Disposal to net proceeds of RM182 million
Sime Darby Berhad today announced that an indirect wholly-owned subsidiary of the Group, Sime Darby Overseas (HK) Limited (SDOHK), has entered into a series of agreements with Jining Port and Shipping Development Group Co., Ltd (JPSDG) to divest its entire interest in three joint venture companies operating three river ports in Jining in the Shandong Province, for a net amount of RMB293.9 million (RM181.6 million), to be realised over a period of three years.
Yesterday, SDOHK signed equity transfer agreements to dispose of its entire 70% equity interest in Yuejin, Longgong and Taiping ports in Jining to JPSDG; a shareholders’ agreement to subscribe to a 49% interest in a new joint venture company; and equity transfer agreements between SDOHK and JPSDG to divest SDOHK’s 49% interest in the joint venture company over a period of three years.
“The agreements that we have entered into allows for a staggered exit from our investment in our three Jining Ports over three years and is very much in line with our strategy to divest non-core assets of the Group,” said Sime Darby Berhad Group Chief Executive Officer Dato’ Jeffri Salim Davidson.
“At the turn of the decade, Sime Darby developed a “China Growth Strategy”. We invested significantly in growing our Motors and Industrial footprint in China, as well as developing the ports business in Shandong province. This strategy has been largely successful, and China now accounts for almost 40% of the Group’s revenue. Nevertheless, with the demerger and our focus on our trading businesses, the ports business is no longer considered a core business of Sime Darby.”
“Over the years, Sime Darby had invested a total of RMB291 million (RM179.8 million) in the Jining ports, which have contributed RMB141 million (RM87.1 million) in dividends to the Group. However, the operations are facing continued downward pressure on margins due to intense competition from neighbouring ports and additional costs. Given these factors that are impacting the inland port sector in China, we consider the disposal price reasonable.”
“Our disposal strategy also very much fits in with the exercise being undertaken by the Jining government to consolidate the fragmented river port industry in Jining. So, it is a win-win situation for us and for the Jining government,” added Jeffri.
State-owned enterprise Jining Energy Development Group Co., Ltd, the parent company of JPSDG, has provided unconditional and irrevocable letters of guarantee for JPSDG’s obligations. These are also supported by bank guarantees provided by JPSDG.
The equity transfer agreements to dispose of SDOHK’s entire 70% equity interest in Yuejin, Longgong and Taiping ports in Jining to JPSDG are to be completed within one month.
For further information, please contact:
Tan Yee Pheng
Sime Darby Berhad