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Wednesday, January 12, 2011


KUALA LUMPUR: Oil and gas counter Dayang Enterprise Holdings Bhd seems to be preparing for a large-scale contract.

The company is slated to have its extraordinary general meeting (EGM) in Miri, Sarawak today.

Interestingly, a couple of the proposals to be deliberated upon today involve Dayang boosting its cash position. Dayang is proposing a one-for-four rights issue of 110 million shares at a price and entitlement date to be determined at a later date.

Considering Dayang’s shares closed at RM2.95 last Friday, the company could raise quite a substantial sum.

Over the past three months, the company’s shares closed at a high of RM3.04 on Nov 11 and hit a low of RM2.25 on Oct 7.

This works out to an average trading price of RM2.67 for the period.

Dayang is also hiving off its entire 40% stake in Syarikat Borcos Shipping Sdn Bhd for RM135 million cash to AWH Equity Holdings Sdn Bhd, which owns the other 60% stake.

Dayang had acquired the stake in Borcos in September 2009. The book value of the stake was RM134.96 million, meaning it is selling out for mere profit of RM43,678, according to announcements to Bursa Malaysia.

According to sources familiar with the company, including the sale of Borcos, Dayang is looking at raising in excess of RM250 million.

This would add to its gross cash pile of RM63.16 million and trade and other receivables of RM108.54 million as at end-September last year.On the other side of the balance sheet, Dayang had borrowings of RM110 million and trade and other payables of RM40.75 million. Its shareholders funds stood at RM355.04 million.

Dayang has also been posting steady profits. For its nine months ended September, Dayang registered a net profit of RM50.06 million on revenue of RM171.97 million. For the corresponding nine months of FY2009, Dayang had raked in a net profit of RM38.34 million from RM157.66 million in sales.

So what does Dayang plan to do with all this cash? While murmurs of mergers and acquisitions have popped up, there is a more compelling reason.

Market rumours have it that Dayang is beefing up its balance sheet in the expectation of bagging a large contract soon. Talk has it that the company is the frontrunner to bag the topside and maintenance work of a RM400 million job, doing top side maintenance for the Sarawak region, for oil major Petroliam Nasional Bhd.

This job is part of the larger RM1.6 billion topside and maintenance jobs that covers the whole country but has been broken down to several packages namely Sarawak, Sabah and Peninsular Malaysia.

Initially it was said that Dayang’s tender was not as attractive as the one by private company, Coral Alliance Sdn Bhd, for the Sarawak portion of jobs. Industry sources said Dayang’s bid was indeed competitive and it stands a good chance of bagging the jobs. Some even said that Dayang had put in a lower bid than that of Coral Alliance.

The Edge had highlighted that Coral Alliance was the frontrunner for the portions in Sarawak and Peninsular Malaysia at the end of last year, but there could have been changes since.

Another contender Petra Energy Bhd is also understood to be still in the race bidding for the jobs.

In Peninsular Malaysia, a private company called PFC Engineering Sdn Bhd (formerly Perwaja Fabrication Centre Sdn Bhd) has surfaced as a major contender.

PFC is 80%-controlled by Datuk Abu Talib Mohamed, the brother of Tan Sri Abu Sahid Mohamed, the controlling shareholder and patriarch of Maju Group. Checks on the Companies Commission of Malaysia (CCM) reveal that the remainder 20% in PFC is held by Muammar Gadaffi Abu Talib.

The company’s directors are Abu Talib, Muammar Gadaffi, Azman Mohd and Abdul Malek Omar.

Its nature of business according to the CCM, is fabrication works, foundry casting, trading and plant maintenance.

For its financial year ended December 2009, PFC raked in some RM13.98 million in after-tax profit, from RM402.15 million in revenue.

This article appeared in The Edge Financial Daily, January 10, 2011.

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