HAL Offshore to demerge Marine, EPC and other ancillary business into Seamec Limited

The Board of Directors of SEAMEC Ltd in its meeting held on March 28, 2022 has considered and approved, the draft scheme of arrangement for de-merger of Marine, EPC and other ancillary business of HAL Offshore Limited (HAL) into Seamec Limited.

The Demerged Company / HAL Offshore is a leading 'End to End' Solution Provider of Underwater Services and EPC Services to the Indian Oil and Gas Industry. The Company is also engaged in Charter Hire of Diving Support Vessels (DSV) to the Mumbai High area undertaking diving, firefighting, material support, accommodation, crane, helipad, operation and maintenance of ONGC Vessels, painting of offshore platforms and other ancillary activities. Over the years, HAL Offshore has developed a diversified portfolio for undertaking turnkey projects involving sub-sea and marine services. Further, the Company is also a leading Indian EPC (Engineering, Procurement and Construction) Company, primarily serving the Oil and Gas Sector. For over a decade, HAL Offshore has executed Greenfield and Brownfield Projects for ONGC Ltd and Oil India Ltd. The projects are executed on LSTK (lumpsum turnkey) basis involving design, engineering, procurement, fabrication, transportation, hook-up, testing, certification / inspection, pre-commissioning, start-up, commissioning and long-term operation & maintenance of executed projects. Projects executed include Gas Gathering Stations, Gas Compression Stations, Oil Processing Facilities, Alkaline Surfactant Polymer Injection Facilities, Effluent Treatment Plants, Water Injection Plants at various assets of ONGC Ltd and Oil India Ltd. The Demerged Company has also made investments in real estate, shares and other securities. Over the years, the Company has built up an impressive portfolio of securities investments. Hence, the Demerged Company has two distinct business verticals-Marine & EPC Business; and Investment Business.

The Resulting Company / Seamec is one of the largest providers of Diving Support Vessels in the Asia Pacific Region having a Fleet of Four Diving Support Vessels, One Barge and One Handy Max Bulk Carrier. The Company has unrivalled experience in the ongoing sub-sea inspection, repair, maintenance and light construction, required for the efficient and productive support of offshore oil production which are carried out by its diving support vessels in India and Overseas. Seamec, historically, has made its presence felt in Middle East, Southeast Asia, West Africa and Gulf of Mexico in the areas of execution of many underwater diving projects with Oil Companies and Contractors across the Globe. In India, Seamec has the reputation of prominent provider of diving support vessels. Seamec's Vessels are ISPS Certified and follow the best practices. They are equipped with pollution prevention equipments which are certified by Indian Certification Authorities. The Company owns one no. of Bulk Carrier while its subsidiaries in UAE owns three no. of Bulk Carriers. The above fleet are operated in worldwide trading. The Resulting Company has also set up a subsidiary for the purpose of undertaking EPC Construction and Turnkey Tunnel Projects, a new line of business.

The Resulting Company is a subsidiary of the Demerged Company. The proposed demerger of Marine, EPC and other ancillary business of HAL Offshore Ltd into Seamec Ltd would result in business synergy, consolidation of entire marine and vessel charter business of both the Companies into the Listed Resulting Company, pooling of the resources of these Companies and would enable the Resulting Company to diversify into lucrative EPC Business.

As mentioned above, the Demerged Company is engaged in the business of charter hire of diving and utility vessels operating in Offshore oilfield along with Offshore and Onshore turnkey projects as EPC Contractor. Whereas the Resulting Company is primarily engaged in chartering and operation of diving support and utility vessels and barge operating in offshore oilfield. The Management has decided to consolidate the vessel charter and other related business of both these Companies into the Resulting Company. In addition, EPC and other ancillary business of the Demerged Company will also be vested into the Resulting Company.

The proposed De-merger will enable the listed Resulting Company to attain healthy economic state encompassed with higher turnovers and better margins. The Scheme will enable the Resulting Company to build up portfolio of several related business activities / services having better growth opportunities. It will also act as a hedging strategy against the business uncertainties with diversified portfolio of services.

It will impart better management focus, will facilitate administrative convenience and will ensure optimum utilization of manpower and various other resources by these Companies.

The proposed De-merger will provide scope for independent expansion of various businesses. It will strengthen, consolidate and stabilize the business of these Companies and will facilitate further expansion and growth of their business.

Shareholders of the listed Resulting Company are expected to have better prospects with regard to return and appreciation on their investments in the Resulting Company. Post Scheme, the Resulting Company will be able to augment its resources at better terms.

The proposed De-merger will have beneficial impact on the Demerged Company and the Resulting Company, their employees, shareholders and other stakeholders and all concerned.

With a view to achieve greater management focus and keeping in mind the paramount and overall interest of the shareholders, the Board of Directors of the Demerged Company and the Resulting Company considered that a Scheme of Arrangement for De-merger would be the most appropriate methodology.

The Scheme of Arrangement is proposed for the aforesaid reasons. The Board of Directors of the Demerged Company and the Resulting Company is of the opinion that the proposed Scheme is in the best interest of these Companies, their Shareholders and other stakeholders.

The authorised share capital of the demerged company is Rs. 25,00,00,000 divided into 2,50,00,000 Equity Shares of Rs.10 each. The issued, subscribed and paid-up equity share capital of the demerged company is Rs. 14,87,37,800 divided into 1,48,73,780 equity shares of Rs. 10 each.

The authorised share capital of the resulting company is Rs. 50,00,00,000 divided into 5,00,00,000 Equity Shares of Rs. 10 each. The issued, subscribed and paid-up equity capital of the resulting company is Rs. 25,42,50,000 divided into 2,54,25,000 equity shares of Rs.10 each.

The Resulting Company will issue 20.17 (twenty point one seven) Equity Shares of no each, credited as fully paid up, to the Equity Shareholders of the Demerged Company for every 100 (one hundred) Equity Shares of no each held in the Demerged Company-HAL Offshore Ltd.

Further, the Resulting Company will also issue 33.76 (thirty three point seven six) Optionally Convertible Preference Shares of no each, credited as fully paid up, to the Equity Shareholders of the Demerged Company for every 100 (one hundred) Equity Shares of no each held in the Demerged Company-HAL Offshore Ltd.

Subject to the conditions, each OCPS will be entitled to be converted into one Equity Share of no each, credited as fully paid-up, of the Resulting Company before the expiry of 18 months from the date of allotment of such OCPS (Conversion Exercise Period), at the option of such OCPS Holders. Accordingly, OCPS Holders can exercise option for conversion of OCPS into Equity Shares of the Resulting Company, in one or more tranches, by giving not less than 30 days' notice to the Resulting Company before the expiry of the Conversion Exercise Period of 18 months from the date of allotment of such OCPS subject to the conditions / restrictions.

OCPS will be redeemed at a Redemption Price of Rs. 1,177 per share (face value of Rs. 10 and Redemption Premium of Rs. 1,167, per share). Such redemption premium shall be compounded at the rate of 9% per annum from the end of the Conversion Exercise Period till the date of redemption.

Shares of Seamec Limited was last trading in BSE at Rs. 1355.45 as compared to the previous close of Rs. 1196.10. The total number of shares traded during the day was 9264 in over 1287 trades.

The stock hit an intraday high of Rs. 1371.00 and intraday low of 1207.95. The net turnover during the day was Rs. 12355492.00.

Source : Equity Bulls

Keywords

Seamec INE497B01018 HALOffshore Demerger Marine EPC AncillaryBusiness