DAYA MATERIALS BERHAD (DMB OR COMPANY)

PROPOSED ACQUISITION OF A VESSEL KNOWN AS SIEM DAYA 1 FOR A PURCHASE

CONSIDERATION OF USD120.0 MILLION
For the purpose of this announcement, the middle rate as published/made available by Bank Negara Malaysia (BNM)
at 5.00 p.m. on 23 April 2015 of USD1.00: RM3.6265 is used, unless otherwise indicated.

1.

INTRODUCTION
On 9 December 2014, the shareholders of DMB had at an extraordinary general meeting (EGM),
approved, amongst others, the following:
(i)

proposed acquisition of a dynamic positioning class 2 (DP2) offshore subsea construction

vessel known as Siem Daya 1 (SD1) from Siem Offshore Rederi AS (SORA) for cash
consideration of USD140.0 million (Proposed SD1 Acquisition);

(ii)

proposed acquisition of a second DP2 offshore subsea construction vessel known as Siem
Daya 2 (SD2) from SORA for a cash consideration of USD140.0 million (Proposed SD2
Acquisition) and an additional USD2.3 million for a 50 metric tonnes active heave
compensation 3,000 metres crane (Crane);

(iii)

proposed private placement of up to 25% of the issued and paid-up share capital of DMB,
representing up to new 347,204,100 ordinary shares of RM0.10 each in DMB (DMB
Shares) (Placement); and

(iv)

proposed renounceable rights issue of new DMB Shares together with free detachable
warrants (Warrants) to raise gross proceeds of up to RM230.0 million before the exercise
of Warrants (Proposed Rights Issue).

In view of the prevailing market conditions and oil prices, the Company now wishes to proceed with
the Proposed SD1 Acquisition only and to terminate the Proposed SD2 Acquisition. The Company
has also re-negotiated with SORA in relation to the Proposed SD1 Acquisition. On behalf of the
Board of Directors of DMB (Board), Hong Leong Investment Bank Berhad (HLIB) wishes to
announce that, on 24 April 2015, DMB had entered into the following with SORA:
(i)

a third addendum to amend certain terms and conditions as set out in the Memorandum of
Agreement in respect of the Proposed SD1 Acquisition dated 22 August 2014 (as amended
by the addendum dated 19 January 2015 (First Addendum) and second addendum dated
19 April 2015) (Second Addendum) (Third Addendum).
The Memorandum of Agreement as supplemented by First Addendum, Second Addendum
and Third Addendum is collectively referred to as the SD1 MOA; and

(ii)

a third addendum to terminate the Memorandum of Agreement in respect of the Proposed

SD2 Acquisition dated 22 August 2014 (as amended by the addendum dated 19 January
2015 and second addendum dated 19 April 2015) (SD2 MOA) with effect from 24 April
2015 with no liabilities or costs to either party.

HLIB also wishes to announce that the Company will not proceed with the Proposed SD2 Acquisition
and Proposed Rights Issue. However, the Company intends to place out the remaining portion of the
ordinary shares pursuant to the Placement.
On 24 April 2015, Bursa Malaysia Securities Berhad (Bursa Securities), had via its letter dated 24
April 2015, resolved to approve the extension of time of six (6) months to 25 October 2015 for the
implementation of the Placement.
Corresponding details of the Proposed SD1 Acquisition are set out in the ensuing sections of this
announcement.

2.

PROPOSED SD1 ACQUISITION

2.1

Details of the Proposed SD1 Acquisition

DMB had on 22 August 2014 entered into the SD1 MOA with SORA in respect of the Proposed SD1
Acquisition. On 19 January 2015, DMB had entered into the First Addendum to amend certain terms
and conditions set out in the SD1 MOA. On 19 April 2015, DMB had entered into the Second
Addendum to further amend certain terms and conditions set out in SD1 MOA.
DMB had on 24 April 2015 entered into the Third Addendum. Pursuant to the Third Addendum,
amongst others, the consideration for the Proposed SD1 Acquisition shall be revised to USD120.0
million (equivalent to approximately RM435.2 million) (Revised SD1 Consideration) to be satisfied
in the following manner:
(i)

cash consideration of USD90.0 million (equivalent to approximately RM326.4 million) (SD1

Cash Consideration); and

(ii)

issuance of such amount of RM denominated four (4)-year redeemable convertible secured

bonds equivalent to USD30.0 million nominal value (Bonds) (based on the closing middle
exchange rate as quoted by BNM on the business day prior to the issuance of the issue
request (Amount-Fixing Date) as consideration for the remaining Revised SD1
Consideration, whereby in any event, the nominal value of the Bonds issued shall not
exceed RM126.0 million. In the event such exchange rate results in an amount higher than
RM126.0 million, the difference between the issue amount and USD30.0 million shall be
paid by DMB in cash.

