THHE, McDermott Split Up
Malaysia’s TH Heavy Engineering Berhad (THHE) and McDermott International have entered into a framework agreement to end their three-year partnership.
The companies signed the agreement in 2013 to cooperate in engineering, procurement, construction and installation (EPIC) projects in Malaysia.
With the framework agreement the companies agreed to mutually unwind the joint ventures in Berlian McDermott Sdn Bhd (BMD) and THHE Fabricators Sdn Bhd. (THF).
THHE will transfer its 30 percent interest in BMD to McDermott, while the latter will transfer its 30 percent stake in THF to the Malaysian firm. As each transaction was valued at $17.35 million, there was no payment made by either party, THHE informed through Bursa filling.
“With the dampening crude oil price and persistent supply overhang, THHE and McDermott had decided to pursue different business paths. THHE has begun diversifying away from the upstream sector of the oil into downstream and other non-oil and gas businesses such as marine vessel construction and repairs,” the company explained.
THHE plans to expand into the refurbishment and maintenance works and non-oil and gas related fabrication works following a nonbinding letter of intent for the supply, delivery, testing and commissioning of three units of Offshore Patrol Vessels complete with fittings and accessories that the company had received on July 28, 2016, from Agensi Penguatkuasaan Maritim Malaysia (APMM) or Malaysian Maritime Enforcement Agency.
“The venture into non-oil and gas fabrication works is expected to provide a more stable and recurring income to the group and will counter the cyclicality of opportunity from the oil & gas business,” THHE added.
