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Offshore services firm Ezra Holdings has inked a deal to sell half of its subsea services business, EMAS AMC, to Japanese oil and gas giant Chiyoda, it said on Thursday.
Chiyoda will pay US$180 million in cash for a 50 per cent stake in the unit, which values EMAS AMC at US$360 million in terms of equity, Ezra said in a Singapore Exchange filing.
Including the US$530 million of third-party net debt that EMAS AMC holds and another US$360 million in long-term funding from Ezra, the total deal value would be US$1.25 billion, Ezra added.
The stake sale involves a restructuring of EMAS AMC, which will be held under a 50:50 joint venture named EMAS Chiyoda Subsea.
Lionel Lee, group chief executive officer (CEO) and managing director of Ezra, told a briefing on Thursday at The Fairmont hotel that the deal would allow Ezra to take on larger deepwater projects in the US$1 billion to US$2 billion range.
The company is tendering for around US$9 billion worth of projects and these projects have not been postponed, he said.
Chiyoda president and CEO Shogo Shibuya said at the briefing that the firm had been looking to expand into the upstream part of the oil and gas supply chain for some time.
Ezra and Chiyoda signed the memorandum of understanding for the deal on Thursday, though it is still subject to Chiyoda's due diligence and the approval of Ezra's shareholders.
Trading in Ezra shares was halted on Thursday morning but will resume on Friday morning. The counter had climbed 7.5 per cent or S$0.008 to S$0.114 on Wednesday with 198.1 million shares traded.