The Revised SD1 Consideration is not intended to be settled on a deferred basis. The salient terms
of the SD1 MOA are set out in Section 2.2 of this announcement.
SD1 is currently chartered by SORA to a subsidiary of DMB. Subsequently, SD1 was chartered on a
long-term charter basis (Charter Party Contract) to Technip Norge AS (Technip) in the North
Sea and North Atlantic regions. SD1 shall be acquired free from all competing rights, encumbrances
and other third party rights. Please refer to Appendix I of this announcement for further information
on SD1.
For further information on the risk factors in relation to the Proposed SD1 Acquisition and the
prospects of the Malaysian economy, oil and gas industry and SD1, please refer to the circular to
shareholders of DMB dated 17 November 2014.
2.2

Salient terms of SD1 MOA

(i)

DMB shall pay the balance of the deposit amounting to USD8,600,000 (equivalent to
approximately RM31.2 million) (Balance SD1 Deposit) by 30 June 2015 and that the
Balance SD1 Deposit shall be held in an interest bearing account;
The partial deposit of USD0.7 million (equivalent to approximately RM2.5 million) paid and
monies previously paid in respect of SD2 pursuant to the SD2 MOA, amounting to USD0.7
million (equivalent to approximately RM2.5 million), shall be utilised for the purpose of
payment of Balance SD1 Deposit.

(ii)

DMB shall pay the Revised SD1 Consideration by way of cash consideration amounting to
USD90.0 million (equivalent to approximately RM326.4 million) and the issuance of such
amount of RM denominated Bonds equivalent to USD30.0 million nominal value (based on
the closing middle exchange rate as quoted by BNM on the Amount-Fixing Date as
consideration for the remaining Revised SD1 Consideration, whereby in any event, the
nominal value of the Bonds issued shall not exceed RM126.0 million. In the event such
exchange rate results in an amount higher than RM126.0 million, the difference between the
issue amount and USD30.0 million shall be paid by DMB in cash.

(iii)

The Bonds shall also be secured by a second priority charge/mortgage in respect of SD1.

(iv)

SORA shall be entitled to a profit share equivalent to 60% of DMBs profit after tax from
operations of SD1, subject to the cumulative profit share amount of not exceeding USD10.0
million (equivalent to approximately RM36.3 million) (Cumulative Profit Share). For the
purposes of calculating profit in case of a sale of SD1, any sales proceeds in excess of the
net selling price less the book value less brokerage fees and other directly related costs
arising from the sale of the Vessel shall be considered as profit. DMB and SORA shall enter
into a profit sharing agreement (PSA). SORA shall have a five (5)-year call option to
purchase SD1 at the purchase price of USD120.0 million less any depreciation expenses
but including interest costs and any profit share payment made. When the Cumulative Profit
Share is paid in full, the option to purchase shall automatically lapse. In the event this option
is exercised, SORA shall take over all rights and liabilities of related contracts to SD1 and
SD2 as existing at the time of the option is exercised. Further, in the event SORA exercises
this option, the said purchase price to be paid shall be increased to reflect any payments by
DMB to SORA made pursuant to the PSA.

