The international oilfield services company is working with its lenders to put in place a refinancing of its RM2.1b debt

By LYDIA NATHAN

BUMI Armada Bhd recorded a net loss of RM502.8 million in the third quarter ended Sept 30, 2018 (3Q18), against a profit of RM123.7 million in the previous year, due to higher asset impairments. Revenue for the quarter fell 8.3% to RM588 million from RM641.4 million reported in 3Q17.

In a statement to Bursa Malaysia last week, the international oilfield services company said it would have made a net profit of RM75.2 million if not for the non-cash impairments of RM41.4 million for the floating production and production (FPO) and RM522.1 million for the offshore marine services (OMS) businesses.

“Revenue contribution from the FPO business in 3Q18 was RM405.7 million, a slight increase over the RM402.7 million recorded in 3Q17 and a decline of 9.1% compared to 2Q18.

“The FPO business registered weaker income of RM144.5 million, compared to RM182.4 million in 3Q17, due to a non-cash impairment charge of RM41.4 million taken against the sale of the Armada Ulysses, a very large crude carrier tanker, which was a vessel held as an FPSO (floating production, storage and offloading) conversion candidate,” it said.

Bumi Armada said its OMS division saw a decline in revenue by 23.6% to RM182.3 million due to lower contribution from the Armada Installer in the subsea construction segment.

On the other hand, the group said its offshore support vessels reported a 43% improvement in its vessel utilisation in 3Q18 compared to 38% in 2Q18.

Looking ahead, Bumi Armada ED and CEO Leon Harland said the company has been in talks with its creditors in an attempt to restructure its US$500 million (RM2.1 billion) loan.

“There is a continuing focus on strengthening our overall balance sheet. We are working with our lenders to put in place a refinancing of our US$500 million debt, of which approximately one-third was due in October 2018.

“We have made a partial repayment of US$120 million in October 2018, and are looking to refinance the balance of debt into a longer-term facility,” he said.

Harland added that the group would focus on optimising cost structure, monetisation of underutilised assets, as well as collecting and generating more cashflow next year.

On the 3Q18 results, he said the performance across its fleet has been positive.

“This is the result of our continuous efforts on safety awareness and proactive measures across the organisation. This has resulted in an increased operating profit of RM114.7 million for the quarter.

“As for the FPO business, we have secured a six-year and three-month extension contract for the Armada TGT 1 FPSO in Vietnam, which is a clear recognition of the capabilities of the unit and its strong operat ional track record,” he said.

Harland added that the company had completed the final acceptance of the Armada Kraken FPSO in September.

“This is a positive result to a project that has been extremely challenging both in its operational complexity and the environment in the North Sea,” he said.