Saturday, June 12, 2010

Wah Seong Corp unwilling to take on Socotherms's liabilities

GEORGE TOWN: WAH SEONG CORPORATION BHD [] (WSC) was unwilling to take on all the liabilities of world's number two pipe-coating Italian company Socotherm and hence it was not disappointed over its failure to win the bid for the latter.

WSC deputy managing director Giancarlo Maccagno said on Friday, June 11 that WSC walked away from Socotherm, which it had been pursuing for a year, as it was not willing to take on all the companies liabilities which Socotherm had insisted WSC take on.

"We knew the risks and they tried to push all the liabilities and wanted WSC to guarantee to on all other liabilities. We did not want to put the holding company at risk and despite the fact that ours was the best bid, they didn't agree and hence the winner was the consortium," he said after WSC's AGM.

To recap, Socotherm had favoured a proposal submitted by a consortium led by the world's biggest pipe coater, Bredero Shaw, and two private equity funds, 4D Global Energy Advisors of France and Sophia Capital of Argentina. A successful bid for Socotherm would have given Wah Seong immediate presence in Brazil, the Middle East and Gulf of Mexico.

However, Giancarlo was upbeat about the outlook for the pipe-coating business over the next one to two years due to the tremendous opportunities for WSC to set up pipe-coating plants in Europe.

WSC managing director and group chief executive officer Chan Cheu Leong estimated about US$170 billion would be invested in deepwater exploration and production in the next five years.

"There are opportunities for gas pipes from North Africa into Europe and from the Gulf of Mexico and Brazil," he said.

Chan said WSC would step up its search for mergers and acquisitions due to the deepwater exploration. These presented tremendous oppportunities for WSC's newly developed coating TECHNOLOGY [] for such projects.

"Deepwater developments present an opportunity as WSC is one of the few companies with the technology and track record and we want to expand our core O & G pipe-coating activities not only in the region but globally," he added.

The pipe coating division has commenced the coating operations for Chevron Australia Gorgon project, valued at RM551 million, that involves 850km of pipes to be installed in Australia.

The trial run for the Gorgon project in the first half of this year saw the Kuantan plant operating at 40% to 50% capacity and its capacity is expected to increased to 70% when the Gorgon contract goes into full production.

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