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Strong cash flows will help the company to service all it’s obligations and also to invest in future growth, a senior official revealed

Times News Service MUSCAT: Renaissance Services is an Omani multinational firm listed firm on the Muscat Securities Market (MSM), with a strong presence in oil servicing field. The company’s chief financial officer (CFO) Vishal Goenka talks to Times of Oman on the company’s financing, oil price impact and other issues. Excerpts: As chief financial officer, how would you describe the financial health of Renaissance? The balance sheet has never been stronger. Our financing platform is diverse and competitive.

We generate significant cash flows from our operating businesses. The financial strength of the company is endorsed by the significant support we enjoy from local, regional and international banks.

A recent example of this is the successful closure of the syndicated $117 million financing package for our Duqm Workers Accommodation project at 4.5 per cent interest on 12 year money. But with your exposure to the oil and gas sector the business is affected by the oil price crisis in the industry? Our Topaz Offshore Support Vessel (OSV) fleet works entirely in the oil and gas sector. Our Renaissance Contract Services and Integrated Facilities Management (IFM) business works across all sectors, including oil and gas.

But it is true to say, both of these businesses are focused in oil and gas reliant geographical markets. So yes, we are seeing some temporary impact arising from the volatility of oil prices.

Even so, our Contract Services business has continued to grow profitably during this period, albeit a little slower than would be the case in more normal times. Topaz has been affected in its spot markets and in its nascent West Africa businesses, but remains remarkably strong and stable in its core markets of the

Caspian and the Gulf. But overall this has led to weaker performance in the first quarter results this year? Yes, the first quarter net profit has been affected; but this should be viewed in the context of how well revenues and earnings before interest, taxes, depreciation, and amortisation (EBITDA) are holding up in such turbulent times. This means our cash flows remain strong and we continue to service all our obligations and invest in future growth. The real question is, how would you define success in 2015? The OSV industry and other oil services sectors have been described as a “blood-bath.” Yet Topaz is at the very top of likefor-like peer group comparisons. This is because Topaz has built a significant leadership position in markets with long-term stable contracts that sustain the business through good times and bad.

We have already advised the markets to expect similar performance in the second quarter before we anticipate gradual improvements in the second half of the year. But people will look back at 2015 and see our businesses out-performed their respective markets. You have announced you are considering a buy-back of your Mandatory Convertible Bonds (MCB), please tell us more about that? We have said we will offer to buy back the MCBs when we have appropriate financing in place. It is a great option for MCB bondholders, as well as being an excellent outcome for shareholders and the company. We are currently looking at a perpetual instrument that will provide a great yield of over 7.5 per cent to investors for the first five years and an option to increase the coupon by a further 500 bps, should the company not call the bond back at that time.

If we go ahead with a perpetual instrument, we shall use the proceeds to buy back the Mandatory Convertible Bonds. Capital Intelligence (CI) has upgraded your rating but your share price remains under pressure. Why is that? CI has upgraded our rating from BBB- to BBB. Low gearing, a strong order backlog and great visibility on future cash flows have no doubt all been considered in their decision to upgrade our rating. Topaz has an order backlog of $1 billion and Contract Services has won new contracts in 2015 increasing its backlog in excess of $50 million to create a new level of order backlog of $500 million just from its pure services business. > B4