KUALA LUMPUR: Oil trading and bunkering company Straits Inter Logistics Bhd has proposed to acquire 8.25 million ordinary shares, or a 55% equity interest in Tumpuan Megah Development Sdn Bhd for a RM35.75mil.
The acquisition will be satisfied via a combination of RM7.80mil in cash and the remaining RM27.95mil via an issuance of 116,458,333 new ordinary shares of Straits at an issue price of 24 sen per share.
In a filing with Bursa Malaysia, Straits has on Thursday entered into a conditional share sale agreement with the vendor, Raja Ismail bin Raja Mohamed for the said acquisition.
The acquisition comes with an aggregate profit guarantee totalling RM10mil by the vendor for two financial years ending Dec 31, 2019 and 2020. Based on the 55% stake to be owned by Straits,
Straits shall be entitled for a yearly profit guarantee of approximately RM2.75mil.
Tumpuan Megah is a company that principally engages in the oil bunkering services business, which includes ship-to-ship bunkering, barging operations and dealing in oil and petroleum products.
The company currently has its operations in eight ports in Malaysia, all of which are licensed under the Petroleum Development Act 1974. It carries out its bunkering services in Malaysia via its 7 vessels.
Based on the past three financial years up to FY16, Tumpuan Megah recorded a revenue of an approximately RM215.44mil, RM154.89mil and RM148.69mil respectively.
The company registered a profit after tax of approximately RM3.16 mil, RM1.02 mil and RM0.96 mil for the same period respectively.
Commenting on the latest corporate exercise, Straits group managing director Datuk Seri Ho Kam Choy said: “The board of Straits applauded the proposed acquisition of 55% in Tumpuan Megah, which has similar core business activities as Straits. The total profit guarantee also provides assurance on the earnings potential of Tumpuan Megah, which is expected to contribute positively to the future profitability of Straits on a consolidated basis.”
“The proposed acquisition would enable Straits to have an immediate expansion in respect of its fleet size and assets base from the current two vessels to nine vessels for its operations. With such expansion of asset base, Straits is capable to undertake higher volume of bunkering services, thereby increase its operational capacities,” he pointed out.
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