A partial view of Weifang Port
KUALA LUMPUR: Sime Darby Bhd
is disposing a 50% stake in Weifang Sime Darby West Port Co Ltd (WSDWP), operator of a multipurpose terminal at Weifang Port, to Hong Kong-listed conglomerate Shandong Chenming Paper Holdings Ltd for 38.61 million yuan (RM24.95mil).
In a filing with Bursa Malaysia, Sime Darby said its indirect unit Sime Darby Overseas (HK) Ltd (SDOHK) and 99%-owned Weifang Sime Darby Port Co Ltd would transfer 49% and 1% equity interest, respectively, in WSDWP to Shandong Chenming Paper.
SDOHK, which will be left with a 50% stake in WSDWP, has also signed a joint venture (JV) contract with the Chinese group to manage and adminiter the afairs of the 3x30,000dwt terminal.
Sime Darby said the main objective of the proposed JV was to secure significant baseload woodchip volume for the multipurpose terminal via equity commitment and potentially attract other forestry products to Weifang Port in the future.
Shandong Chenming Paper is able to provide a large volume of baseload woodchips for the terminal through the import of woodchips for its paper production plant in Shouguang, Shandong Province.
“Given the significant woodchip volume from Shandong Chenming, two of the berths in the multipurpose terminal will be utilised to handle its woodchips while the remaining berth will be utilised to handle other types of cargo,” Sime Darby said.
SDOHK is expected to secure a long-term partnership with Shandong Chenming Paper compared to a regular commercial contract with a customer.
The JV structure also allows for cost and risk-sharing, according to Sime Darby. “It is in the interests of Sime Darby’s logistics division to take a pragmatic approach in balancing the risk and return trade-off of its large-scale investments amidst a challenging business environment.”
Sime Darby expects the proposed JV to be completed within the first half of 2017 or such other date as agreed by the parties in writing.
In May last year, Sime Darby completed the disposal of a 50% stake in Weifang Sime Darby Liquid Terminal Co Ltd, operator the the liquid terminal at Weifang Port, to Overseas Hong Kong Investment Ltd, an indirect unit of Dragon Crown Group Holdings Ltd, for 60.85 million yuan (RM39.32mil).
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
