Malaysia firms to enter Indonesian coal transport business through acquisition

Singapore Exchange-listed firm Chuan Hup Holdings Limited announced on Monday it had entered into conditional sales and purchase agreement to sell its entire marine logistics including shares in Indonesian business unit to Malaysian Stock Exchange-listed firm Habib Corporation Berhad (HCB).

Chuan Hup said that its entire marine logistic business unit, along with 29.07 percent shares in CH Offshore Limited (CHO) and 49.07 percent shares in Indonesian marine logistic unit PT. Rig Tenders, which is listed in the Jakarta Stock Exchange for S$570 million, of which S$485 million to be paid in cash, with the remaining balance to be paid with HCB?s shares.

Rig Tenders is currently one of Indonesia?s leading providers of supply vessels and coal transportation services to oil and gas and coal mining industries. Rig Tenders has a fleet of 39 vessels, which include anchor handling tug supply vessels, accommodation and work-over barges, offshore utility tugs, coal transport barges and tugs.

Chuan Hup sold the 49.07 percent shares in Rig Tenders for S$55 million.

Separately, HCB said that the acquisition would result in the company acquiring significant presence in the marine coal transportation services in Indonesia and in offshore oil and gas support in Southeast Asia as the target companies own and operate a total of 155 vessels, serving clients such as leading Indonesian coal producers PT. Adaro Indonesia and PT.Arutmin Indonesia and oil and gas companies in Indonesia, Malaysia and Thailand.

The proposed deal, which will give Scomi control of 155 vessels owned directly or indirectly by Chuan Hup in Singapore and Indonesia, also underscores the growing commercial ties between Malaysia and Singapore, two neighbors who have often bickered in the past but have grown closer since Abdullah succeeded the combative Mahathir Mohamad as Malaysia's leader in November 2003.

HCB also said it would propose to tender offer the remaining 50.93 percent shares of Rig Tenders it did not owned once the transaction was completed.

HCB plans to finance the purchase through a combination of debt and the issue of new HCB shares, which will be offered to Scomi Group Bhd, Chuan Hup and selected institutional investors, executives from the two Malaysian companies told reporters Monday.

In another part of the deal, Scomi will pay slightly more than Malaysian Ringgit 200 million to acquire 29.6 percent of HCB's enlarged paid-up capital through the purchase of 174 million new shares in the company at Malaysian Ringgit1.15 a share. The purchase will make Scomi the single largest shareholder in HCB.

The Habib family, which currently owns more than 66 percent of the company, will see its stake diluted to slightly below 17 percent.

The corporate transaction, which must get regulatory and shareholder approvals, is expected to be completed within the next six months.

Scomi, which is listed in Malaysia Stock Exchange, is controlled by Kamaluddin Abdullah, the only son of Malaysia's premier Abdullah Ahmad Badawi. (alex)