THE WEST AUSTRALIAN
Wednesday, 28 November 2012 09:53
A Singapore company's takeover bid for Neptune Marine Services was cleverly timed to take advantage of a revamp before its benefits were realised, Neptune shareholders have been told.
MTQ yesterday declared unconditional its offer to buy the offshore engineering company after Neptune's independent directors and an expert's report backed the bid.
The offer made last month came before Neptune returned to profitability after undergoing a severe restructure last year to avoid collapse.
"I think it's a smart offer to make an offer at this point in time," Neptune chairman Peter Wallace told his company's annual meeting.
"You take the pain up-front in the restructure and the actual benefits of that restructure don't come in until later in the piece. That restructure program will take time to deliver the returns to shareholders.
"This bid potentially could put that in MTQ's hands but it depends on the shareholders' decision."
MTQ's offer values Neptune at about $58 million and has a 15 December deadline, which may be extended.
The Singapore engineering company's offer allows for it to use its right to a 3 per cent creep if it falls short of the 90 per cent compulsory acquisition target.
MTQ already owns about 21 per cent of Neptune.
The next biggest stake of 12 per cent is controlled by Pratt family investment vehicle Thorney Holdings.
If the takeover bid falls short, shareholders have been told Neptune may need additional capital to remain competitive in servicing the oil and gas industry.
After wiping out its debts with a $65 million capital raising last year, Mr Wallace said the company would be reluctant to borrow to renew its fleet of subsea remote operation vehicles.
"The board has some aversion to debt at this stage of our growth," he said after the meeting. "We really want to retain control of our own operations, not hand it to banks to control."
MTQ chief executive Boon Wee Kuah said if his company gained control, additional funding would be considered on a case-by-case basis.
"I think we will have scope to do that within the company and certainly as shareholders we'll see what makes sense," Mr Kuah said.
He said the opportunities for oil and gas work in Australia were only valuable if they could be realised. "When you make an acquisition, there's always plenty of risk in terms of execution.
"I think if we get the opportunity we will face that head-on and try to work with management to address that."
MTQ's shareholders last week backed the takeover bid. The company said as oil and gas drilling moved to deeper waters, it was an opportune time to increase exposure to subsea activities.
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