

Change is required at MMA
Halom Investments is the largest shareholder in MMA Offshore (ASX:MRM), with an 18% interest. We have become concerned with the direction of MMA under current stewardship. Halom believes change is required to salvage the company from its unsustainable capital structure, promote a new strategic vision and restore value for shareholders that has been destroyed.
Concerns about MMA
Taking action for change at MMA
On 20 September 2017, Halom wrote to MMA's Board proposing removal and replacement of two Board Members, the CEO Jeff Weber and the Chairman Tony Howarth.
To Halom’s disappointment, MMA did not disclose the Members Statement from Halom to all shareholders outlining our concerns, as part of its 25th September ASX announcement.
This Members Statement can be found here, and sets out (within a regulated 1,000 word limit) the reasons for the Company’s largest shareholder taking these steps.
Our concerns
ASIC reviewed MMA's FY2016 financials as part of its ongoing financial reporting surveillance programme. ASIC raised concerns regarding the value of PP&E relating to the Vessels business, resulting in subsequent write-downs.
ASIC queries
The current Board led by Chairman Tony Howarth and CEO Jeff Webber have presided over the destruction of $882m of shareholder value. MMA's market capitalisation declined from $951m to $69m between 28 February 2013 and
11 September 2017.
Massive value destruction
MMA is running out of money. It had $19m of cash at June 2017 and an annual estimated cash burn of $22m.
Serious liquidity risks
MMA's CFO abruptly resigned on 28 July 2017. There was no well orchestrated campaign for his departure and no replacement has been found.
Abrupt CFO exit

News Articles
Halom's Member's Statement
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On 20 September 2017, Halom wrote to MMA's Board proposing removal and replacement of two Board Members, the CEO Jeff Weber and the Chairman Tony Howarth.
To Halom’s disappointment, MMA did not disclose the Member's Statement from Halom to all shareholders outlining our concerns, as part of its 25 September 2017 ASX announcement. It was not released until the 27 October AGM notice.
This Member's Statement can be found here or using the link below. It sets out (within a regulated 1,000 word limit) the reasons the Company’s largest shareholder believes change is required. We also have prepared a more detailed presentation for shareholders to consider, linked below.
Shareholder Value Loss (since 2013)
($882m)
($522m)
Last Two Year Losses
$5.1m
CEO Pay
for FY14 - FY17
$324m
MMA's Total Debt

