PETALING JAYA: Westports Holdings Bhd has extended the proposed construction of more container terminals (CT) costing RM10bil by another five years to 30 years due to the near-term impact of Covid-19.
In its circular to shareholders, Westports said the development period for the new CT facilities comprising CT 10 to CT 17 was revised due to the Covid-19, which has resulted in current uncertainties in the global economy.
“Our group expects to fund the development cost through internally generated funds, bank borrowings and/or proceeds to be raised from fund-raising exercises, ” it said.
On Feb 7, its unit Westports Malaysia Sdn Bhd agreed to purchase 146.4 hectares from Pembinaan Redzai Sdn Bhd (PRSB) for RM393.96mil.
The land is located to the south-west of Pulau Indah which is under water.
Land reclamation was expected to start in the fourth quarter of this year and development of the additional CTs was expected to begin in 2022.
“The prospects of the proposed acquisition would allow the group to grow its total handling capacity over the medium to long-term to cater for the expected long-term growth in the demand for port services, ” Westports said.
PRSB’s original cost of investment was RM45.6mil on July 25,2002.
PRSB owns 42.42% stake in Westports. Westports executive chairman Tan Sri G. Gnanalingam is also a director of PRSB. His son, Datuk Ruben is also a director of PRSB while non-independent director Chan Chu Wei is a PRB director.
Westports’ board, excluding interested directors who have abstained, had considered all aspects of the proposed acquisition.
“Accordingly, our board (save for our interested directors), recommends that you vote in favour of the resolution, ” at the EGM on May 5.
Independent adviser Hong Leong Investment Bank also said the rationale for the proposed acquisition was in Westports’ long-term interest and “it is reasonable and not detrimental to the non-interested shareholders of Westports”.
In its rationale, Westports stated its current CT facilities, comprising CT 1 to CT 9, were operating at a utilisation rate of 72% of its total terminal handling capacity as at the LPD.
It expected the current CT facilities to reach near full utilisation within the next few years, hence the need to acquire more land for the building of more CTs.