UAE: Lamprell Offers USD 336.1 Million for MIS Acquisition

Further to the announcement of 7 April 2011, Lamprell , a leading provider of specialist engineering services to the international oil & gas and renewables industry,  announce the proposed recommended acquisition of all the issued and to be issued shares of Maritime Industrial Services Co. Ltd. Inc. (“MIS”) for a total consideration of NOK 1,869 million (£208.1 million; US$336.1 million) which values each MIS Share at NOK 38 per share.

MIS, with its principal operations based in Sharjah in the UAE, is a diversified engineering and contracting group focused on the energy sector. It offers a range of engineering and contracting services to the oil, gas and energy industry spanning the hydrocarbons delivery chain, from exploration drilling through to delivery to downstream customers. MIS operates primarily in the UAE, Kuwait and Saudi Arabia and divides its operations into six main business lines, including; new build, upgrade and refurbishment, EPC services, fabrication, H2S safety services and technical services. For the financial year ended 31 December 2010, MIS recorded profit before tax of US$37.1 million and, as at 31 March 2011, MIS had gross assets of US$351.6 million.

Lamprell also announces today a fully underwritten 3 for 10 Rights Issue, at a price of 232 pence per share, to raise gross proceeds of £139.4 million (US$225.1 million) and approximately £132.0 million (US$213.2 million) net of expenses. Lamprell proposes to fund the Acquisition through a mixture of equity (by way of the Rights Issue), debt (principally through a new US$150 million term loan facility) and from existing cash resources.

Lamprell has also separately announced today its IMS statement for the period 1 January 2011 to 18 May 2011.

Acquisition highlights

The Board believes that the Acquisition offers significant benefits and opportunities, including:

• Providing complementary business areas, particularly in onshore service offerings

• Enhancing in-house engineering capabilities

• Adding extra capacity and resources

• Adding a number of established businesses in target geographies

• Providing an enlarged customer base with a wider service offering

• Consolidating Lamprell’s position as a regional market leader in the rig market

• Achieving cost and revenue synergies between two highly complementary businesses

Lamprell expects the Acquisition when partially financed by the Rights Issue to enhance substantially Lamprell’s earnings per Ordinary Share (adjusted for the discount element of the Rights Issue) in the first full financial  year post-acquisition. Lamprell also anticipates that the return on invested capital in the first full year of ownership will at least match Lamprell’s cost of capital and exceed it thereafter.

Lamprell, through Lamprell Investments, is making the voluntary offer in accordance with the Norwegian Securities Trading Act. The board of directors of MIS has unanimously recommended the Voluntary Offer to the MIS Shareholders. Certain MIS Shareholders representing approximately 81.50 per cent, of the existing issued ordinary share capital of MIS have irrevocably undertaken to accept the Voluntary Offer in respect of the MIS  Shares held by them.

Lamprell Holdings Limited, which holds Ordinary Shares representing approximately 33.12 per cent, of the ordinary share capital of the Company, has irrevocably undertaken to vote in favor of the Acquisition Resolution and the Rights Issue Resolutions and has indicated to Lamprell that it intends to take up (or procure the taking up of) its full entitlement to New Ordinary Shares under the Rights Issue.

Commenting on the announcement, Lamprell Chief Executive Officer, Nigel McCue said;

This transaction represents a significant step for Lamprell in its evolution as we continue to expand both the breadth and depth of our service offering and the geographical range of our customer base. There is a strong complementary fit between Lamprell and MIS, enabling the enlarged group to pursue new opportunities with enhanced resource and technical competence. In particular, we see real competitive advantage in the companies’ combined engineering offering as well as greater access to new business in the downstream and onshore sectors.

We believe that this transaction will rapidly create value for our shareholders and that we can demonstrate the merits of bringing together these two businesses both through new business opportunities and operational and financial synergies.”

Commenting on the announcement, MIS Managing Director, Kevin Hudson said;

This agreement is in the best interests of our shareholders and the complementary nature of our two businesses provides significant opportunities for the Enlarged Group, and its employees, going forward.’

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Source:Lamprell , May 19, 2011;