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ABG to retain minor stake in Great Offshore

ABG to retain minor stake in Great Offshore

Mumbai: ABG Shipyard, which earlier this month exited from a bidding war to gain control of Great Offshore, has stated its  intentions to keep its remaining shares in the offshore oilfield services company, writes the Wall Street Journal. ABG and unit Eleventh Land Developers Pvt. Ltd. sold about 3.07 million shares--or an 8.27% stake--of Great Offshore on Dec. 2. via a secondary market transaction. ABG--India's largest private shipbuilder by sales--now has only 571 shares in Great Offshore.

The transaction followed ABG's rival Bharati Shipyard Ltd. raising its price for an open offer to buy an additional stake in Great Offshore to 590 rupees ($12.6), in comparison to ABG's 520 rupees. The open offers from ABG and Bharati closed Tuesday.

"We will be holding on to the stake," Dhananjay Datar, ABG's chief financial officer, told Dow Jones Newswires by phone. "We should be able to know about the response to our open offer by Jan. 8."

Both ABG and Bharati have said previously that the winning bidder will gain key inroads into the offshore services sector catering to the oil and gas sector, which is growing both in India and overseas.

The bidding war began May 7 with Bharati acquiring a 14.89% stake in Great Offshore and later made an open offer to buy another 20%. This was followed by a counter offer from ABG and multiple upward revisions of the offer prices by both companies until ABG decided to sell most of its stake in Great Offshore.
Bharati owns a 22.48% stake in Great Offshore.

Datar said ABG currently has no plan to acquire stake in any other offshore oilfield services company. He added that ABG has outstanding shipbuilding orders of 126 billion rupees, which are to be serviced until 2014. "Globally, ships are getting decent charter rates," he said. "The global shipbuilding market looks robust. We have had no cancellations so far."

He further stated that the company is investing 16 billion rupees to build a new facility at Dahej in the western state of Gujarat. The facility will include a unit to build jackup oil rigs.

"About 85% of the facility is complete," Datar said, adding that the entire facility including a new ship lift should be ready by June. He added that ABG has no plan to raise funds and will finance the expansion from its cash reserves, currently at 10 billion rupees. The company has total debt of INR26 billion to 27 billion rupees, at 10%-10.5% interest rates, he said.

ABG has already received a $440 million order from Essar Oilfield Services Ltd., a unit of Essar Shipping Ports & Logistics Ltd., to supply two jackup oil rigs from mid-2011.  [23/12/09]