IJM Corp Bhd and the vendors of Kumpulan Europlus Bhd (K Euro) have agreed to extend by three months the completion date of IJM’s proposed acquisition of 25% of K Euro shares to Feb 28 next year.
The extension is necessary to enable the concession agreement for the West Coast Expressway (WCE) to be approved by the relevant authorities.
In May, IJM announced that it was in talks to buy a 25% stake in K Euro for RM33mil, or 28 sen a share, from several vendors, including Tan Sri Chan Ah Chye, who is the controlling shareholder of K Euro, and its 49% associate, Talam Corp Bhd.
Speaking in Kuala Lumpur yesterday to update the media on the status of the IJM-K Euro deal, Talam deputy president Chua Kim Lan said contrary to market talk that negotiations between IJM and K Euro had reached a deadlock, “IJM is still with us at this juncture and both parties are keen to proceed”.
Chua said that in the acquisition agreement between IJM and the vendors, one of the condition precedents was the signing of the concession agreement for the WCE.
“The terms and conditions for the WCE have been agreed by the Economic Planning Unit and the concession agreement is in the stage of finalisation by the Attorney General’s Chamber before being tabled to the Cabinet. We hope the agreement will be approved within this extension period,” she added.
The concession period for the 216km dual carriageway from Banting to Taiping is for 38 years and is projected to generate a revenue of RM42bil.
The WCE project will be undertaken by Konsortium LPB Sdn Bhd, which is 60% owned by K Euro, while Selangor State Agency and Perak State Agency each has 20% stake.
“The project will no doubt assist greatly to consolidate and strengthen the capacity of both K Euro and Talam to remain major players in property and infrastructure developments,” Chua said.
IJM Corp chief executive officer and managing director Datuk Krishnan Tan, who was at an earlier presentation for analysts and bankers, said should the deal proceed, IJM would most likely exercise the option for another 5% of the K Euro shares.
“We see good value in the proposed acquisition and, having learnt of the circumstances on why the extension is necessary, we are willing to go along with it,” Tan said.
According to Chua, upon the entry of IJM in K Euro, there would be joint management to undertake re-branding and strategic partnership with IJM Properties Sdn Bhd to launch new projects.
“We want to start afresh after solving all our problems this year and can look forward to a turnaround from the second half of the next financial year ending Jan 31, 2007,” she added.
Both K Euro and Talam recorded a total loss of some RM100mil for the first half of the current financial year ending Jan 31, 2006.