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MISC to buy back 50% interest in Gumusut-Kakap semi-FPS

MISC to buy back 50% interest in Gumusut-Kakap semi-FPS
MISC is paying $445m to buy back the 50% equity interest in Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL) that it sold to Petronas Carigali's unit E&P Venture Solutions Co at cost in December 2012 for $305.7m, the company said in a stock market release.

MISC will pay cash to take back full control of the owner and lessor of the deepwater semi-submersible floating production system (semi-FPS), which the group explained it had relinquished to strengthen its financial position at the time.

MISC noted that the monetisation of GKL enabled the company to pare down its debt and improve its liquidity and cash position, which has since improved significantly.

As at 31 December 2015, the company’s gearing level stood at 0.18 times. As such, MISC said, it would be able to undertake the proposed acquisition without impacting its gearing much, with the debt position increasing from 0.18 times to 0.30 times.

“The proposed acquisition represents a good opportunity for MISC to fully own an asset that is under a long-term lease with a strong client, which is a subsidiary of an international oil and gas company,” MISC said. After gaining full control, MISC would be able to fully consolidate its future earnings as GKL becomes its wholly-owned subsidiary

It noted that the Gumusut-Kakap semi-FPS was on a lease that would expire in 2039, 25 years from the start of commercial production in October 2014.

“The increase in stable and recurring revenue contribution to MISC will further strengthen the financial position of the MISC group,” it added.The proposed acquisition is expected to be completed in the second quarter of 2016.