PROPOSED DISPOSAL OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF THE ICE CLASS VESSEL COMPANIES (AS DEFINED BELOW) BY THE WHOLLY-OWNED SUBSIDIARIES OF BUMI ARMADA, NAMELY BUMI ARMADA SINGAPORE HOLDINGS PTE. LTD. (“BASH”), BUMI ARMADA OFFSHORE CONTRACTOR LIMITED AND BUMI ARMADA RUSSIA HOLDINGS LIMITED (COLLECTIVELY, THE “SELLERS”) TO AC MANAGEMENT COMPANY LIMITED (“AC MANAGEMENT”) AND K.N. HOLDING LIMITED LIABILITY COMPANY (“K.N. HOLDING”) (COLLECTIVELY, THE “PURCHASERS”) (“PROPOSED DISPOSAL”)

For the purpose of this announcement, “USD” refers to United States Dollar and “RUB” refers to Russian Ruble. Unless stated otherwise, the exchange rate adopted in this announcement is based on USD1 : RM4.1925, being the middle rate published by Bank Negara Malaysia on 19 January 2022.

1.0 INTRODUCTION

The Board of Directors of Bumi Armada (“Board”) wishes to announce that the Sellers had on 19 January 2022 entered into a sale and purchase agreement for the disposal of the entire issued and paid-up share capital of the following wholly-owned indirect subsidiaries of Bumi Armada to the Purchasers for a total cash consideration of USD44.5 million (equivalent to approximately RM186.6 million), subject to adjustment in accordance with the terms thereof (“Sale Consideration”) (“SPA”):

(i) Bumi Armada Marine Uray Pte. Ltd. (“BAMU”);

(ii) Bumi Armada Marine Pokachi Pte. Ltd. (“BAMP”);

(iii) Bumi Armada Marine Naryan Mar Pte. Ltd. (“BAMN”); and

(iv) Bumi Armada Marine LLC (“BAM”),

(collectively, the "Ice Class Vessel Companies”).

2.0 DETAILS OF THE PROPOSED DISPOSAL

The Proposed Disposal entails the disposal of the entire issued and paid-up share capital of each of the Ice Class Vessel Companies, details of which are set out below:

The Proposed Disposal is subject to the terms and conditions of the SPA. Please refer to Appendix I for the salient terms of the SPA.

Upon completion of the Proposed Disposal, the Ice Class Vessel Companies will cease to be part of the Bumi Armada group of companies (“Bumi Armada Group”).

2.1 Information on the Ice Class Vessel Companies

The Ice Class Vessel Companies (other than BAM) own the Bumi Uray, Bumi Pokachi and Bumi Naryan Mar vessels which have been working for LUKOIL-Nizhnevolzhskneft Limited Liability Company (“LUKOIL NVN”) in the Caspian Sea, Russia since 2016 under 3 charter party contracts.

2.1.1 BAMU

BAMU was incorporated in Singapore on 21 May 2015, with the principal activity of ship owning, chartering and managing ships and vessels, and the provision of marine support and other services to offshore oil and gas companies.

As at the date of this announcement, the issued share capital and shareholding structure of BAMU are as follows:

2.1.2 BAMP

BAMP was incorporated in Singapore on 21 May 2015, with the principal activity of ship owning, chartering and managing ships and vessels, and the provision of marine support and other services to offshore oil and gas companies.

As at the date of this announcement, the issued share capital and shareholding structure of BAMP are as follows:

2.1.3 BAMN

BAMN was incorporated in Singapore on 21 May 2015, with the principal activity of ship owning, chartering and managing ships and vessels, and the provision of marine support and other services to offshore oil and gas companies.

As at the date of this announcement, the issued share capital and shareholding structure of BAMN are as follows:

2.1.4 BAM

BAM was incorporated in Russia on 21 August 2014, with the principal activity of providing marine support and other services to oil and gas companies.

As at the date of this announcement, the issued share capital and shareholding structure of BAM are as follows:

Note:

BAOCL, BARHL and BAOHL are wholly-owned subsidiaries of Bumi Armada.