(v)

upon payment of the Balance SD1 Deposit, DMB shall provide evidence of all relevant
shareholders approvals in respect of the execution, delivery and performance of the SD1
MOA;

(vi)

upon delivery of the SD1:

(a)

the balance of the SD1 Cash Consideration and all other sums payable on delivery in
respect of the stores and spares, bunkers and lubes shall be transferred by conditional
payment before the deletion of SORAs existing mortgage by way of pre agreed
release letter;

(b)

SORA shall provide DMB a legal bill of sale stating that SD1 is free from all mortgages,
encumbrances and maritime liens or any other debts whatsoever, evidence that all
necessary corporate and shareholder authorisation has been taken to authorise the
sale and relevant powers of attorney, together with all other listed documents;

(c)

DMB shall provide evidence that all necessary corporate and shareholder
authorisation has been taken to authorise the purchase and all applicable Board
resolutions have been duly attested and legalised or apostilled (as appropriate);

(vii)

SORA shall assign all warranties in respect of SD1 and its equipment and machinery;

(viii)

the existing Charter Party Contract relating to SD1 shall be terminated with no liabilities for
early termination arising to either party;

(ix)

SORA shall be liable for any taxes, fees or expenses in relation to the SORAs ship register
and DMB shall be liable for similar taxes in DMBs ship register;

(x)

should SORA fail to complete a legal transfer, DMB has the option to cancel the SD1 MOA
and the Balance SD1 Deposit together with interest earned, if any, shall be released to DMB
immediately. Should SORA fail to be ready to validly complete a legal transfer and their failure
is due to proven negligence and/or wilful misconduct, DMB shall at their option have the
following remedies:

(xi)

(a)

SORA shall be liable to DMB for DMBs third party costs and third party fees incurred
or expended by DMB as a result of the fund raising exercise; or

(b)

specific performance and the right to claim legal costs and expenses or outgoings
and/or fees or costs incurred or expended to maintain DMBs financing arrangements;

if DMB does not pay the Balance SD1 Deposit or the remaining SD1 Cash Consideration,
SORA has the right to cancel the SD1 MOA and the Balance SD1 Deposit together with
interest earned, if any, shall be released to SORA. DMBs total liability whatsoever to SORA
shall be limited to the amount of the Balance SD1 Deposit;

2.3

(xii)

if there is a delay on regulatory approvals in respect of the acquisition of the SD1, SORA shall
have no right to claim payment of the Deposit or an amount equivalent to the Deposit or part
thereof from DMB, and each party shall be responsible for their own costs and expenses.
Neither party shall be liable to the other for any losses incurred by reason of the non-payment
of the Deposit arising out of the delay. DMB shall pay the Deposit immediately upon receipt of
the necessary regulatory approvals.

(xiii)

DMB and SORA shall agree to a list of stores and spares (including spares required by class
notation) (SD1 Stores and Spares), which are not included in the SD1 Cash Consideration,
but which shall be delivered to DMB on the date of delivery. DMB shall purchase the SD1
Stores and Spares at an estimated amount of USD1.6 million (equivalent to approximately
RM5.8 million) but DMB shall purchase these items at the actual net price as evidenced by
invoices or vouchers and SORA shall deliver these items to DMB on the date of delivery;

(xiv)

the SD1 MOA provides that SD1 shall be delivered with the Crane, which as at the date of the
Addendum No.3 to the SD1 MOA, is stored ashore and shall be delivered at its present
location, unless otherwise agreed. Unless and until the cash consideration of USD2.3 million
(equivalent to approximately RM8.3 million) for the Crane has been paid to SORA, SORA
shall retain title and possession of the Crane and daily hire will be charged at USD1,500
(equivalent to approximately RM5,440) per day until the purchase of the Crane has been
completed. The pedestal, which as at the date of the Third Addendum is stored ashore, has
been included in the cash consideration of USD2.3 million for the Crane. The pedestal shall
also be delivered at its present location, unless otherwise agreed.

(xv)

the SD1 MOA is conditional upon the following:

(a)

the Securities Commission Malaysia (SC), for the issuance of the Bonds;

(b)

Bursa Securities for the listing of and quotation for the new DMB Shares to be issued
pursuant to the conversion of the Bonds;

(c)

the shareholders of DMB at an EGM to be convened; and

(d)

other relevant authorities/parties, if required.

(xvi)

the SD1 MOA is conditional upon DMB re-negotiating the service contracts in respect of SD1
to the satisfaction of DMB and SORA.

