Beng Kuang Marine to sell 31% of shipyard property for S$9.9 million
Samuel Oh
MAINBOARD-LISTED Beng Kuang Marine will sell 100,970 square metres (sq m) of land in its Batam shipyard property for S$9.9 million, it said on Friday (Jun 23).
This partial sale amounts to around a third, or 31 per cent, of the company’s 328,956 sq m waterfront fabrication yard land that it holds in Kabil, on the eastern side of Batam island. The sale price is also 68 per cent of Beng Kuang Marine’s market capitalisation of S$14.5 million.
The buyer is Bukit Batu Mulia, a company which is 51 per cent-owned by Summit Excellent Enterprises and 49 per cent-owned by George Santos, the founder and owner of the Indonesian Solid Group.
This is the second sales agreement inked for the shipyard property. In April, the company sold 30 per cent or 90,000 sq m of its shipyard property to a subsidiary of Oil States International, a major provider of integrated energy systems and solutions, for S$8.64 million.
Beng Kuang Marine said Summit Excellent Enterprises is closely affiliated with the Nanshan Group from China. The group is in the business of aluminium processing, fabric and garment manufacturing and processing, real estate, finance, scientific research, education, tourism and health preservation.
Indonesian Solid Group has business activities in mining, shipping, construction, concrete batching, asphalt and stone quarry.
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Following the completion of both transactions, Beng Kuang Marine would have a balance of 137,986 sq m of its shipyard land remaining, while the lease term for its Batam shipyard expires on Apr 18, 2037.
The group will use up to S$5 million of the net proceeds from the sale to repay its bank and other borrowings. The remainder will be used for general working capital purposes.
The land sale will also help the group reap substantial interest savings and lower depreciation expenses, as the company adopts an asset-light strategy, said Beng Kuang Marine.
The company added that the shipyard has been underutilised since FY2014 due to the downturn in the offshore oil and gas sector, and this proposed transaction would present opportunities for the company to “realise the value of Batam shipyard at a reasonable premium to its investment costs”.
Beng Kuang Marine’s chief executive Yong Jiunn Run said cash proceeds from both sale transactions would help to boost its liquidity resources and allow the company to “stay nimble and agile in navigating through the current rising interest-rate environment”.
He added that the sale proceeds will allow the company to pursue high-growth opportunities in its infrastructure engineering and corrosion prevention business segments.
Beng Kuang Marine’s shares were trading 9.6 per cent or S$0.007 higher at S$0.08 as at 11.24 am on Monday. The counter had resumed trading following a halt called on Jun 21.
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