APFT proposes move to diversify into oil and gas

by **Cals** Fri 06 Sep 2013, 08:52

Published: Friday September 6, 2013 MYT 12:00:00 AM
Updated: Friday September 6, 2013 MYT 7:52:09 AM
APFT proposes move to diversify into oil and gas

PETALING JAYA: Aviation training firm APFT Bhd has proposed to acquire a 51% stake in an oil and gas services company called PT Technic (M) Sdn Bhd for RM30.6mil as a means to diversify its earnings base.
StarBiz had reported in July, when APFT’s shares were actively traded, that dealers had speculated APFT was mulling a venture into the oil and gas sector.
PT Technic, an EPCC (engineering, procurement, construction and commissioning) player in the oil and gas and petrochemicals sectors, had secured five contracts with an estimated unbilled value of RM69.2mil in its order book which were expected to be completed by early 2015, APFT said in its filing with Bursa Malaysia.
The vendors of the shares in PT Technic are also providing APFT a profit guarantee of some RM6mil for the financial year ending March 31, 2014.
When contacted, Datuk Faruk Othman the ex-banker founder of APFT explained that this venture into oil and gas was merely a diversification exercise to bring on a new income stream before his other plans to expand the core business of flight training schools come to fruition.
“It could very well have been a cash-flow producing asset in another industry. But we were fortunate to find this company. It is primarily to address our income stream which has been negatively impacted. Operationally, we are still focused on our core business of flight education and training. We have put in place a few initiatives which should bear fruit in two to three years time,” he explained.
To recap, APFT, which was listed two years ago, had been negatively impacted by major airlines cutting back on training programmes and the increasing difficulty for cadets to obtain funds as well as reports that there was a surplus of cadet pilots in the country.
Faruk said the target company, whose management and key personnel would remain running the business for the next five years, held a lot of promise, adding that he had forked out his own money to pay an initial deposit for this acquisition. As a result, APFT is also seeking in this proposal to settle a RM15mil debt owed to Faruk and an entity controlled by him, via the issuance of 54.5 million APFT shares at an issue price of 27.5 sen, which is the five-day weighted average market price of the shares up to Sept 4, 2013.
The proposal also stated that the target company PT Technic was a Petronas licence holder and had completed close to 60 projects over the 20 years of its operations, that included EPCC projects for a jet fuel storage terminal at Kuala Lumpur International Terminal and a waste water treatment facility in Sudan. PT Technic was also in negotiation for new projects amounting to some RM105mil, with negotiations expected to be completed by the end of the year, APFT’s filing stated.