KUALA LUMPUR: MMC Corp Bhd is buying a 49% stake in Penang Port, the country’s oldest port, from Seaport Terminal (Johore) Sdn Bhd (STJSB) for RM200mil in cash. The utilities and infrastructure group, which already has several port operating assets, told Bursa Malaysia that it signed a conditional agreement yesterday to acquire the shares in Penang Port Sdn Bhd (PPSB) from STJSB, which is MMC’s majority shareholder with 51.76% equity interest. STJSB will maintain a 51% stake in PPSB, which is trying to turn its port into a competitive regional one.
Among the conditions precedent is the execution by PPSB of the agreement(s) to dispose of its loss-making ferry service business on terms acceptable to the purchaser, including the assumption by the buyer of all costs and liabilities arising from the ferry operations. If the disposal of the ferry business was not completed, MMC said there was no assurance that its expectation of PPSB’s financial performance would be achieved.
MMC said the proposed purchase was in line with the group’s initiative to make further strategic investments in one of its core businesses, ports and logistics, and to strengthen its financial performance and position. It said this would help the group maintain its position as a key player in the ports industry in Malaysia as well as to establish its foothold in PPSB, a prominent port company located in the northern part of Peninsular Malaysia.
MMC noted that PPSB was currently undertaking a transformation programme to turn around the port to be more competitive and profitable. They include reducing operation cost, increasing port efficiency, providing additional services for cargo handling activities and developing continuously the port infrastructure to meet industry demand. PPSB’s operations are subject to the terms and conditions under the privatisation agreement. Among others, the concession is for an approved period (reportedly ending in 2023). MMC expects the proposed acquisition to be completed in the first quarter of 2017.
