Business

Friday June 8, 2012

Cahya Mata unit plans with M’sian Phosphate to set up RM850 JV


KUALA LUMPUR: Cahya Mata Sarawak Bhd (CMSB), through wholly owned subsidiary Samalaju Industries Sdn Bhd, has entered into a memorandum of understanding (MoU) with the aim of setting up a joint-venture (JV) integrated phosphate plant in Samalaju, Sarawak.

CMSB told Bursa Malaysia yesterday that the MoU with Malaysian Phosphate Additives Sdn Bhd, which makes various grades of food and feed phosphates, was for the purpose of entering into negotiations pertaining to the plant with an annual production capacity of about 500,000 tonnes at a current estimated cost of RM850mil.

Subject to the terms of the JV agreement to be mutually agreed, Samalaju Industries and Malaysian Phosphate may set up a special-purpose vehicle to undertake the project.

The indicative equity structure of the project company is 60% held by Malaysian Phosphate and 40% by Samalaju Industries.

CMSB said the project company would undertake a feasibility study before proceeding with the project. It will also enter into, among other things, a power purchase agreement and raw material supply agreement.

Should Samalaju and Malaysian Phosphate failed to enter into a definitive agreement by Dec 31 or at another extended date agreed by both companies, then the MOU might be terminated by either party in writing, it added.

During the term of the MOU, each of the parties will not permit any of its representatives, to, accept or entertain offers, negotiate, solicit interest or otherwise enter into or continue any existing discussions with any party in connection with any phosphate plant and its related businesses in Sarawak.

Samalaju Industries, which is principally an investment holding company, has an issued and paid-up share capital is RM22mil comprising of RM1 shares each.

Meanwhile, the issued and paid-up share capital of Malaysian Phosphate is RM8.99mil comprising of RM1 shares each and 45,615 preference shares of RM1 each.

The MOU will not have any material effect on the earnings or net assets of CMSB for the year ending Dec 31.

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