Tuesday, 16 December 2014

Mainly Ananda Krishnan owned Bumi Armada to be taken private again?

PETALING JAYA: Bumi Armada Bhd’s tumbling share price and the sudden departure of its chief executive officer on Dec 5 is fuelling talk that the company could be taken private again. 

The oil and gas services company’s main shareholder T Ananda Krishnan has a track record of de-listing companies when times are bad and taking it back to the market when conditions and valuations improve.

Ananda’s chief corporate lieutenant Ralph Marshall declined to comment on the matter when contacted by StarBiz.
“Sorry, I cannot comment. I don’t know anything about Bumi Armada,” he said.

But the prospect of a fresh corporate exercise is keeping its share price afloat above the RM1 level.
Maybank IB Research, in a recent report, did not rule out a potential privatisation for the stock, as it was trading at around one time book value.

Operationally, it said it liked Bumi Armada’s floating production, storage and offloading (FPSO) business model in light of the current weak/volatile oil market environment while valuation-wise, it was inexpensive to growth.

Another analyst agreed that the company’s fundamentals were doing well and that he also would not be surprised by a move to privatise the company.
“There is value in it, just that the share price is down for now,” he said.
Ananda had previously delisted and relisted companies under his stable including Astro Malaysia Holdings Bhd, Maxis Bhd and Bumi Armada.
“It has happened before and I don’t think anyone will be surprised if it happens again,” said an analyst, who declined to be quoted.
She noted that the company’s fundamentals seemed to be intact, with the recent hit to its share price most likely to be due to poor market conditions.

She said that Bumi Armada had a strong order book with quite a lot of new contracts as well as work-in-progress contracts.
“Everyone knows the earnings will not be immediate but the fundamentals are quite sound. Beside this, FPSO contracts are quite resilient,” she said.

She said another factor that could have affected the stock was CEO Hassan Basma’s resignation.

“We have also seen supposedly substantial shareholders actively selling over the past few months. But again, they seem to be nibbling back their stake,” she observed.

One of Bumi Armada’s shareholders, Ombak Damai Sdn Bhd, had a 7.17% stake on Sept 9 after disposing of 15 million Bumi Armada shares. It continued to pare its stake down to 6.97% in October via three transactions on Oct 1, 3, and 7 that saw it dispose of a total of 297,500 shares.

However, it then bought back some shares on Oct 9, raising its stake to 7.07% currently.

Bumi Armada was taken private by Ananda in 2003. The company, however, was re-listed on Bursa Malaysia in 2011 at an initial public offer price of RM3.03. The stock was last traded at RM1.01 yesterday.

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