One of the largest owners of offshore support vessels in Asia is spending US$679,464 to diversify into harbour vessel services
Singapore-listed offshore support vessel (OSV) operator PACC Offshore Services Holdings (POSH) is set to acquire the 50% of Pacific Workboats it did not already own.
It will purchase the 50% stake held by Sembcorp Marine’s subsidiary Dolphin Shipping Co in one of the biggest deals in the towage sector in the last five years.
Pacific Workboats operates a fleet of harbour tugs, mainly in Singapore, Malaysia, Vietnam and New Caledonia, and heavy-lift floating cranes.
This acquisition is expected to be completed by the end of this year, “conditional upon, among others, a dividend distribution by Pacific Workboats to POSH and Dolphin, which will be satisfied through a distribution of assets, comprising primarily of vessels,” said POSH.
Pacific Workboats will then cease to be a joint venture of POSH and will become a wholly-owned subsidiary of POSH. This acquisition is in line with POSH’s ongoing comprehensive review of its businesses and investments.
POSH’s diversification into harbour services is a long-term solution to expand its business. It comes at a time when tug operations are becoming more appealing, said POSH chief executive Lee Keng Lin.
“This decision on Pacific Workboats marks another proactive step forward in our comprehensive business review, as we continue to sharpen our strategy and be better positioned for our next phase of growth,” he said.
Mr Lin suggested POSH would continue investing in the harbour towage business. “The prospects for the harbour services sector remain attractive,” he said. “We look forward to this next chapter and will work to grow our business both in Singapore and abroad.”
The Pacific Workboats acquisition is not expected to have any material impact on the net tangible assets per share and earnings per share of POSH for the financial year ending 31 December 2019.
Like other OSV owners, POSH has suffered from the long market downturn. Its Pacific Workboats acquisition comes as OSV operators continue to battle against debt following a five-year downturn in market conditions.
OSV operators have suffered from low utilisation and charter rates, taking heavy losses on business and facing difficulties in paying back loans taken to expand OSV fleets when market rates were far higher.
POSH posted a loss of US$21.3M for the six months ended 30 June, adding to the red ink from the same period one year ago, when it posted a US$13.1M loss.
In explaining its results in August, POSH said that the “oversupply of vessels continues to be a drag on charter rates, although there are signs of increased activities in select segments.” In the wake of the market conditions, POSH is considering selling off some of its non-core assets.
OSV markets and smart tug opportunities were presented at Riviera Maritime Media’s Asia Offshore Support Journal Conference and Smart Tug Operations Conference in Singapore in September. More opportunities and market solutions will be discussed in London in February at the Annual Offshore Support Journal Conference, Awards and Exhibition.