Vallianz secures US$10m for fleet expansion from UOB-Orix Corp investment fund

SINGAPORE - Mainboard-listed offshore marine services provider Vallianz Holdings has secured US$10 milllion (S$13.5 million) through the issue of 10 million convertible preference shares at US$1 apiece.

These will be issued at US$1 each to United Orient Capital Fund (UOC Fund), jointly held by United Overseas Bank Limited and Orix Corporation. The fund invests in mid-sized firms with mature operations, strong cash flow and good management teams.

The net proceeds of US$9.5 million will go towards fleet expansion (70-80 per cent of proceeds), with the remainder going to general working capital, Vallianz said in a filing with Singapore Exchange on Thursday. The existing bank facilities and working capital available to the group are sufficient to meet current requirements, it added.

Said Vallianz CEO Ling Yong Wah: "We appreciate this investment commitment by UOC. Despite the uncertain business environment in the offshore oil and gas industry, we are continuing to expand our operations and remain positive of the group's long-term outlook. UOC's investment signals its confidence in Vallianz's business model, growth and industry prospects."

UOC Fund executive director Yeo Wee Yap said that UOC aims to help fast-growing companies with growth capital. "Vallianz has an experienced management team and a proven business model that is able to generate stable revenue returns," he said. "We believe Vallianz is well-placed to emerge stronger from the industry's current downturn."

UOC Fund will receive a cumulative preferential dividend of 4 per cent for the first four years. This will be raised by 3 per cent each year every six months after. In lieu of the dividends, both can also mutually agree for Vallianz to issue more convertible preference shares at US$1 each to UOC Fund.

If Vallianz does not pay the cumulative preferential dividends to UOC Fund, or issue more convertible preference shares, the cumulative preferential dividend rate will be raised a further 2 per cent each year.

The conversion price for the preference share is US$0.0519, representing a premium of 16 per cent to the volume weighted average price of S$0.0604 on June 3. After conversion, UOC Fund will have a 5.44 per cent stake in the enlarged share capital of Vallianz.