Manhattan Resources unit to sell two-thirds of vessel fleet for 170.6b rupiah

Singapore

A WHOLLY owned subsidiary of Manhattan Resources is selling two-thirds of its vessel fleet to PT Karunia Samudera Lines of Indonesia for 170.6 billion rupiah (S$18 million) in cash, according to an announcement on Tuesday after the market closed.

Manhattan, a coal and oil and gas contractor, said that the 22 tugs and 22 barges incurred a net loss of S$2 million in the half-year ended June 30, 2016. Manhattan will use the net proceeds from the sale of the loss-making assets for general purposes and working capital as it shifts towards power plant and property businesses in China.

"The disposal of the vessels will result in the disposal of a substantial portion of a loss-making business segment at a premium to their book value, improve the balance sheet of the group and hence enable it to conserve its resources," Manhattan announced.

The purchase consideration matches an independent valuation of the vessels, and represents a premium of about 60 per cent to the vessels' S$10.7 million book value as at June 30, 2016. If the sale is completed, Manhattan expects to recognise a S$7.3 million gain on disposal.

Manhattan's net loss widened to S$24.4 million in 2015 from a S$5.9 million net loss in 2014. Revenue halved to S$8.7 million from S$17.0 million over the same period as coal carrying activities slowed down.

The company said that unfavourable weather conditions have affected coal transportation volumes, while major Indonesian thermal coal producers show no signs of slowing output even as the outlook for overall coal demand remains uncertain.

The company plans to devote its resources towards building and operating coal-fired steam power plants, selling electric power and developing property in China. It will also be trying to find new business opportunities.

The transaction is targeted for completion after Dec 7.