(xvii)

SD1 may require some modifications post-delivery and if so, DMB shall retain monies from the
Balance SD1 Deposit equivalent to the amount in the commercial invoice in respect of the
estimated amount for the SD1 Stores and Spares until such time as the modifications are
completed;

(xviii)

the SD1 MOA shall be governed by and construed in accordance with the laws of Norway.

Basis and justification of arriving at the Revised SD1 Consideration

The Revised SD1 Consideration amounting to USD120.0 million (equivalent to approximately
RM435.2 million) was arrived at on a willing-buyer, willing-seller basis after taking into consideration
the earnings potential and future prospects of SD1.

2.4

Details of the Bonds

The Bonds shall be issued to Siem Offshore Invest AS and/or such other nominees(s) as may be
nominated by SORA as consideration for the remaining Revised SD1 Consideration amounting to
RM denominated equivalent to USD30.0 million, whereby in any event, the nominal value of the
Bonds issued shall not exceed RM126.0 million. Hence, no proceeds will be raised from the
issuance of the Bonds. The amount of Bonds to be issued shall be determined at the Amount-Fixing
Date. It is the intention of DMB and SORA to determine the amount based on the prevailing
exchange rate between USD and RM at the Amount-Fixing Date. No proceeds will be raised from
the conversion of the Bonds into new DMB Shares as the conversion will be wholly satisfied through
the surrender of Bonds.
The salient terms of the Bonds are set out in Appendix II of this announcement.
4

2.4.1

Issue price and conversion price of the Bonds

The Bonds will be issued at its nominal value. The conversion price of the Bonds has been fixed at
RM0.15 per DMB Share (Conversion Price).

2.4.2

Basis and justification of the Conversion Price

The Conversion Price of RM0.15 represents a premium of approximately RM0.0110 or 7.91% to the
five (5)-day volume weight average market prices of DMB Shares of RM0.1390, up to and including
23 April 2015, being the date immediately prior to the date of this announcement.
The Conversion Price was determined and agreed upon between DMB and SORA after taking into
consideration, amongst others, the following:
(i)

the issue price of the Bonds;

(ii)

the par value of DMB Shares of RM0.10 each;

(iii)

the prevailing market conditions; and

(iv)

the prospects of the DMB Group.

The Bonds will be issued in bearer form and constituted by a trust deed to be executed by DMB and
the trustee acting on behalf of the holder of Bonds.
2.5

Liabilities to be assumed
There are no other liabilities, including contingent liabilities or guarantees to be assumed by the DMB
Group arising from the Proposed SD1 Acquisition.

2.6

Source of funding
DMB intends to fund SD1 Cash Consideration amounting to USD90.0 million (equivalent to
approximately RM326.4 million), a cash consideration of USD1.6 million (equivalent to approximately
RM5.8 million) for the SD1 Stores and Spares and a cash consideration of USD2.3 million
(equivalent to approximately RM8.3 million) for the Crane through borrowings from financial
institution(s), internally generated funds and/or proceeds raised from the Placement. The borrowings
from the financial institution(s) has not been finalised as at the date of this announcement.

2.7

Additional financial commitment required

There is no additional financial commitment required from DMB for SD1s operations at this juncture.

2.8

Information on SORA
SORA was incorporated as a limited company in Norway on 31 December 1854. As at 22 April 2015,
the authorised and paid-up share capital of SORA is NOK35,941,688 comprising 8,985,422 ordinary
shares of NOK4.00 each in SORA. SORA is principally involved in the operation and ownership of
offshore vessels, shipping businesses, construction businesses and any other business in connection
with the abovementioned activities, including participation in other companies through ownership, loans
or other types of involvement.
As at 22 April 2015, SORA is a wholly-owned subsidiary of Siem Offshore Inc, a provider of marine
services to the offshore energy service industry, which is listed on the Oslo Stock Exchange. As at 22
April 2015, the directors of SORA are Dagfinn Breistein Lie, Idar Hillersy, Svein Erik Mykland and
Arne Johannes Andersen.

3.

