Jul 18, 2011

Radiant Utama to pledge assets

Extraordinary general meeting of Shareholders of PT Radiant Utama Interinsco Tbk (RUIS) held in Jakarta, Friday, last week approved the company to pledge its assets to the financiers which will fund the acquisition of mobile offshore production unit (MOPU).
The company, in an official statement filed to Indonesia Stock Exchange today, is planning to buy MOPU from its partner, Global Process Systems (GPS) from Dubai. Previously, starting 2005, the company and GPS are having a partnership to provide the MOPU for the client, a PSC company in East Java. The project will end in 2020.
However, due to some reason, GPS offered company to buy the MOPU and company agreed to buy the assets with the value of US$35 million. The company  will fund the acquisition by the external funding.  
The company has secured loan commitment from a foreign bank and a financial institution. Therefore, due to compliance with the company article of association, the company should get approval from shareholder to pledge the MOPU to the lenders. 
The company believes the transaction will benefit the company. The company expects the net profit in 2011 and 2012 will be higher by Rp5 million and Rp12 million respectively. 
Moreover, based on the independent appraisal, the MOPU has value of US$ 70 million.  
Radiant Utama believes, acquiring the MOPU at below its market value, will significantly enhance the value to all the shareholders. 
Currently the company has no plan to conduct right issue to raise fund for the exploration of the block.  The company now funds the exploration by internal cashflow. 
Meantime, the company is still having a negotiation with strategic investor who interest with the oil & gas block. "However, we can not disclose the value and the scheme of transaction, as the due diligent is still progressing."

Disclosure: No position at the stock mentioned above.
 
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