Otto Marine Wins 2 Newbuild Orders Worth Us$77m (BT)

Sep 11, 2011

ORDER wins for Otto Marine have broken the spell of bad luck that has plagued the offshore supply vessels (OSV) builder this year.

It announced yesterday a contract for two 12,000 brake horsepower (bhp) anchor handlers for US$77 million, one of which it expects will be completed in August 2012 and the other in March 2013.

The newbuild orders came after Otto's sale of another 8,000 bhp anchor handler to the same ship manager Go Marine Group for US$24 million, which was announced on Thursday.

The vessel was handed over to Go Marine yesterday at Keppel Bay Marina. Go Marine will deploy GO Rigel to Australia's Bass Strait to support the Origin Yolla Field Development.

While the two orders will not have a material impact on Otto's net earnings per share or net tangible assets per share for this fiscal 2011, GO Rigel's sale does.

Otto Marine has a 19 per cent equity stake in Go Marine, which operates about 20 OSVs. GO Rigel is the first vessel that it has acquired from Otto Marine.

'These orders placed demonstrate the positive synergies we can harness from association with Go Marine,' said president and group CEO of Otto Marine, Lee Kok Wah.

The good news breaks step with a rough patch that Otto Marine has gone through. It chalked up a Q2 loss of $38.3 million as it ran into problems with a US$322.5 million contract from customer Norway's Mosvold Supply.

Mosvold cancelled three of four ordered anchor handling tug supply vessels after Otto failed to deliver the vessels on time. The last vessel may suffer the same fate if there are further delays.

Otto Marine's share price has reached trough valuations, and its shares have sunk to more than half of what it was at the start of 2011. Otto Marine's share price edged up 0.3 cents to 15.2 cents yesterday.

Otto Marine press release