IJM, Silk abort RM395mil Kajang highway deal

PETALING JAYA: IJM Corp Bhd unit Road Builder (M) Holdings Bhd and Silk Holdings Bhd have mutually decided to abort the RM395mil acquisition of 100% equity interest in Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd.

It was called off following the non-fulfilment of certain conditions precedent within the agreed timeline, IJM told Bursa Malaysia.

“This is a mutual agreement as certain conditions precedent could not be fulfilled, thus both parties are not proceeding. Monday is the last day for the conditions precedent to be fulfilled,” IJM Corp chief executive officer and managing director Datuk Teh Kian Ming told StarBiz.

“This is part and parcel of running a business and to say that I am not disappointed is not true. We are constantly looking to expand our business and we will continue to look for other opportunities to expand in the highway (business segment),” Teh added.

Silk Holdings in its announcement said that all conditions precedent were not fulfilled within the agreed timeline.

The share sale agreement (SSA) between both parties dated June 20 for the acquisition thus lapsed from yesterday and ceased to have any further effect, IJM said.

Silk Holdings, the concession holder of the 37km Kajang Traffic Dispersal Ring Road (Silk Highway), would refund IJM within seven days its deposit together with all interest accrued, it added.

The proposed purchase of the highway had to be approved first by regulators, shareholders and bondholders.

Earlier reports had indicated that bondholders of Silk Highway were objecting to the sale and wanted a portion of the profits to be accrued by Silk Holdings from the sale of the highway.

The sale had been proposed since June 2014 to provide Silk Holdings with the flexibility to expand its oil and gas support services business.

Further to this latest development, Silk Holdings may have to put its planned expansion of its oil and gas support business on hold.

Silk Holdings shares, which have fallen 46% from their year-to-date peak of RM1.20 in July, may come under further selling pressure over this development, but some analysts say the cancellation of the deal could be a blessing in disguise as oil prices are falling and keeping its diversified business may help the company weather the storm.