UMW said in a stock market announcement that it will also make impairments for its non-O&G assets among moves to completely exit the sector.
The amount to be impaired will be disclosed in its final-quarter results for 2016.
“In pursuing the divestment of the non-listed O&G assets, UMW will undertake an impairment. The quantum has yet to be determined,” said UMW president and group ceo Badrul Feisal Abdul Rahim.
UMW’s exit from the O&G sector is through a series of corporate moves, includes a dividend in specie and a capital injection estimated at MYR750m ($ 168.7m) by its major shareholder Permodalan Nasional Bhd (PNB) into a new enlarged O&G outfit that will have Ekuiti Nasional (Ekuinas) as a shareholder.
Under the exercise, UMW will distribute its 55.7% stake in UMW Oil and Gas Corp (UMW-OG) to shareholders.
Following that, UMW-OG will take over Ekuinas’ 42.3% stake in Icon Offshore, triggering a mandatory general offer.
The enlarged UMW-OG unit will also acquire Orkim, a company that owns and operates clean petroleum products, for MYR472.73m in cash from Ekuinas.
The enlarged UMW-OG will then undertake a rights issue amounting to MYR1.8bn, of which part of the proceeds would go towards the purchase of Orkim.
Ekuinas chief executive Syed Yasir Arafat Syed Abdul Kadir said that the investment fund was effectively putting the money from the sale of Orkim back into the enlarged O&G outfit.
In a move that indicates PNB’s more hands-on approach in UMW-OG, the fund’s president and group CEO Abdul Rahman Ahmad has been appointed as deputy chairman of the O&G company.
With its exit from the O&G sector, UMW aims to redefine its corporate strategy, streamline its business model and reallocate its resources.
Badrul highlighted that the conglomerate was steering out of the O&G field to focus primarily on its three core businesses.
“Over the last five years, the group has been gradually exiting from approximately 10 non-listed O&G assets,” said Badrul, adding that the conglomerate planned to dispose of its stake in 12 more assets, moving forward.
In 2017 alone, UMW foresees divestments in about six or seven O&G assets.
With the completion of the corporate exercises, Ekuinas’ interest in the O&G sector will be entirely narrowed to its ownership of UMW-OG.
Upon the successful completion of the corporate exercise, UMW-OG aims to be an integrated service provider in the O&G sector, catering to industrial needs, right from the exploration to the downstream segments.
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