IJM boosts stake in CIDBI

KUALA LUMPUR: IJM Corp Bhd is further expanding its venture in the Indian highway business following its proposal to buy stakes in CIDB Inventures Sdn Bhd (CIDBI) and Swarna Tollay Pvt Ltd (STPL) for RM 27.4 million and US$21.34 million (about RM66 million) respectively.

In a Bursa Malaysia filing on Tuesday, Oct 5, the group said it had entered into a sale and purchase agreement (SPA) with WCT (Overseas) Sdn Bhd and MTD Capital Bhd, while IJM Corp's indirect unit IJMII (Mauritius) Ltd had entered into an SPA with WCT (Offshore) Pte Ltd and International MTDCap (Mauritius) Ltd, both on the same date.

WCT (Overseas) and WCT (Offshore) are units of Main Market-listed WCT Bhd while MTD Capital and International MTDCap (Mauritius) are units under Main Market-listed MTD Capital Bhd.

With the acquisition, its shareholding in CIDBI and STPL will be increased to 78.14% and 76.44%.

According to a separate filing by MTD Capital, CIDBI is engaged in the construction, development, operation and management of highway projects in India.

It had entered into a concession agreeement with the National Highways Authority of India (NHAI) for improving and upgrading two highway sections, namely Tada to Nellore (km 52.8 to km 163.6) and Nandigamat to Igrahimpatnam Section (km 217 to km 252) in Andhra Pradesh, India, via a 30-year concession on a build, operate and transder basis.

STPL was set up by CIDBI as a special-purpose vehicle to undertake the concession agreement.

MTD Capital said for the audited financial year ended Dec 31, 2009, CIDBI recorded a net loss of RM940,995 while its net asset stood at RM63.86 million.

Meanwhile, STPL recorded a net loss of IR89.45 million (RM6.5 million) while its net asset stood at IR3.7billion (RM270.6 million).

IJM Corp has proposed to acquire from WCT (Overseas) a 15.35% stake in CIDBI for RM9.45 million while it had proposed to acquire a 29.15% stake in CIDBI from MTD Capital for RM17.95 million.

Meanwhile, IJMII had proposed to acquire from WCT (Offshore), a unit of listed entity WCT Bhd, a 17% stake in STPL as well as 4.5 million cumulative redeemable preference shares, representing 22.45% of the preference share capital of STPL, for US$12.96 million.

In addition, IJMII had also proposed to acquire an 11% stake in STPL and 2.9 million preference shares representing 14.53% of the preference share capital of STPL for US$8.38 million.

MTD Capital said the consideration was arrived at on a willing-buyer willing-seller basis, after taking into account the future discounted cash flow of the project as well as the premium paid for the redeemable preference shares.

It added that the disposal of its stake in the companies was in line with its plans to divest itself of non-core assets that do not fit its long-term objectives.

The gains from the disposal, which amount to RM43.5 million, will be used to pay existing bank loans and defray expenses related to the disposal, it said.
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