KTL Global, the supplier of rigging equipment to the offshore oil and gas (O&G) sector, says it will invest $6 million to set up one the largest rigging and sling manufacturing facilities in the Middle East.

It will be located on a 10,000 sqm plot of prime industrial land in the Hamriyah Free Zone in the city of Sharjah in the United Arab Emirates. Spanning 24 square kilometres and served by a 14 metre deep port, the zone is dedicated to small and medium-sized enterprises in various industries such as O&G, petrochemical, steel and construction.

The proposed site will be acquired by KTL’s wholly-owned KTL Offshore, which recently inked a sale and purchase agreement with three individuals to buy over their entire combined 100% stake in Atlantic Engineering FZC for $3 million. Atlantic Engineering holds a 25-year lease (expiring in May 2030) to the property, which comes with a 308 sq m office and 1,189 sq m of warehouse space.

KTL expects that $3 million in capital expenditure will be required over the next six to 12 months to get the facility up and running. The facility will be equipped with specialised equipment, such as the KimTest 1000MT x 60m test bed and 2000MT hydraulic press, which will enable the group to test, certify and manufacture customised mooring and heavy lift systems for the offshore O&G and marine industries.

The group’s proposed purchase price of $3 million (7.8 million dirham) for the site is 4% below the KTL Offshore-commissioned market valuation of 8.15 million dirham for the property as at 16 November 2009. KTL intends to fund the acquisition of Atlantic Engineering and the estimated capex of $3 million through a combination of internal cash and bank borrowings.