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Renaissance - Topaz to merge
Renaissance Services SAOG (RENAISSANCE) and Topaz Energy & Marine
SAOG (TEAM) have proposed a consolidation of their operations. The
process is being conducted in an amicable and consultative manner
between the companies. The respective boards at separate meetings
held on 5th March 2005 took this decision. This merger of the 2
companies will create a substantial entity in Oman’s services
sector with an enhanced global footprint and operations across 8
business lines. RENAISSANCE is in Contract Services, Technology &
Healthcare, Education & Training and Media Communications: TEAM is
in Ship Owning, Ship Repair, Oil & Gas fabrication and Stainless
Steel products.
Both Boards
believe that looking ahead, this merger will deliver positive
results for the shareholders of the 2 companies.
TEAM and
RENAISSANCE are considered to be large and successful companies in
the context of Oman market. However, they are dwarfed in size,
scale and resources when competing in a larger geographical
footprint. It is the view of both Boards that growth and better
value propositions will only be captured in deal flow and
transactions of a size and scale that are not available to the
companies based on their individual resources. The
combining of the
balance sheets will allow the companies to look at growth
opportunities of far greater magnitude than their stand-alone
resources have hitherto permitted. The key drivers for this merger
can be identified as:
-
Size and scale
of the company will increase in financial terms
-
Due to
increased Net Worth and projected Net Profits, the risk taking
capacity will be higher
-
This will
marry the services businesses of RS with the investment driven
business of TEAM providing a better balance
-
Open up new
markets for the various businesses under the merged company and
leverage of each other’s current relationships
-
Increase the
shareholder base, improve liquidity of the shares and be able to
attract deeper pools of equity and debt capital
The proposed
merger will be effected through an exchange of shares held by the
shareholders of TEAM for new shares to be allotted by RENAISSANCE.
Under the present regulations, this would be the most efficient
way of concluding the transaction. Based on internal evaluations
by the companies, it is proposed that the swap ratio be in the
range of 3.6 to 4.1 shares of TEAM for every one share in
RENAISSANCE. This would give the TEAM shareholders a stake of
nearly 40% in the merged company. The final exchange ratio will
however be determined by the 2 companies based on advice of an
independent professional firm. The merger is subject to final
approval of the respective Boards, the share holders of each of
the companies and the regulatory bodies.
In the event the
merger is concluded on the above lines, post the current
dividend
and bonus distribution of respective companies RENAISSANCE also
intends to issue additional shares by way of stock dividend to all
the shareholders (including the new shareholders) to make the
capital base of the merged company in the region of
RO 20M (US$ 52M). This capital base will reflect the size of the
new entity, which will have Net Worth of approximately RO 50M
(US$ 130M), Net Fixed Asset of around
RO 40M (US$ 104M) and Net estimated earnings of RO 9 - 11M (US$ 24
- 29M) in 2005.
For the year
ended 31st December 2004, RENAISSANCE has reported a Turnover of
RO 62.6M (US$ 163M), Net earnings of RO 13.5M (US$ 35M) and
dividend of 45% (35% cash, 10% stock). TEAM has reported Turnover
of RO 24.7M (US$ 65M), Net earnings of RO 2.5M (US$ 6.5M) and cash
dividend of 10%.
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