An additional 30% stake in its drilling subsidiary will help Gulf International Services (GIS) earn an estimated profit and revenue in excess of QR900mn and QR3.5bn respectively in 2014.
GIS will complete the purchase of 30% stake held by Japan Drilling Company (JDC) in Gulf Drilling International (GDI) for a consideration of $160mn by this month end. After this, GDI will become a fully-owned entity of GIS, whose other 100% subsidiaries are Al Koot, Gulf Helicopters and Amwaj.
"The JDC buyout was a well timed investment that is expected to yield significant results for the largest services group based in Qatar," HE the Minister of Energy and Industry, who is also GIS chairman, Dr Mohamed bin Saleh al-Sada said.
The fundamentals of this investment are particularly strong considering the substantial value received for the consideration paid. With GDI's ambitious growth plans starting to take hold, GIS is well-positioned to reap the benefits made possible by the successful joint venture with JDC," al-Sada said.
GDI is expected to contribute an incremental QR1.4bn of revenue and QR150mn of net profit in 2014 on account of the acquisition, GIS chief co-ordinator Ibrahim al-Mannai said.
The expected final cost to GIS is circa $160mn, subject to the final audit of the accounts, a GIS spokesman said, adding the transaction is being financed by an eight-year bilateral loan agreement secured through local banks on competitive terms, and repayable on a semi-annual basis starting from 2015.
The consideration paid for JDC's 30% stake was derived pursuant to terms set forth in the joint venture agreement and is based on 30% of GDI's net book value as of April 30, 2014. The fair market value of this interest is estimated to be significantly above its net book value, with GDI's fleet being fully utilised under favourable multiyear contracts.
GIS will own a larger share of a rapidly growing company, accordingly its future earnings are expected to grow exponentially and the company's shareholders are expected to gain from the transaction, al-Mannai said.
GDI, which is a dynamic company with world-class drilling contractor capabilities, is also diversifying into complimentary lines of business that include jack-up accommodation and lift-boat operations.
As a result, substantial growth has been achieved in a short period of time with the size of GDI's fleet set to double from 9 to 18 in just three years with the arrival of three more units (two rigs and one lift boat) later this year.
© Gulf Times 2014
