Beng Kuang Marine is to sell part of its Batam shipyard as it looks to focus on more high growth opportunities in the maritime sector.
The Singapore-listed company is selling the property to US-listed Oil States Industries for SGD 8.64m ($6.5m), it confirmed in a regulatory filing.
The land being sold amounts to 90,000 square metres and forms part of Beng Kuang Marine’s 328,956 square metre waterfront fabrication yard on the eastern side of Batam Island.
Beng Kuang Marine said the part of the yard being sold has remained underutilised since 2014 due to the downturn in the offshore oil and gas sector.
The company said it intends to use the net proceeds of the proposed transaction to repay its bank borrowings and for general working capital.
An independent valuation of Batam Shipyard earlier this year by KJPP Toto Suharto & Rekan determined its value to be around SGD 35.3m.
The term of the lease for Batam Shipyard expires on 18 April 2037, and has been fully paid in advance, with options for further lease extension of 20 years and final term of 30 years.
The buyer, which is headquartered in the UK, describes itself as a “major global provider of integrated energy systems and solutions”.
In recent years, Beng Kuang Marine has been prioritising cost-cutting, monetising fixed assets and other deleveraging initiatives.
The group’s focus has been on high-potential business segments within its core business divisions to “create new growth catalysts”.
“Capping another milestone in rationalising our fixed assets and transition towards an asset-light business model, this transaction provides an opportunity for the group to unlock value and partially monetise our shipyard property at a premium to our initial investment,” said Beng Kuang Group chief executive Yong Jiunn Run.
“The proceeds from this transaction will significantly enhance our liquidity position, strengthen our balance sheet, and further reduce our gearing as well as interest expenses.
“Building on this momentum, the Beng Kuang Group will have more financial agility to harness the opportunities in the marine and offshore industries, accelerating our turnaround strategy in 2023,” he added.
In late February 2023, Beng Kuang Group reported a 71% year-on-year increase in its interim net loss to SGD 23.8m despite revenue increasing by over 18% to SGD 30.1m.
