20120502 1142 Malaysia Corporate Related News.

Khazanah, Tune Air share swap possibly off
The boards of state-owned Khazanah Nasional and Tune Air SB will today make official their decision to abandon the RM1.1bn share-swap deal involving beleaguered Malaysian Airline System (MAS) and AirAsia. According to corporate executives and government officials involved in the proposed unbundling exercise, the boards of the two companies will ratify the transactions that will unwind the share-swap last August which featured AirAsia’s Tan Sri Tony Fernandes and his partner Datuk Kamarudin Meranun taking up 20.5% interest in MAS and 2 board positions, in exchange for Khazanah owning a 10% stake in the regional budget airline. (Financial Daily)

Bina Puri eyes China coal mine and Kelantan tin mine
Construction outfit Bina Puri Holdings is believed to be in negotiations to acquire a coal mine in China and a tin mine in Kelantan, sources said. “The company is also looking at securing infrastructure project soon to build a bridge in Jakarta. The focus will still be on its core construction business but it is also trying to diversify into the commodity business and also businesses that provides more recurring income,” the source said. The company was last said to be exploring opportunities in tin mining in Indonesia back in 2004, when it was making a tin mining feasibility study on the Indonesian island of Bangka. Bangka is rich in tin ore deposits; it is also where PT Koba Tin, a subsidiary of Malaysia Smelting Corp has a contract of work with the government, giving it exclusive rights for exploration, mining and smelting tin over 41,680ha in Bangka Belitung Island. (StarBiz)

TNB allocates RM9.7bn to increase generating capacity
Tenaga Nasional will spend about RM9.7bn in the next five years to increase electricity generating capacity in Malaysia. President and CEO Datuk Seri Che Khalib said a major portion of the investment until 2017 is to build several power stations whose locations have been identified. Among the stations currently under constructions are the Manjung Sultan Azlan Shah Power Station in Perak (RM6bn), a hydroelectric power plant in Hulu Terengganu (RM1.6bn) and Hulu Jelai in Pahang (RM2.1bn). An independent power producer plans to build a RM6bn coal-fired plant in Tanjung Bin, Johor, which is slated for completion in 2016. “This means in the next 5 years, the new projects will give TNB additional generation capacity of 2,000MW using coal and 630MW using hydro.(Financial Daily)

Puncak Niaga gets RM500m in O&G contracts
Puncak Niaga has secured oil and gas contracts worth RM500m, executive chairman Tan Sri Rozali said. Its involvement in the industry is via wholly owned unit, Puncak Oil&Gas SB (POG), which had acquired Global Offshore SB and KGL Ltd last year. Rozali said Puncak Niaga expects revenue of between RM1bn to RM1.5bn from the O&G sector this year. He said the company will bid to develop Petronas’ marginal oilfields. (Financial Daily)

Prasarana says Posco ‘best candidate’
Syarikat Prasarana Negara Bhd is proposing to the government that the RM950m systems contract for the Ampang light rail transit (LRT) line extension project be awarded to Posco, a South Korean steelmaker. Business Times reported recently that a consortium comprising Balfour Beatty Rail SB, Ingress Corp and the UK’s Invensys was tipped to win the contract this month. “The government is still deciding who to award the contract to. The bidders are lobbying hard for the job. We at Prasarana think Posco and its consortium partners are the best candidates,” said Prasarana key officials. In December last year, BT reported that Prasarana had recommended Posco to the government for the job because the company offered to use the French based Thales’ Communication-Based Train Control (CBTC) signaling system. Thales is a leader in the CBTC market. It invented the CBTC technology, a train control system based on telecommunications, in the 1980s. Its technology was used for the KL monorail project and the existing Kelana Jaya LRT line. (BT)

Petronas Gas awards services deal to US' Fluor
Petronas Gas Bhd, a listed subsidiary of Petronas has awarded a contract to Texas-based Fluor Corp to provide front-end engineering and design services for a new liquefied natural gas (LNG) regasification terminal in Malaysia. According to Fluor, the new terminal will supply gas to an adjacent 300MW combined cycle power plant in Lahad Datu, Sabah. Fluor secured the contract, the value of which is undisclosed, in the 1Q of this year. The formal signing of agreement was in Kuala Lumpur on 2 April. Fluor senior vice-president for energy and chemicals business Ken Choudhary said the contract would further consolidate the company's position in Malaysia, where it is implementing projects in the oil refining sector and the LNG regasification business. The company also expects significant project growth opportunities in Malaysia in the near term. (BT)

