PDZ looking to raise funds

By Sharen Kaur
Published in NST on March 27, 2014

BUYING O&G ASSETS: Sources say company may consider private placement, rights issuance or bonds

TAN Sri Robert Tan Hua Choon, a major shareholder of PDZ Holdings Bhd, may consider a fundraising exercise to help finance the acquisition of oil and gas (O&G) assets, sources said.

The fundraising exercise may include a private placement, rights with warrants issuance or convertible bonds, they said.

Tan owns 19.13 per cent of PDZ and has been a shareholder of the shipping firm since November 2000. He plans to venture into the O&G sector to diversify earnings and boost profitability.

PDZ currently operates six vessels in Malaysia, Singapore, Brunei and Myanmar.

Tan sees the O&G sector as having the biggest potential for PDZ due to the size of the industry.

Prime Minister Datuk Seri Najib Razak said on Tuesday capital expenditure in the Malaysian O&G upstream business is forecast to be around RM200 billion over the next five years.

He also said some 20 per cent of the global upstream spending of around US$700 billion (RM2.31 trillion) in the sector over the next decade would be in Southeast Asia.

Tan was not available for comment.

“His close link with Petroliam Nasional Bhd may land him some jobs. To be in the game, PDZ needs a good O&G play, which is why Tan is actively looking to buy assets,” one of the source said.

“He is not going to leave his cash idle in PDZ without doing anything. He wants to grow PDZ by diversifying. He may venture into logistics.” 

Tan was looking to buy O&G services provider Efogen Sdn Bhd but aborted the plan last month.

For the first quarter to September 30 last year, PDZ posted a net profit of RM778,000 from a loss of RM265,000 previously. This was despite an 18.33 per cent drop in revenue to RM43.6 million.

For the period, PDZ had a net asset value (NAV) of 11 sen and its net cash position was RM16 million.

Analysts believe the stock, which is currently hovering around 12 sen, will have potential to hit 20 sen or above due to the diversity of its core businesses.

“If PDZ does acquire an O&G asset soon, 20 sen to 25 sen is achievable, given that its NAV is 11 sen. PDZ has been loss-making not because of management incompetence but because of slow growth in the overall shipping industry,” an analyst said.

ENDS