This is a reminder that public equity investors need to think about the energy transition much more broadly than owning or building renewable generators. Because so are the buyers.
Hats off to the MMA Offshore management team led by David Ross and David Kavanagh for righting the ship.
The company used to be a business owner of boom and bust times, just like the oil and gas industry, and during boom times when capital investment was active, the company bought expensive ships and enlarged them, but when customers were in a recession, they stood by and ran into trouble. I just felt it. A tightened belt.
That would be wasting the good years and holding on to the bad ones.
MMA Offshore made its big move in 2014, when it paid $550 million to Singapore marine services provider Jaya Holdings to capitalize on the boom and really ramp up its international operations.
MMA Offshore, then called Mermaid Marine, raised significant equity and debt to fund the deal. The acquisition fell through, and the company was saddled with debt for years.
MMA Offshore's near-death moment came in November 2020, when shareholders re-capitalized the group at just 3 cents per share (a 10-to-1 merger resulted in the current 30 cents per share). ). Proceeds will be used to pay down debt, while lenders also took a haircut. MMA Offshore emerged with his $100 million in net debt, which new management set out to pay off.
Around that time, profits from offshore wind began to rise and MMA Offshore began its own transition.
That transition included the pursuit of offshore wind farms, but pure ship operator It also included a transition from the Marine and Subsea Services Group to an integrated marine and subsea services group.
Harvest time
Fast forward to October of last year, and that transition was taking shape. MMA Offshore reported that 24 percent of its revenue in the just-ended financial year came from offshore wind customers and reiterated that its strategy is to increase its exposure to offshore wind, government and defense businesses. Ta. The company's two largest revenue vessels, MMA Pinnacle and MMA Prestige, are both engaged in offshore wind farm work.
Then along came Cyan Renewables, a Singapore-based company owned by Celaya Partners, a new “next generation” infrastructure investment firm.
MMA Offshore, advised by Rothschild and Thomson Gear, began confidential negotiations with Cyan in November and ultimately agreed to a $2.60 per share buyout, according to scheme documents released on Monday.
The 10.6% premium to the final closing price alone makes the price look overwhelmingly low. However, while MMA Offshore and Cyan were in talks, the company's stock price was moving. The bid price is approximately a 30 percent premium to the 90-day volume-weighted average price, which is more in line with what you would expect for a control premium.
The fact that MMA Offshore's board and management say they will accept $2.60 per share suggests they are keen to bank on the recent cyclical rally rather than spending money like in the past. It shows.
They know the company is in a good position now, but at some point they will have to update their vehicles and the cost will be high. And despite all the changes, there is still some periodicity in the numbers. In its latest half-year results, MMA Offshore announced that its fleet is 57% contracted for the next 12 months.
Announcing the deal, MMA Offshore chairman Ian McLiver said Cyan intends to retain MMA's employees (approximately 1,100 staff), customers, locations and contracts. In other words, Cyan said it intends to acquire the business as a business, rather than some assets to interfere with the business. Wider platform.
The last time I saw M's Macliver was&There was a situation in the Western Area where he sold the company to IGO Ltd. for about $1.3 billion. Since then, IGO has suffered from constant headaches that have wiped out most of its “value.”
Will MMA Offshore work out for the new owners? It's impossible to know. The short-term question is whether you have other interests. A $5 billion publicly traded company, Tidewater Inc is where he's most notable.
Cyan has not entered into a pre-bid agreement with MMA Offshore shareholders, potentially exposing the contract to intruders (if any). The $10.3 million penalty, which is about 1 percent of the transaction value, is not that high either.
