More time required to complete Shell’s proposed sale to MHIL

Night view of Shell Refining Company in Port Dickson taken 2005.

KUALA LUMPUR: Shell Overseas Holdings Ltd’s (SOHL) proposed sale of its controlling 51% stake in Shell Refining Co (Federation of Malaya) Bhd (SRC) requires a longer time to complete, with a second extension being needed to fulfill the conditions precedent.

In a filing with Bursa Malaysia, SRC said SOHL and the China-based buyer, Shandong Hengyuan Petrochemical Co Ltd’s indirect unit Malaysian Hengyuan International Ltd (MHIL), had mutually agreed to extend the deadline for fulfilling the sale and purchase agreement’s (SPA) conditions precedent to Nov 17.

Except for the extension, all the other provisions and clauses of the SPA remain in full force and effect, according to a press statement issued by MHIL.

SOHL signed the conditional agreement to sell its 51% equity interest in SRC to MHIL for US$66.3mil (RM278.5mil) on Feb 1. Originally the conditions precedent were expected to be met within eight months (i.e. by Sept 30).

On Sept 30, the period to achieve the conditions precedent was deferred to Oct 31. 

SRC’s announcement did not say which of the conditions precedent had not been fulfilled.

Among others, the proposed disposal of SRC shares is subject to the approvals, waivers or consent of the International Trade and Industry Ministry and the Domestic Trade, Cooperatives and Consumerism Ministry. 

The sale and purchase agreement is also conditional on the Securities Commission giving MHIL a waiver from complying with Section 37 of the Malaysian Code on Takeovers and Mergers 2010.

SOHL said previously that the sale was consistent with Shell’s strategy to concentrate its global downstream footprint and businesses where it could be most competitive.

It gave assurance that Malaysia continued to be an important country for the group.