jeffrey Choo - to sell the remaining 30 per cent of Rapid to Sinwa. Sinwa, conversely, has a call option to buy that stake, but no price has been set for either option. The options are to be exercised within six months from the end of 2014.
The acquisition was set in motion by a chance meeting between Mr Choo and Mike Sim - Sinwa's executive chairman and chief executive officer - at a shipping conference in London in September last year.
'We met by accident in Kensington Town Hall at a shipping conference and we decided that there is this fantastic synergy,' said Mr Sim.
According to Mr Sim, Rapid will give Sinwa an engineering edge in China and Western Australia where the latter is established.
Rapid, in turn, will be able to gain a foothold in these markets.
'(Sinwa) has a database of owners which we can immediately access. For geographical expansion, we can immediately become operational in two countries - China and Australia in the very near future,' said T K Naga, Rapid's director.
Sinwa's previous partnerships have not gone as swimmingly as hoped, what with the cancellation of a 50-50 joint venture with Nordic International to build a barge and a deal to sell a stake in Sinwa to Sinohit Offshore Engineering falling through.
Nonetheless, Mr Sim sees a turnaround in fortunes for the industry, at least. 'I think we have seen the worst of the shipping recession. We noticed that our customers - the shipowners - are beginning to build new ships, so that's very good indication of their confidence in the rebounding of the market,' he said.
Business Times - 06 Jan 2011
Sinwa acquires 70% of Rapid Offshore & Marine
Acquisition set to add heft to Sinwa's earnings by Q2
By JOYCE HOOI
MARINE supply and logistics firm Sinwa Limited may not have had the best of luck with partnerships, but it is upbeat that its latest deal will be a winner.
Yesterday, Sinwa announced an acquisition of a 70 per cent stake in Rapid Offshore & Marine through a mix of shares and cash. The maximum consideration, based on 70 per cent of a P/E ratio of 3.5 times of specified audited net profits, is $12.25 million.
Rapid is a heating, ventilation, air-conditioning and refrigeration (HVAC&R) firm that services the offshore and marine industry. To date, it is said to have completed HVAC&R systems for more than 20 per cent of the global floating production, storage and offloading (FPSO) vessel fleet.
The acquisition is expected to start adding heft to Sinwa's earnings by Q2 this year.
The deal, expected to be finalised by March 1, will be carried out in two tranches. The first tranche of $7.35 million will be paid in equal parts cash and new Sinwa shares.
The remainder - also equal parts cash and new Sinwa shares - will be paid in a second tranche after the audited accounts of FY2011.
The deal also comes with a put option for Rapid's chairman and chief executive officer - Jeffrey Choo - to sell the remaining 30 per cent of Rapid to Sinwa. Sinwa, conversely, has a call option to buy that stake, but no price has been set for either option. The options are to be exercised within six months from the end of 2014.
The acquisition was set in motion by a chance meeting between Mr Choo and Mike Sim - Sinwa's executive chairman and chief executive officer - at a shipping conference in London in September last year.
'We met by accident in Kensington Town Hall at a shipping conference and we decided that there is this fantastic synergy,' said Mr Sim.
According to Mr Sim, Rapid will give Sinwa an engineering edge in China and Western Australia where the latter is established.
Rapid, in turn, will be able to gain a foothold in these markets.
'(Sinwa) has a database of owners which we can immediately access. For geographical expansion, we can immediately become operational in two countries - China and Australia in the very near future,' said T K Naga, Rapid's director.
Sinwa's previous partnerships have not gone as swimmingly as hoped, what with the cancellation of a 50-50 joint venture with Nordic International to build a barge and a deal to sell a stake in Sinwa to Sinohit Offshore Engineering falling through.
Nonetheless, Mr Sim sees a turnaround in fortunes for the industry, at least. 'I think we have seen the worst of the shipping recession. We noticed that our customers - the shipowners - are beginning to build new ships, so that's very good indication of their confidence in the rebounding of the market,' he said.
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