KUALA LUMPUR: Boustead Holdings Bhd (BHB) has proposed to acquire nine parcels of land totalling 69.88 acres (28.27ha) in Pulau Indah, Selangor for RM310 million, which include prime sea-fronting land and the Port Klang Cruise Centre (PKCC).
It is understood that BHB, via its unit Boustead Heavy Industries Corp Bhd (BHIC), may develop parts of the land into a fabrication yard that specialises in oil and gas (O&G) support services. Some parts of the land are strategically located alongside a 10-metre deep water frontage.
The Edge weekly on July 14 reported that BHIC was looking to acquire fabrication yards as part of plans to expand its O&G activities and reduce its dependence on government-related defence jobs.
BHIC’s primary business is in shipbuilding and ship repairs as well as offshore fabrication for the O&G industry.
In a filing with Bursa Malaysia yesterday, BHB said the proposed land acquisitions form part of the group’s strategy to continue exploring growth opportunities with a view to unlocking its potential and adding value to its stable of businesses.
“Coupled with BHB group’s existing businesses via our heavy industries division (BHIC), this improves our capability to provide a wide range of services for the naval and maritime industries, and cements our position in the maritime sector while enlarging our presence in the O&G sector,” said Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin in a statement yesterday.
“In addition, the cruise terminal (PKCC) is one of the few maritime gateways to Malaysia, and provides an opportunity to further expand our existing husbandry business to service a larger range of ships in the Asia-Pacific region, and move up the value chain with an already well-established client base,” he added.
Cruise lines currently utilising the terminal include Cunard Lines, Royal Caribbean, Princess Cruises, Costa Cruises and Star Cruises.
BHB’s wholly-owned unit Bestari Marine Sdn Bhd yesterday signed four conditional sale and purchase (S&P) agreements with Glenn Defense Marine (Asia) Sdn Bhd (GDMA) for the acquisition of three parcels of land for RM72.49 million.
Bestari Marine also signed S&P agreements with GDMA’s subsidiary Port Klang Cruise Centre Sdn Bhd to acquire two parcels of land which include PKCC for RM164.31 million. The cruise terminal sits on 11.82 acres and comprises a five-storey building and jetty.
Both GDMA and Port Klang Cruise Centre Sdn Bhd were placed under receivership and Duar Tuan Kiat of Messrs Ernst & Young was appointed as the receiver and manager of all the two companies’ assets and undertakings. It was reported that GDMA had bought over PKCC from Star Cruises Terminal Sdn Bhd for RM118 million back in 2009 and had planned to develop a third container terminal with a 1.5km wharf at the PKCC site.
In addition, Bestari Marine signed with Glen Management Sdn Bhd and Glamourous Trendy Sdn Bhd for three parcels and one parcel of land for RM62.37 million and RM10.82 million respectively.
“The unique nature of the land involved will enable BHB Group to strategically tap multiple opportunities including O&G, shipbuilding and ship repair, while developing its existing business in ship husbandry on the back of the cruise centre,” said BHB in the statement.
Upon completion of the acquisitions that are slated by the fourth quarter of this year, the group plans to invest RM100 million in the development of the land.
The RM310 million purchase consideration will primarily be funded by proceeds of RM200 million from the group’s Perpetual Junior Sukuk Programme, and the balance via internal funds and bank borrowings.
“We are excited about the potential value this move can bring to the group as it is very much in line with our ongoing strategy to build up our portfolio of investments and strengthen our earnings potential,” said Lodin.
“The acquisition puts us in an advantageous position to enhance our group’s prospects,” he added.
BHIC currently has three yards across Malaysia, in Lumut, Jerajak and Langkawi which is now mainly utilised for BHIC’s shipbuilding and ship repair businesses.
Shares of BHB closed up 4 sen or 0.78% at RM5.19 yesterday, while BHIC’s stock ended the day was unchanged at RM2.65.
This article first appeared in The Edge Financial Daily, on July 24, 2014.
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