PETALING JAYA: Minority shareholders have been advised to vote in favour of Westports Holdings Bhd’s proposed acquisition of a 146.4ha land parcel in Klang, Selangor, for RM393.96 million cash at its upcoming extraordinary general meeting.
In an independent advice circular, Hong Leong Investment Bank said the proposed acquisition “is fair and reasonable and is not detrimental”.
It noted that the group’s current container terminal (CT) facilities, comprising CT 1 to CT 9, was operating at a utilisation rate of 72% of its total terminal handling capacity.
“Westports handled 10.86 million twenty-foot equivalent units (TEUs) of containers in 2019. The increased throughput of 14% over the previous corresponding period was contributed by transhipment containers, which improved to 7.23 million TEUs, while gateway containers expanded to 3.63 million TEUs,” it said.
Westports expects its current CT facilities to reach near full utilisation within the next few years.
In February, Westports said the proposed acquisition would help facilitate an increase in container terminal (CT) capacity, in order to keep up with an expected increase in throughput demand.
The total development cost for the entire proposed expansion of the group’s CT facilities comprising CT 10 to CT 17, is expected to be about RM10 billion over a period of 25 years.
The proposed acquisition is expected to be completed by the fourth quarter of 2020.
In addition to the proposed acquisition, Westports said it will be investing in the deployment of additional terminal handling equipment at CT 9, which will consist of 12 rubber tyre gantry (RTG) cranes to stack inbound and outbound containers and five quay cranes (QC) to load/discharge containers on to/from the vessels, at its port.
“As part of our group’s proactive management strategy, we intend to undertake periodic increase in our CT capacity to meet the projected increase in throughput demand as well as to remain competitive in the industry.
“Our group expects to incur about RM60.5 million and about RM180 million for the acquisitions of the additional RTGs and additional QCs respectively.”
The group intends to have the additional RTGs to be fully operational by the first quarter of 2021.
Beyond CT 9, the group is also planning for the proposed expansion to support the expected long-term growth in the coming decades.
It expects to invest RM3 billion for new terminal handling equipment required for the commissioning of CT 10 to CT 17. In addition, it expects to further incur about RM300 million over a period of around 30 years to refurbish and replace the terminal handling equipment as and when necessary.
The proposed acquisition and the proposed expansion would also cater for the expected long-term growth in the demand for port services as it is expected to increase the group’s total handling capacity to 28 million TEUs per annum upon its completion.
