Viking Offshore gets into jack-up rig venture

Gusto MSC CJ46 X100 D Gusto MSC CJ46 X100 D

NOVEMBER 4, 2013 — Singapore based Viking Offshore & Marine Limited is to get into the mainstream offshore rig-building and rig charter market. It is partnering with Singaporean rig building veteran Chan Kwan Bian to construct a jack-up rig at a cost of around $180 million. The rig is a cantilever CJ46-X100-D GustoMSC designed for use in water depth up to 375 feet and can accommodate 120 men during operation.

Viking Offshore has set up an investment holding subsidiary, Viking Asset Management Pte Ltd, that has entered into a conditional sales and purchase agreement to acquire a 30 percent-stake, valued at $5.4 million, in Smart Earl Investment Pte Ltd ("SEI"), an investment vehicle belonging to Mr. Chan, that has the rights to build the jack-up rig.

The purchase consideration will be satisfied in cash and will be funded partly through the cash proceeds from the rights-cum-warrants issue completed in May 2013.

Mr. Chan is well-known industry veteran with extensive experiences in the rig building and shipbuilding space. He was a cofounder of Labroy Marine Ltd, a then-SGX listed offshore and marine specialist that was sold to Dubai Drydocks World LLC for Singapore $2.4 billion in January 2008.

The drilling rig will be built by the state-owned China Merchant Heavy Industries (Shenzhen/Jiangsu) Co Ltd. shipyard. . Mr Daniel Lin, Executive Director of Viking and son of Mr Andy Lim, Chairman and controlling shareholder of Viking, has been appointed the Chief Executive Officer of Viking Asset Management. responsible for the success of this partnership

"Viking has been offered an exceptional opportunity to participate in the fast growing rig building and rig charter market with an attractive proposition," said Daniel Lin. The contractual terms extended to SEI and Viking give us the opportunity to build and coown a jack-up rig without straining our cashflow and funding ability.

"Through this investment," he added, "Viking has initiated its move into the mainstream offshore and marine business, in line with the asset-based strategic growth initiative it had planned for. This foray into the offshore rig market is timely to capitalize on the market view that jack-up rigs of this capacity are expected to see demand outstripping supply in the next few years.

"Our investment and partnership allows Viking to leverage on the rig building experience and track record of our partner – people who have been there, done it successfully and still have the fire to do it again."

The contract to build the jack-up rig is expected to complete within 26 months, with Mr. Chan's team to provide the overall project management of the rig contract with the shipyard. Viking says this also opens up the opportunity for Viking to participate in providing the complementary equipment and engineering services to the rig construction.

The joint venture intends to resell or charter the rig to prospective Viking customers in the South East Asia region.

The acquisition by Viking is subject to shareholders' approval at an extraordinary general meeting.