Ezra sells 50% stake in subsea unit to Chiyoda

$252m joint venture with engineering giant will open doors to more complex projects

Ezra Holdings group chief executive Lionel Lee (second from right), seals the deal with Chiyoda president and chief executive Shogo Shibuya. They are flanked by Chiyoda's senior executive vice-president Keiichi Nakagaki (far left) and Economic Develo
Ezra Holdings group chief executive Lionel Lee (second from right), seals the deal with Chiyoda president and chief executive Shogo Shibuya. They are flanked by Mr Haruhisa Takeuchi (left), Japan's ambassador to Singapore, and Economic Development Board chairman Beh Swan Gin.PHOTO: EZRA

Oilfield services group Ezra Holdings is selling a 50 per cent stake in its subsea unit to a Japanese firm for US$180 million (S$252 million).

It has inked an agreement with engineering giant Chiyoda Corporation for the sale of the Emas AMC stake, it announced yesterday.

The deal will involve a restructuring of Emas AMC, which will then be renamed Emas Chiyoda Subsea.

Ezra said the total value of the deal, when including Emas AMC's third-party net debt of US$530 million and a further US$360 million in long-term funding from Ezra, would amount to US$1.25 billion.

Mr Lionel Lee, Ezra group chief executive and managing director, told a briefing at Fairmont Hotel that the joint venture will allow Emas to undertake larger and more complex deepwater installation projects around the world, which typically range from US$1 billion to US$2 billion.

"We will also have access to a global network of engineering centres, wider supply chain capability and global vendor networks, and a wider global client network as well," he said, adding that it will enhance Emas AMC's overall competitiveness, while strengthening Ezra's balance sheet.

Mr Lee remains optimistic about the long-term outlook for deepwater projects despite the persistent weakness in oil prices.

He added that the company's tender book comprises projects worth about US$9 billion, of which none have been cancelled or delayed substantially.

Chiyoda president and chief executive Shogo Shibuya, who was also at the briefing, said the firm had been looking for opportunities to expand into the upstream oil and gas business - a portfolio it would build as its "next core business".

"With the establishment of Emas Chiyoda Subsea, we are in a position to provide comprehensive services to our clients... throughout the life cycle of any offshore oil and gas project."

The transaction, though still subject to the approval of Ezra shareholders and other conditions, is expected to close by the year-end.

Last year, the company sold its offshore marine supporting operations to its Oslo-listed affiliate EOC for US$502 million, in a move to focus more on the growing subsea services market.

Ezra had requested a trading halt on its shares yesterday morning.

The counter, which resumes trading this morning, had closed 0.8 cent or 7.5 per cent up at 11.4 cents on Wednesday.

A version of this article appeared in the print edition of The Straits Times on August 28, 2015, with the headline 'Ezra sells 50% stake in subsea unit to Chiyoda'. Print Edition | Subscribe