The Hindu Business Line : Great Offshore acquisition of Sea Dragon will not be revenue neutral

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Great Offshore acquisition of Sea Dragon will not be revenue neutral

Jayanta Mallick

According to market grapevine, the proposed overseas acquisition of Sea Dragon Offshore, Cayman Islands, by Great Offshore would not be revenue and liability neutral on a consolidated basis. According to sources close to the development, the $1.4-billion acquisition would be through a 100 per cent owned SPV, which would be domiciled in a tax heaven, and the deal would be 100 per cent leveraged. Lawyers are expected to zero-in on the geography soon. “Apart from domicile, arbitration and tax issues, all other aspects including that of financing the deal have already been tied up,” said a source. The consortium of banks and insurance companies is understood to be getting better asset coverage because of a 30 per cent value appreciation in one of the rigs of the target company, since the time when Great Offshore had first agreed to buy the company. The rig has already been contracted for service in the Gulf of Mexico by Petrobas for $5-lakh dollar per day.

This price-sensitive development along with buyback of shares (at a maximum price of Rs 750 each), which opened on May 7, has not, however, influenced the recent stock price much. The stock finished at Rs 665.45 on Wednesday, representing a gain of 0.30 per cent. In the past one week, the stock has declined by 1.37 per cent. Meanwhile, the company had informed the stock exchanges that it has purchased a few thousands of shares since the offer opening.