MTQ

MTQ: intends to make a conditional offer for all issued shares in Neptune Marine Services, at A$0.032 per Neptune share (33% premium over last traded at A $0.024/sh). The aggregate cash consideration is expected to cost A$47.0m. MTQ intends to finance the offer through a combination of a funding commitment with UOB for up to A$37m, and the remaining from internal sources. Neptune has its HQ in Perth. It is listed on the ASX with a mkt cap of A$43.3m, as at 29 Oct ’12. The group provides engg services to offshore oil and gas, marine and renewable energy industries. These comprise commercial diving, dry underwater welding using its patented NEPSYS technology, hydrographic surveying, positioning and geophysical services, Non-Destructive Testing and inspection services, pipeline stabilization and grouting, Remote Operated Vehicles services, specialist fabrication, subsea and pipeline engg, testing and assembly services and end to end project mgt. MTQ expects oil and gas drilling activities to remain robust with an increasing focus on deep sea drilling which drives demand in subsea services. MTQ anticipates that having control of Neptune will create opportunities for the cross selling of services to each other’s customers and strengthen engagement with common customers. In addition, Neptune is in a net cash position with strong operating businesses and good growth opportunities. The offer price will be a discount of 33% to Neptune’s NAV and a premium of 6.4% to Neptune’s NTA. However, Neptune was recently making large losses. Based on FYMar12 numbers, if MTQ successfully privatizes Neptune, MTQ’s NTA would drop from 80.85cts to 73.07 cts, and MTQ’s EPS of 16.3cts would turn to a loss of 8.85cts. MTQ remains untraded for today; last closed at $0.94. 2QFYMar13 results are due today after mkt close.