Thai offshore vessel player Mermaid Maritime has proposed a SGD 5.5m ($4.1m) rights issue after revealing that 2020 was the third consecutive year it operated at a loss.
The company, which is listed in both Singapore and Bangkok, said on Friday that it proposed a non-renounceable, non-underwritten rights issue with warrants for 70.6m new ordinary shares.
The issue would increase its share capital to just over 1.48bn shares.
While the company said it wanted the cash for working capital needs, Mermaid stressed that it was not running out of money.
“The directors are of the opinion that, after taking into consideration the group's present bank facilities, the working capital available to the group is sufficient to meet its present requirements,” the company said in an SGX announcement.
Mermaid will need to obtain approval from its shareholders during its next annual general meeting, as well as from the two exchanges it is listed on.
The company revealed in its 2020 full-year financial statements on Friday that it had finished the year with cash, cash equivalents and current investments of $47.5m, in addition to $35.3 in trade and other account receivables.
At the same time, it had current liabilities totalling $36.7m, with $13.6m in interest-bearing debt maturing in 2021.
During 2020, Mermaid recorded a net loss of $109.6m on revenues of $84.2m. In 2019, it made a loss of $24.2m on revenues of $107.7m.
It attributed 2020's losses to dry dockings of three of its seven subsea support vessels, and a $61.8m write-down from exiting Asia Offshore Drilling.
Bullish prospects
Mermaid went to some length to assure confidence in its future prospects during an investor briefing, noting that it has a two-year forward orderbook worth $190m, 99% of which is based in the Middle East.
The company said its cable-laying division would be the single biggest driver towards a business turnaround in the short term, and claimed its forward book vindicated that position. The sector currently accounts for $41m of the forward book.
“No other business can offer us this sort of return on capital expenditure, and the upfront costs are low," the company said. "Mermaid is good at cable laying, and we now have the right personnel in place to offer a decent backlog. Moreover, 2021, 2022 and 2023 look good in the Middle East.
“Furthermore, we now have some small awards in Asia against which we can build momentum.”
In the subsea sector, the company said service providers, although shaken by the Covid-19 pandemic in the short term, continued to be positive on a longer-term basis.
Mermaid said Saudi Arabia and Qatar were planning to spend upwards of $467bn on various projects up to 2025, while in the West African market oil majors have allocated budgets of additional $123bn towards subsea sector.
Mermaid has three of its subsea support vessels deployed in the Middle East and two in West African waters.
“We expect to achieve higher utilisation throughout 2021 to 2023,” it said.
The company is in the process of establishing a Dubai office, which will become a hub for controlling its cable-laying and subsea activities in the Middle East and West Africa.