2.2 Original cost of investment

The original cost of investment in the Ice Class Vessel Companies is the nominal value of the issued share capital of the Ice Class Vessel Companies at the time of incorporation. The details of the original cost of investment are as follows:

2.3 Financial information on the Ice Class Vessel Companies

Based on the interim financial statements for the 9-month financial period ended 30 September 2021, the Ice Class Vessel Companies recorded a combined loss after taxation of RM56.6 million and have combined net assets (“NA”) (including capital contribution) of RM219.9 million.

2.4 Information on the Purchasers

2.4.1 AC Management

AC Management was incorporated in the Cayman Islands on 8 December 2006 and subsequently registered as a company continuing in The Republic of Cyprus on 2 June 2016.

As at the date of this announcement, the existing directors of AC Management are Andreas Theofanous and Sakis Patikkis. AC Management is wholly-owned by LUKOIL International Upstream Holding B.V., The Netherlands, which in turn is wholly-owned by LUKOIL International GmbH, Austria, a wholly-owned subsidiary of PJSC LUKOIL.

2.4.2 K.N. Holding

K.N. Holding was incorporated in Russia on 28 February 2003.

As at the date of this announcement, the existing director of K.N. Holding is Stepanov Sergey Alexeevich. K.N. Holding is directly and wholly-owned by PJSC LUKOIL.

3.0 BASIS AND JUSTIFICATION FOR THE SALE CONSIDERATION

The Sale Consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration the future cash flows from the charter party contracts entered into with LUKOIL NVN.

4.0 LIABILITIES TO BE ASSUMED

Save for certain agreed Sellers’ warranties, and the guarantee provided to the Purchasers by Bumi Armada Offshore Holdings Limited to guarantee the Sellers’ payment obligations under the SPA which are subject to claims by the Purchasers (any such claims to be brought within 24 months from Completion), there are no other liabilities, including contingent liabilities and guarantees, to be assumed by the Bumi Armada Group as a result of the Proposed Disposal.

5.0 RATIONALE AND BENEFITS OF THE PROPOSED DISPOSAL

The Proposed Disposal is in line with the strategic plans and intention of the Bumi Armada Group as previously announced, to exit the offshore marine services business. It will also generate cash inflow to enable the Bumi Armada Group to repay and reduce its corporate debt. Further, it will allow the Bumi Armada Group to redeploy and focus its resources on its core activities.

6.0 UTILISATION OF PROCEEDS

Approximately USD38.0 million of the proceeds received from the Proposed Disposal will be used to reduce the Bumi Armada Group’s corporate debt whilst the remaining proceeds amounting to approximately USD6.5 million will be retained for working capital purposes. The proceeds are expected to be fully utilised within 3 months from the receipt of such proceeds.

7.0 RISKS OF THE PROPOSED DISPOSAL

Save for the risk of non-completion, the Board does not foresee any material risk factors arising from the Proposed Disposal.

8.0EFFECTS OF THE PROPOSED DISPOSAL

The Proposed Disposal is expected to result in a loss on disposal of subsidiaries of approximately RM25 million to the Bumi Armada Group.

The effects of the Proposed Disposal to the results of Bumi Armada for the 9-month financial period ended 30 September 2021 are as follows:

9.0 APPROVAL REQUIRED

The Proposed Disposal is not subject to the approval of Bumi Armada’s shareholders and/or any regulatory authorities as the highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 18.1% based on the latest audited financial statements of Bumi Armada for the financial year ended 31 December 2020.

10.0 INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED

None of the Directors and/or major shareholders of Bumi Armada and/or persons connected with them have any interest, either direct or indirect, in the Proposed Disposal.

11.0 DIRECTORS’ STATEMENT

The Board, having considered all aspects of the Proposed Disposal (including the rationale, benefits and the effects of the Proposed Disposal), is of the opinion that the Proposed Disposal is in the best interests of the Bumi Armada Group.

12.0 ESTIMATED COMPLETION

Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed by the 1st quarter of 2022.

13.0 DOCUMENT FOR INSPECTION

The SPA will be made available for shareholders’ inspection during normal business hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement at the registered office of the Company at Level 21, Menara Perak, 24 Jalan Perak, 50450 Kuala Lumpur.  

This announcement is dated 19 January 2022.