RATIONALE
The Proposed SD1 Acquisition will enable the DMB Group to own and operate SD1 instead of
chartering SD1 from SORA. The Proposed SD1 Acquisition will further enhance the operating cost
structure of SD1, which is expected to contribute positively to the future profitability of the DMB
Group. The Proposed Acquisition is also in line with the DMB Groups business strategy to own
operating assets to expand its range of subsea services and enhance its subsea capabilities in
offshore oil and gas operations.
The Proposed SD1 Acquisition also involves the issuance of the Bonds, which will enable the DMB
Group to part finance the Proposed SD1 Acquisition at a fixed rate as compared to taking up further
borrowings from financial institution(s), thereby reducing the DMB Groups exposure to interest rate
fluctuations, which in turn will enable the DMB Group to manage their cash flows more efficiently. In
addition, the issuance of Bonds will also mitigate the immediate substantive dilutive impact on the
earnings per share (EPS) which would otherwise arise from a full equity issue to part finance the
Proposed SD1 Acquisition.
SORA also has the option to convert the Bonds into new DMB Shares at a premium to the prevailing
market price of DMB Shares, in which converted, the new DMB Shares issued will reduce the
outflow of funds required from DMB to redeem the Bonds upon maturity.

4.

EFFECTS
The Proposed SD1 Acquisition will not have any effect on the issued and paid-up share capital and
substantial shareholders shareholding. However, the conversion of Bonds will have an effect on the
issued and paid-up share capital and substantial shareholders shareholding. For illustrative
purposes, the proforma effects on the issued and paid-up share capital, net asset (NA) per share,
gearing, earnings and EPS and the substantial shareholders shareholdings in DMB are based on
the following:
Minimum Scenario

Maximum Scenario

Based on the assumption:

(i)

the 3,000 DMB Shares held as treasury shares (Treasury Shares)

are retained by the Company and are not resold to the market; and

(ii)

the Bonds will be fully redeemed at the maturity date.

Based on the assumption:

(i)

the 3,000 Treasury Shares are retained by the Company and are not
resold to the market; and

(ii)

the Bonds will be fully converted at the maturity date.

4.1

Issued and paid-up share capital

For illustrative purposes, the proforma effects on the issued and paid-up share capital of the
Company are shown below:
Minimum Scenario

Maximum Scenario

No. of DMB
Shares

No. of DMB
Shares

(000)

RM000

(000)

RM000

Issued and paid-up share capital

(1)
as at 15 April 2015

1,651,816

165,182

1,651,816

165,182

New DMB Shares to be issued

pursuant to the conversion of
(2)
Bonds

725,300

72,530

Enlarged issued and paid-up

share capital

1,651,816

165,182

2,377,116

237,712

Notes:
(1)

Based on existing issued and paid-up share capital and excluding 3,000 Treasury Shares as at 15 April
2015.

(2)

Based on the assumption that up to approximately RM108.8 million (equivalent to approximately to

USD30.0 million) in nominal value of Bonds is issued and the Conversion Price of RM0.15 for the Bonds.

4.2

NA and gearing
For illustrative purposes, the proforma effects of the Proposed SD1 Acquisition on the NA and gearing ratio of the DMB Group based on the audited
consolidated balance sheet of DMB as at 31 December 2013 are shown below:
Proforma I

Proforma II

Proforma III(A)

Proforma III(B)

Audited
as at
31 December 2013
RM'000

After adjustment
for subsequent
(2)
events
RM'000

After Proforma I and

the Proposed SD1
(3) (4)
Acquisition
RM'000

After Proforma II and

assuming full
redemption of Bonds
RM'000

After Proforma II and

assuming full
(5)
conversion of Bonds
RM000

126,304
25,759
1,121
(1,016)
88,516
240,683

165,182
71,414
1,121
(1)
88,516
326,232

165,182
71,414
1,121
(1)
4,166
86,516
328,398

165,182
71,414
1,121
(1)
85,127
322,843

237,712
107,679
1,121
(1)
85,127
431,638

1,257,817
0.19
141,111

1,651,816
0.20
141,111

1,651,816
0.20
569,880

1,651,816
0.20
466,639

2,377,116
0.18
466,639

0.59

0.43

1.74

1.45

1.08

Share capital
Share premium
Foreign currency translation reserve
Treasury shares
Equity component of Bonds
Retained earnings
Shareholders funds/NA
No. of DMB Shares in issue (000)
NA per DMB Share (RM)
Total borrowings
(RM 000)
Gearing ratio (times)

(1)

Notes:
*

Negligible.

