Concerns raised about sanctity of contracts and charter rates

In April last year, Yinson had proposed to pay Us$200mil (Rm815mil) for 70% equity in Ezion. This was later revised to Us$150mil (Rm628mil) for 63.4% equity in March this year. Ezion is prized for its fleet of 11 liftboat assets, of which eight are wholly-owned.

The source also raised concerns about the sanctity of contracts and fear that charter rates could drop in the future.

They were also a bit concerned about whether cash flows could support the liabilities at Eversendai post the acquisition.

Meanwhile, Minority Shareholder Watchdog Group (MSWG) is of the view that the related party transaction and issuance of redeemable convertible preference shares (RCPS) are not to the detriment of minority shareholders and most importantly, minority shareholders will have a say at the EGM when voting on the proposals.

For one, the proposals are subject to and conditional upon approvals being obtained from the shareholders of Eversendai at an EGM to be convened.

Thus, shareholders have a say in the acceptance of the proposals, unlike some instances where the RPT does not trigger any of the thresholds in the listing requirements to warrant an EGM for shareholders’ approval.

MSWG CEO Devanesan Evanson says the injection of Vahana will be beneficial to Eversendai’s bottom-line as the group has been loss-making.

“The purchase consideration does not result in an outflow of cash from Eversendai; it involves the issuance of 770.49 million RCPS in Eversendai at 30.5 sen each.

“The RCPS shall have a tenure of 10 years with cumulative preferential dividend of 3% per annum and is convertible into ordinary shares in Eversendai at a conversion ratio of two RCPS to one Eversendai share.

“The preferential dividend of 3% is deemed reasonable,” he says.

It remains to be seen how Eversendai’s profits will improve going forward, premised on contribution of profits from Vahana to Eversendai on a recurring basis, and coupled with the group’s Rm2.88bil order book in hand that will last two to three years.