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Subdued OSV business forces Trada Maritime to change course

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JAKARTA (RambuEnergy.com) – The weakening of Indonesia’s offshore support vessel (OSV) business due to falling offshore oil and gas exploration activities in the country has forced PT Trada Maritime Tbk (IDX:TRAM) to change its course, although the company admitted that the existing vessel business will be kept.

Marking the change was the change of the company’s name to PT Trada Alam Mineral Tbk in mid-October. In a press conference, the company’s newly appointed President Director Ismail Mahruf, said the company would not completely leave the vessel business.

At present, the company owns and operates 22 various types of vessels, with the utilization of 80 percent. The company believes entering the mining business would ultimately support the company’s vessel business.

The other sign of the company’s decision to change its course is by acquisition mining service companies, namely PT Gunung Bara Utama and PT SMR Utama Tbk.  The acquisitions will be funded by rights issue as well as a bank loan, with a total amount of Rp9 trillion.

The company secured approval from its shareholders to launch rights issue last month.

Trada has said it will take over 100% shares of PT Gunung Bara Utama from PT Semeru Infra Energy. The takeover is done indirectly. Gunung Bara Utama is a limited liability company holding a mining production operation permit located in West Kutai District, East Kalimantan. The company has been operating and producing coal.

Through rights issue, the company aims to raise Rp6 trillion and the remaining Rp3 trillion from bank loans.

The company has said it will use the rights issue proceeds of around Rp6 trillion to acquire Gunung Bara Utama from its shareholders, PT Semeru Infra Energi (SIE) and PT Black Diamon Energi (BDE).

The expansion to mining sector appears to go ahead with the plan. Last Friday, the company announced that it has secured fresh funds from UOB Kay Hian Credit Pte Ltd amounting to Rp3.13 trillion (USD231.8 million).

In a filing to the Indonesian Stock Exchange on Friday (Nov.24), Trada Alam Mineral said the loan deal was signed on Nov. 21. “Based on the agreement, the company is obliged to settle the loan within ten years,” the company’s corporate secretary Asnita Kasnmy said.

The company said the funds will be used to acquire 50.1% shares of PT SMR Utama Tbk (IDX:SMRU), owned by PT Lautan Rizki Abadi, or 6.26 million shares.

Trada has signed a Memorandum of Understanding (MoU) with PT Semeru Infra Energy on July 27 this year. Under the MoU, the acquisition transaction settlement target will be done no later than six months after the memorandum of understanding is signed which TRAM will conduct due diligence on the company to be purchased before proceeding the transaction.

As a follow up of the acquisition, Trada Mineral will offer to buy shares held by the public, as required by the stock market’s tender offer ruling.

The company said the acquisition is part of the company’s drive to diversify its business to mining and energy services.

In the nine months to September, the company posted a net loss of USD5.96 million, narrowed from a loss of USD13.10 million in the same period last year.

The company engages in vessel operation, vessel management, logistic, vessel agent, handling service and catering. The diversification is seen as a move by the management to keep the company afloat.

Last Friday (Nov. 24), the company ended higher 2 points or 1.29% at Rp157 per share, after trading within range of Rp156-Rp166.

Investors appear to give approval to the company’s drive to expand to mining service business as reflected by the recovery of the company’s shares, called TRAM. The company’s shares have fallen to as low as Rp73 per share on July 3, 2017, but has recovered since then to close at Rp157 a share, representing an increase of 115% since its low point of the year.

The company’s shares reached a peal of Rp358 a share on Feb. 8, 2017, but then continued to lose its ground, before recovering again in early July.

Edited by Roffie Kurniawan (email: roffie.kurniawan@gmail.com)

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