(1)

Computed net of 5,220,700 Treasury Shares as at 31 December 2013.

(2)

Adjustments for subsequent events include:

(a)

resale of 5,220,700 DMB Shares held as treasury shares for a total cash consideration of RM2,164,724 and purchase of an additional 3,000 DMB Shares by the
Company as treasury shares for a total cash consideration of RM879; and

(b)

issuance of 125,781,000 DMB Shares at RM0.345 per DMB Share under a private placement exercise which was completed on 3 January 2014, raising a total cash
consideration of RM43,394,445 and net of expenses in relation to the private placement exercise of RM0.9 million; and

(c)

Issuance of 233,000,000 DMB Shares at RM0.165 per DMB Share and 30,000,000 DMB Shares at RM0.165 per DMB Share under a private placement exercise
which was completed on 19 December 2014 and 31 December 2014, respectively, raising a total cash consideration of RM43,395,000 and net of expenses in
relation to the private placement exercise of RM2.4 million.

(3)

Less estimated expenses relating to the Proposed SD1 Acquisition.

(4)

For illustrative purposes, assuming up to USD89.8 million (equivalent to approximately RM325.5 million) borrowings to be taken to part finance the Proposed SD1
Acquisition.

(3)

Based on the assumption that up to approximately RM108.8 million (equivalent to approximately to USD30.0 million) in nominal value of Bonds is issued and the
Conversion Price of RM0.15 for the Bonds.

4.3

Substantial shareholders shareholding

The issuance of Bonds will not have an immediate effect on the shareholding of the substantial
shareholder of the Company. However, if and when the Bonds are converted in the future, the
percentage shareholding of the substantial shareholder will be diluted accordingly, the quantum of
which is dependent on the nominal amount of Bonds converted.
The proforma effects of the conversion of Bonds on the shareholding structure of the substantial
shareholder of DMB as at 15 April 2015 are as follows:

As at the 15 April 2015

Direct
Indirect
No. of
No. of
Shares
Shares
(000)
%
(000)
Datuk Lim Thean Siang
Holder of the Bonds

100,000
-

6.05

Proforma I
Assuming the Bonds are fully
converted
Direct
Indirect
No. of
No. of
Shares
Shares
(000)
%
(000)
%

%
-

100,000
725,300

(1)

4.21
30.51

Note:
(1)

4.4

Based on the assumption that up to approximately RM108.8 million (equivalent to approximately to

USD30.0 million) in nominal value of Bonds is issued and the Conversion Price of RM0.15 for the Bonds.

Earnings and EPS

Upon the completion of the Proposed SD1 Acquisition, the DMB Group will own and operate SD1
instead of chartering SD1 from SORA, which is expected to further enhance the operating cost
structure of SD1, resulting from savings on operational costs by owning as compared to chartering
SD1 from SORA.
The EPS of the DMB Group may be diluted as a result of the increase number of DMB Shares in
issue pursuant to conversion of the Bonds. Nevertheless, the dilution impact on the EPS of the DMB
Group will also depend on the actual number of new DMB Shares to be issued and the level of
profits generated from the operations of the SD1.

4.5

Convertible securities
As at 15 April 2015, the Company does not have any outstanding convertible securities.

5.

APPROVALS REQUIRED
The Proposed SD1 Acquisition is subject to approvals being obtained from the following:
(i)

the SC, for the issuance of the Bonds;

(ii)

Bursa Securities for the listing of and quotation for the new DMB Shares to be issued
pursuant to the conversion of the Bonds;

(i)

the shareholders of DMB at an EGM to be convened; and

(ii)

other relevant authorities/parties, if required.

The Proposed SD1 Acquisition is not conditional upon any other corporate exercise undertaken or to
be undertaken by the Company.

10

6.

PERCENTAGE RATIOS UNDER PARAGRAPH 10.02(G) OF THE MAIN MARKET LISTING

REQUIREMENTS OF BURSA SECURITIES (LISTING REQUIREMENTS)
Based on the DMB Groups latest audited financial statements for the FYE 31 December 2013, the
highest percentage ratio under Paragraph 10.02(g) of the Listing Requirements in relation to the
Proposed SD1 Acquisition is more than 100%. In this regard, DMB is required to issue a circular to
its shareholders and seek shareholders approval for the Proposed SD1 Acquisition in a general
meeting.
Notwithstanding the above, the Proposed SD1 Acquisition does not result in a significant change in
the business direction of DMB.

