Destini proposes to buy shipbuilder for RM90m

PETALING JAYA: Destini Bhd’s wholly-owned subsidiary Destini Armada Sdn Bhd yesterday entered into a conditional share sale agreement (SSA) with Destination Marine Services Sdn Bhd (DMS) to acquire its wholly-owned subsidiary company Everyday Success Sdn Bhd for RM90 million worth of cash and shares.

DMS had, on June 15 2015, received and accepted a letter of acceptance from the Agensi Penguatkuasaan Maritim Malaysia (APMM) for the supply, delivery, testing and commissioning of six patrol vessels for a contract period of thirty five months, at a value of RM381.30 million.

The purchase consideration is to be satisfied via a combination of cash payment of RM15 million and the remaining RM75 million to be satisfied via the issuance of 107.14 million shares of 10 sen each in Destini at the issue price of 70 sen per Destini share.

DMS will hold a 11.71% stake in Destini post the acquisition.

Everyday Success is currently dormant and the intended principal activities shall be the provision of shipbuilding and ship repair services.

DMS will inject into Everyday Success several identified/ agreed assets to enable Everyday Success to operate as a shipbuilding company. Destini will fund the cash payment of RM15 million via bank borrowings.

DMS, which is principally engaged in boat building, provision of ship repair and marine-related engineering services, agrees, undertakes and guarantees that the aggregate net profit of Everyday Success for the two financial years ending Dec 31, 2015 and Dec 31, 2016 will not be less than RM25 million.

Destini is currently involved in the marine safety and survival business activities via its subsidiary company, Vanguard Composite Engineering Pte Ltd, which manufactures life boats and davits systems and the Techno Fibre group, which provides maintenance, repair and overhaul (MRO) services on life boats, davits systems and other lifesaving equipment.

Vanguard’s factory in Nantong, China has a capacity to build about 150 boats per year. Due to the increase in demand, Vanguard plans to set up another facility in Malaysia. DMS has existing facilities to accommodate this requirement.

DMS is a manufacturer of paramilitary boats of various types and sizes of vessels. It currently operates at its fully equipped shipyard on an approximately 6-acre land located at Port Klang. Its track record includes projects awarded by the government agencies and commercial sectors not only in Malaysia but also other countries such as India, Bangladesh and Kuwait.

DMS also specialises in building small-medium size vessels, including but not limited to ferries, barges, tugs, offshore support vessels (OSV), yachts, fishing vessels and patrol crafts with vessels sizes of up to 45 metres in length, and 450 tonnes deadweight tonnage (DWT).

“The proposed acquisition represents a gateway for Destini to further increase its range of products and expand its supply of vessel segment in terms of product complexity, technology, technical knowledge and expertise by venturing into the supply, testing and commissioning of paramilitary boats and its related MRO services to a different market segment.

The proposed acquisition is subject to approvals being obtained from Bursa Securities and the shareholders of Destini at an EGM to be convened.

The proposed acquisition is expected to be completed by the fourth quarter of 2015.

Source : The Sun Daily