SILK Holdings shareholders approve sale of toll highway to PNB

KUALA LUMPUR: SILK Holdings Bhd shareholders have unanimously approved the proposed disposal of Sistem Lingkaran Lebuhraya Kajang Sdn Bhd (SILK) to Permodalan Nasional Bhd (PNB).
The shareholders voted in favour of the proposed disposal at an EGM yesterday, which will see SILK Holdings sell its entire issued and paid-up share capital in SILK for RM380 million cash.
“With that, the remaining approvals that are still required will be the approvals of the relevant government authorities, in this instance UKAS (Public Private Partnership Unit), as well as the completion of the due diligence exercise which PNB is undertaking,” executive chairman Datuk Mohammed Azlan Hashim (pix) told reporters yesterday.
Recall that the sukuk holders had already approved the transfer of equity and changes to the terms of the sukuk papers, and the parties have until end of April to complete the entire transaction.
Of the RM380 million proceeds, at least RM200 million will be used to strengthen its marine logistics business and future investments while RM70 million has been allocated for a special dividend of 10 sen per share. The balance will be used for working capital.
“More than 50% of the proceeds will be for the purposes of enhancing the existing business that we have in marine logistics, for both upstream and downstream, as well as to look into further opportunities,” said Mohammed Azlan.
He said the group will be more focused in the marine logistics industry via its subsidiaries Jasa Merin (Malaysia) Sdn Bhd, which is in the upstream business and Jasa Merin (Labuan) PLC, which is in the downstream business.
“This industry has got its challenges, but it is a cyclical one and we think that with cycles, there are opportunities. So, what we would like to see, is that we strengthen and enhance the existing business that we have and thereafter look for opportunities that would be there for us to consider,” he added.
He said the group does not have specific plans yet but noted that it has been receiving more invitations to bid for contracts compared with a year or two ago. On the upstream side, the group has 21 offshore support vessels (OSV) that are “relatively new” after a fleet renewal programme that was carried out over the last five to six years.
“In the downstream, this is an area we went into and commenced last year. We had acquired three chemical tankers, they handle clean petroleum products and other oil and related products. They do fulfillment activities, bringing products from one port to another,” Mohammed Azlan said.
Astramina Advisory Sdn Bhd managing director Wong Muh Rong said the loss-making position of SILK Holdings in its annual report is mainly due to the provisions that are required to be made pertaining to accounting requirements and is not a result of operational inefficiency.
“Pursuant to the completion of this transaction, SILK Holdings will make a huge gain on disposal. That technically will improve the balance sheet substantially. When we complete this transaction, we will make around RM300 million plus for that, which will be recorded for this financial year ending Dec 31, 2017,” she said.
She said the gain on disposal will result in a write back of the provisions made earlier. Astramina Advisory is the financial adviser/joint adviser for the transaction.