7.

INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO

THEM
None of the Directors and/or major shareholders of DMB and/or persons connected to them, as
defined in the Listing Requirements, have any interest, whether direct or indirect, in the Proposed
SD1 Acquisition.

8.

DIRECTORS STATEMENT
The Board having considered all aspects of the Proposed SD1 Acquisition, (including but not limited
to the rationale, risk factors, prospects and the effects), is of the opinion that the Proposed SD1
Acquisition is in the best interest of the DMB Group.

9.

PRINCIPAL ADVISER
HLIB has been appointed by DMB as the Principal Adviser for the Proposed SD1 Acquisition.

10.

EXPECTED TIME FRAME FOR COMPLETION AND APPLICATION TO THE RELEVANT

AUTHORITIES
Barring any unforeseen circumstances, all the applications to the relevant authorities in relation to
the Proposed SD1 Acquisition will be made within three (3) months from the date of this
announcement.
Barring any unforeseen circumstances, the Proposed SD1 Acquisition is expected to be completed
by the second half of 2015.

11.

DOCUMENTS FOR INSPECTION

The SD1 MOA and SD2 MOA are available for inspection during the normal office hours (except
public holidays) at the registered office of DMB at Level 8, Symphony House, Pusat Dagangan
Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan for a period of 3 months from
the date of this announcement.

This announcement is dated 24 April 2015.

11

APPENDIX I
INFORMATION OF THE VESSEL
1.

2.

DETAILS OF SD1
Builder of vessel

Vard AS Brattvaag, Norway

Type

Multi-Purpose Offshore Vessel

Classification

Det Norske Veritas (DNV) Germanscher Lloyd (GL)

Design

STX OSV 11L

Length overall

120.8 metres

Breath

22.0 metres

Deadweight tonnage

5,000 tonnes

Environmental regulatory number

99,99,99,80

Deck space

1,300 square metres

Dynamic positioning (DP) system

DP II (Kongsberg)

Accommodation

110 persons

Main engines

4x Wartsila W6L32 D

Main crane

250 tonnes (National Oilwell Varco) and 50 tonnes

(National Oilwell Varco)

Service life of SD1 to-date

19 months

Net book value as at 31 December

2013

DMB has used its best endeavour to obtain such

information. However, DMB is not privy to the information
on the net book value of SD1 and as such is unable to
disclose such information.

INFORMATION ON CHARTER PARTY CONTRACT

The Charter Party Contract is for a period of up to two hundred and thirty (230) days per year for up to
seven (7) years until year 2020. The scope of works in respect of the Charter Party Contract is for the
provision of SD1 and SD2.
Technip is entitled to cancel the Charter Party Contract for a particular year in respect of the vessel if
the vessel is delivered late. If Technip does exercise its right to cancel, then neither party is liable to
the other except that DMBs subsidiary is liable for liquidated damages. There is a right for the said
subsidiary to withdraw the vessel from Technip in respect of non-payment of hire and to terminate.
Liability is based on the knock for knock principle, which means that each party pays the claims of its
own group following an accident. This principle applies irrespective of blame and seeks to save time
and expenses in connection with casualties. Save for agreed damages, neither the said subsidiary or
Technip are liable to the other for consequential losses.
Technip have the option to terminate the Charter Party Contract early for convenience and are liable
to pay an early termination fee if they do so. Either the said subsidiary or Technip may terminate for
other causes, including requisition, confiscation, bankruptcy, force majeure and for repudiatory breach.
Technip may terminate in circumstances of loss of vessel and breakdown.
Depending on the actual utilisation of the vessels, the estimated value of the Charter Party Contract is
approximately RM440 million for each vessel for a period of seven (7) years.

