EOC Ltd, an offshore support services provider for the oil & gas industry, set the price range for its secondary listing in Singapore on Wednesday. Roadshows also began on the same day for the deal, which is now being pitched on a range of S$194 million to S$230 million ($156 million to $184 million) pre shoe.
This is less than the $250 million EOC was hoping to raise during pre-marketing and the prospective freefloat has also been expanded from 25% to about 32.7% pre shoe. This equates to a market capitalisation of S$595 million to S$704 million ($475 million to $563 million).
The DBS and OCBC-led deal comprises 190 million new shares with an option to sell a further 20 million shares through the greenshoe. The price range has been set at S$1.02 to S$1.21.
There is also a 180 voluntary lock-up on parent company Ezra Holdings.
Roadshows will continue through to September 15, with pricing set to take place on September 16, ahead of a retail public offering from September 18 to 23. Listing is scheduled for September 26, by which time the group hopes to have secured shareholder approval to change its name to EMAS Offshore.
At S$1.02 to S$1.21 per share, the deal is being marketed on a 2015 p/e range of 7.2 to 8.5 times earnings based on syndicate averages. This means profits are forecast to decline to about $66 million in 2015 from $71.3 million in 2013.
EOC's nearest comparable is probably Pacc Offshore Services, or POSH, which listed in Singapore this April at S$1.15 per share. Since then, the stock has slipped 17.4% to S$0.955, although it has picked up a little bit of steam again over the past couple of trading days.
At current levels, it is trading at about 15.6 times 2014 earnings and 8.3 times 2015. The Singapore oil services sector average is about 12 times 2014 and 9.6 times 2015 earnings.
In a research note, published yesterday, Maybank said it was turning positive on the sector. Analyst Yeak Chee Keong wrote, "With their depleting oil fields, oil companies are under pressure to focus their spending on undeveloped fields to bring them into production. This will require increasing support from OSV's including pipelay vessels, liftboats and construction vessels."
He added that asset owners with newer and better vessels will be favoured by the oil companies. EOC has a fleet of 50 vessels, comprising 31 AHT’s (Anchor Handling Tug), 10 PSV’s (Platform Supply Vessel), two barges, four accommodation vessels, one S-Lay vessel and two FPSO’s (Floating, Production, Storage and Offloading Vessel).
In terms of AHT’s and PSV’s, this gives the group the second largest fleet in South East Asia after POSH, which has 46 AHT’s and PSV’s, with a further 15 on order. By contrast, Pacific Radiance has 27 vessels in the same category.
It also has one of the youngest fleets in the region, with an average age of five years, second only to Singapore-listed Jaya Holdings. Just over half the fleet is company-owned, with a further 27% on sale and leaseback - to manage EOC’s overall debt.
EOC's secondary listing complements a primary listing in Oslo, Norway. The flotation is running concurrent to a group-wide re-organisation, which will split EZRA Holdings into two distinct entities and give it majority control of EOC, up from its current 45.7% stake.