New MMA directors proposed by Halom
Haridass Ajaib
Haridass is a director of SGX-listed and Temasek-linked Sembcorp Industries Limited and Sembcorp Marine Limited, as well as SGX-listed Nam Cheong Limited, an OSV builder.
He is a prominent admiralty, marine insurance and commercial lawyer, practicing as an admitted Advocate / Solicitor in Singapore since 1976 and member of the English Bar.
Haridass is an accredited arbitrator and mediator. He is recognised by Chambers Global - The World's Leading Lawyers as a preeminent shipping and dispute resolution litigator. He was a magistrate of the State Courts of Singapore and currently sits as Referee of the Small Claims Tribunal.
Jeffrey Mews
Jeff was a non-executive director of MMA from its IPO in 1999 until November 2009.
Jeff, previously a tax consulting partner of PricewaterhouseCoopers (1976-1998), was formerly a member of the WA Salaries and Allowances Tribunal.
He is a Fellow of the Institute of Chartered Accountants and Taxation Institute of Australia.
About Halom
Halom is a long term investor and the largest shareholder owning an 18.09% equity interest in MMA,
with substantial OSV experience in the past. This includes experience gained through the various upturn and downturn cycles since the 1970's.
Halom is backed by Michael Kum.
Mr Kum has over three decades of hands-on experience in the OSV market, including in the North West Shelf region.
He commenced his career in Singapore in 1969 working for an Australian OSV company headquartered in Fremantle, Western Australia (with operations in Singapore). He subsequently co-founded Offshore Equipment Pte Ltd in 1976 to charter OSVs to the oil & gas industry in the Middle East (including Egypt), India, Australia (including the North West Shelf) and South-East Asia.
Mr Kum previously 'part-owned' Mermaid Marine Australia (which is now called MMA Offshore).
Mr Kum also co-founded Miclyn Express Offshore Limited (ASX:MIO), which was listed on the ASX in 2010.
Click the link below to read about our intentions
if our resolutions to replace two MMA board members are successful.
Largest shareholder with substantial hands-on OSV industry expertise is seeking change
Contact us
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Concerns about MMA Offshore
Taking decisive action for change
Our concerns
On 20 September 2017, Halom wrote to MMA's Board proposing removal and replacement of two Board Members, the CEO Jeff Weber and the Chairman Tony Howarth.
To Halom’s disappointment, MMA did not disclose the Member's Statement from Halom to all shareholders outlining our concerns, as part of its 25 September 2017 ASX announcement. It was not released until the 27 October 2017 AGM announcement.
This Member's Statement can be found here. It sets out (within a regulated 1,000 word limit) the reasons the Company’s largest shareholder believes change is required. A summary of our concerns is below or can be downloaded as a presentation.
MMA is likely to run out of cash. It had $19m of unrestricted cash at June 2017 and an estimated annual cash burn of $22m. With the OSV market not expected to improve for several years, MMA's cash burn (including >$24m p.a. in interest payments on debt) poses a significant risk to the company's survival.
Serious liquidity risks, with no recovery on the horizon
The incurrence of substantial debt at the top of the cycle through the Jaya acquisition has materially contributed to MMA’s financial challenges, after the cyclical downturn occurred (now 18x FY17 EBITDA). The Chairman and CEO together with other board members (except Peter Kennan, appointed recently) undertook this acquisition.
Jaya acquisition
debt
There has been inadequate accountability for the poorly timed, top-of-cycle acquisition of Jaya Holdings in 2014 for A$550 million using US$227 million in new debt funding. Total debt post acquisition of Jaya was A$447m. The acquisition and incurrence of debt have materially contributed to MMA’s current financial woes, particularly after the cyclical downturn occurred.
No
accountability
In Halom's opinion, the current approach taken by the Board and CEO to sell vessels at extremely low prices now, after having acquired Jaya's assets in materially higher pricing environments at that time (as recent as 2014) is value destructive. This contradicts the common principle of “Buy Low, Sell High” and erodes value.
Inappropriate
'buy high, sell low' strategy
MMA has sold an important strategic asset – Dampier Supply Base & Slipway – to repay lenders. This erodes value and optionality for all stakeholders, as this asset generally gives MMA an added competitive advantage in the north-west WA region (e.g. past Gorgon project) and possibly the impending Chevron and Woodside Petroleum joint venture project in the near future. In fact, the sale price was less than the EBITDA of the assets in FY13 & FY14.
Sale of key strategic asset
only to repay debt
Since the Jaya acquisition in 2014, MMA's CEO Jeff Weber has received $5.1m in total compensation (averaging approximately $1.275m p.a.) while cumulative losses have totalled $519m. In Halom’s opinion the CEO's pay (including stock-based incentives) has not been appropriately performance based and there has been a misalignment with shareholders’ interests. Halom seeks accountability & change.
Executive remuneration
MMA had poor strategic direction since 2014 and in Halom’s views lacks strategic direction going forward. It appears that the Company has no effective plan to derive sustainable returns through the present cycle. After 15 years with the same CEO, fresh ideas with dynamic management and expertise is required.
Lack of strategic direction
MMA has claimed that the actions taken by Halom are destabilising to the Company. Halom is of the view that the current Board and CEO have made decisions and set strategies that have adversely affected the Company (e.g. resulting in 18x Debt-to-EBITDA). Taking decisive and corrective action is essential to Halom as a major shareholder. Our proposed strategy is outlined here.
Halom's proposed action is to stabilise the Company
Halom can assist in stabilising the Company. Halom is financially backed by Michael Kum, an industry veteran having over 3 decades of hands-on experience in the OSV owning and chartering market. He has gained experience through the various upturn and downturn cycles since the 1970's. Halom has proposed two new board members who will advocate a strategic review to save the company from possible insolvency and to drive a turnaround.
Halom credentials well suited to stabilise and
grow MMA
Taking into account all matters that have led to MMA's current position since 2014, shareholders will have the opportunity to evaluate for themselves all matters (e.g. Jaya acquisition) leading to MMA’s current precarious financial position. It is interesting to read and digest the rationale of the Jaya acquisition at that time, relative to what have happened to the Company after that.
Shareholders can then form their own view and make an informed vote on the removal of the CEO (Jeff Weber) and appointment of new Board members at the upcoming AGM (set for 30 November 2017 - click here to read how to vote).
Shareholders will have a say
In Halom’s opinion, MMA’s current board and management are not in a credible position to lead a strategic review. Any review undertaken will likely need to analyse their own previous decisions, any past errors of judgement and may not give sufficient thoughts to the rectification of their previous courses of action. A fundamental re-think of MMA’s overall strategy is essential.
Current Board's strategic review lacks credibility
Halom is proposing changes to seek to correct the course set by the
current Chairman, Tony Howarth, and CEO, Jeff Weber.
It is time for change and fresh perspectives
The average tenure of the Company’s existing Board is over 9.5 years with a minimum of 5 years (excluding Peter Kennan, appointed after Halom lodged its notices on 20 September 2017). During the terms of the current board (excluding Peter Kennan), MMA has experienced a collapse in shareholder value since FY14. Considering the existing tenure of the current Board (excluding Peter Kennan) and the massive losses, a new perspective with dynamic management is essential.
Halom’s proposed directors have more than adequate OSV related experience. The proposed directors would help to create a refreshed Board with sufficient OSV experience and new perspectives to lead a dynamic management team. Jeff Mews, for example, has OSV related experience and was a former director of MMA (1999-2009). Haridass Ajaib (a prominent admiralty, marine insurance and commercial lawyer with more than 4 decades of maritime law practice) is also a director of Temasek-linked Sembcorp Industries Limited and Sembcorp Marine Limited and SGX-listed Nam Cheong Limited, an OSV builder.