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APPENDIX II
SALIENT TERMS OF THE BONDS
The salient terms of the Bonds are as follows:
Issuer

DMB

Issue size

Up to RM126.0 million in nominal value

Issue price

The Bonds shall be issued at its par value

Tenure/Maturity Date

Four (4) years from the date of issuance (Issue Date)

Redemption at Maturity

All Bonds which are not redeemed, converted, repurchased or cancelled shall
be redeemed by the Issuer at its nominal value on the maturity date.

Coupon Rate

The coupon rate for the Bonds shall be 5% per annum. The coupon shall be
payable in arrears annually during the tenure of the Bonds prior to the
conversion of the same.

Conversion Price

RM0.15 per DMB Share

Conversion Rights

The Bondholders shall have the right to convert at the Conversion Price all or
any part of the Bonds into fully paid new DMB Shares at any time during the
Conversion Period, subject to the Bondholders giving seven (7) market days
prior irrevocable written notice to the Issuer.

Conversion Period

Any time from the Issue Date and in any case shall not be later than eight (8)
market days prior and up to the Maturity Date.

Security

The Bonds will be secured, subject to the consent being obtained from the
senior lender, third party second legal charge over SD1.

Rating

The Bonds are exempted from the rating requirement pursuant to paragraph
4.11(c) of the Guidelines on Private Debt Securities as issued by the SC on
the following basis:

Form and denomination

(i)

the subscriber of the Bonds are given the Conversion Rights to convert
the Bonds into new DMB Shares during the Conversion Period; and

(ii)

the new DMB Shares shall be listed on Bursa Securities.

Form
The Bonds shall be represented by a Global Certificate to be deposited with
BNM and shall be in bearer form. No physical delivery of the Bonds is
permitted.
The Bonds shall be prescribed and be reported under the rules of the
Malaysian Electronic Clearing Corporation Sdn Bhd (MyClear) and shall
comply with all rules and requirements set out by MyClear.
Denomination
The Bonds shall be issued in denomination and multiples of RM1.00 each or
such other denominations as shall be agreed upon between HLIB as the Lead
Arranger and the Issuer.

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APPENDIX II
SALIENT TERMS OF THE BONDS
Selling restriction,
including tradability

The Bonds are tradable and transferable. For avoidance of doubt, in the event
the Subscriber elects to transfer or dispose of the Bonds (Disposal), the
Subscriber(s) hereby agrees to grant to the Issuer the first rights of refusal on
such Disposal.
The selling restrictions are as follows:
Selling Restrictions at Issuance
The Bonds may only be offered, sold, transferred or otherwise disposed
directly or indirectly to a person to whom an offer or invitation to subscribe the
Bonds may be made and to whom the Bonds are issued would fall within:(i)

Schedule 6 or Section 229(1)(b) of the Capital Markets and Services Act

2007 (as amended from time to time) (CMSA);

(ii)

Schedule 7 or Section 230(1)(b) of the CMSA;

read together with Schedule 9 or Section 257(3) of the CMSA.

Selling Restrictions Thereafter
The Bonds may only be offered, sold, transferred or otherwise disposed
directly or indirectly to a person to whom an offer or invitation to purchase the
Bonds would fall within Schedule 6 or Section 229(1)(b) of the CMSA read
together with Schedule 9 or Section 257(3) of the CMSA.
Listing status

Not applicable. The Bonds will not be listed on Bursa Securities or any other
stock exchange.

Status and Ranking

The Bonds shall constitute direct, unconditional, unsubordinated and secured

obligations of the Issuer and will at all times rank pari passu without
preference or priority among themselves and will rank in priority to all other
present and future unsecured obligations of the Issuer from time to time
(subject to those preferred by law).

Status of the new DMB

Shares to be issued
pursuant to the
conversion of the Bonds

The new DMB Shares to be issued pursuant to the conversion of Bonds shall,
upon allotment and issue, rank pari passu in all respects with the then existing
DMB Shares, except that the holders of new DMB Shares to be issued
pursuant to the conversion of Bonds will not be entitled to any dividends,
rights, allotments and/or any other distributions that may be declared by DMB
in respect of which the entitlement dates are prior to the date of allotment of
the new DMB Shares to be issued pursuant to the conversion of Bonds.

Trust Deed

The Bonds shall be constituted by a trust deed, which shall be administered

by a trustee acting on behalf of the Holders.

Governing Law

Laws of Malaysia.

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