Felda Global Ventures: Sources say to list by end-June
According to two officials with direct knowledge of the matter, the US$2bn (RM6.08bn) listing of Felda Global Ventures Holdings (FGVH) is expected to take place at the end of June. They added that FGVH has started offering its initial public offering (IPO) shares to bumiputra investors at an indicative price of RM4.65 a share.  At an indicative price of RM4.65, the 419.5m shares reserved for bumiputra investors, or 11.5% of the company’s capital, would be worth a total of RM1.95bn. One of the officials said bookbuilding process will follow thereafter. The second official added that it is not clear what the institutional investors are getting yet, but bumiputra investors will get a refund should institutional investors get less than the indicative price. (StarBiz)

Felda Global Ventures: Going all out for productivity push
Felda Global Ventures Holdings (FGVH) is going all out to boost productivity after its listing as part of efforts to ensure steady future growth in earnings. According to sources, although half of FGVH's 355,846ha oil palm estates are past their prime at over 25 years old, another 17% of the estates are at their prime production between 20 and 25 years old. A source said Felda will continue to boost productivity by using its award-winning Yangambi oil palm seeds, which can boost oil extraction rate to 23% from the current 20%. It is understood that postlisting, FGVH plans to return 50% of its net profit to shareholders and achieves a return on equity of 13%. (Business Times)

RHB Capital, OSK Holdings: More equity than cash in merger deal
Corporate executives close to the transaction said that RHB Banking group and OSK group are close to completing their merger, which will largely feature the exchange of shares in a deal that could price OSK’s investment banking arm at  between 1.9 times and 2.2 times book value. Financial executives said that both RHB and OSK are keen to have an external person lead the merged entity and several potential candidates have been shortlisted. (Financial Daily)

Telekom Malaysia: Launches HK centre
Telekom Malaysia Bhd (TM) has launched its first regional data centre facility in Hong Kong. Located in a Class A office facility at the Billion Centre in the famous Kowloon Bay area, the data centre, named VADS Hong Kong Data Centre (HKDC), was expected to meet the increased demand for cloud-based services, via its information and communication technology (ICT) arm, VADS Bhd (VADS), which provides managed ICT services. HKDC is an extension of the already existing 14 data centres established by TM via VADS throughout Malaysia. With a total build up space exceeding 14,000 sq ft, HKDC is built as a Green Data Centre with the coalescence of hot and cold aisle containment system together with a Tier III+ design. TM owns or leases capacity on more than 10 submarine cable systems, which span more than 60,000 fiber-route miles around the globe. (StarBiz)

Kencana Petroleum: Consortium wins EPCC job
Kencana HL Sdn Bhd, in consortium with Shinryo (M) Sdn Bhd, has signed a contract with Petronas Gas to provide engineering, procurement, construction and commissioning (EPCC) work for two co-generation plants. The portion of the contract value for Kencana HL, which is a  wholly-owned subsidiary of Kencana Petroleum Bhd, is estimated at RM35m. Kencana Petroleum said the plants would have a combined capacity of 50MW of electrical power and steam capacity of 120 tonnes per hour. It said the contract forms part of Petronas Gas’ gas processing plant in Kertih, Terengganu. Kencana Petroleum said the contract’s scope of work in general included project management, engineering, procurement, construction and installation of steel structures, piping and equipment as well as civil works. The contract is expected to be fully completed by 1Q 2014. (StarBiz)

Boustead Holdings, Kuala Lumpur Kepong: Unit spreads roots to Indonesia
Seed producer Applied Agricultural Resources Sdn Bhd (AAR), an equally-owned unit of Boustead Holdings Bhd and Kuala Lumpur Kepong Bhd (KLK), has spread its roots to produce oil palm seeds in Indonesia. Boustead deputy chairman and group MD Tan Sri Lodin Wok Kamaruddin said the company will cater to the increased demand for high-yielding seeds there as farmers plant up their greenfields and replant unproductive areas. PT AAR Nusantara, which will undertake seed breeding in Medan, is a JV between AAR, Kuala Lumpur Kepong Plantation Holding and Indonesian government-linked company PT Perkebunan Nusantara II. (Business Times)

Hong Leong Bank: Islamic unit eyes sukuk market
Hong Leong Islamic Bank is banking on its enlarged operating capacity, following the merger with EONCap Islamic Bank last year, to venture deeper into the Islamic capital markets and wholesale sectors as its new growth area. CEO Raja Teh Maimunah Raja Abdul Aziz said the sukuk market, which Malaysia is a dominant player, is one area that the bank wants to tap actively into. The country's Economic Transformation Programme (ETP) projects, she said are expected to provide the Islamic finance industry with ample opportunities as she said the ETP projects will invariably be funded almost entirely by the Islamic capital market and this will fuel the Islamic banking business from the wholesale side. (Business Times)

Fraser & Neave: Invests RM18m to strengthen presence in Sabah
F&N Beverages Marketing Sdn Bhd has invested RM18m to install a polyethylene terephthalate (PET) production line and supporting infrastructure at its facility here to meet the growing demand for PET packaged sparkling beverages in Sabah. The line provides F&N production scalability in anticipation of future growth without the need for plant expansion. It also reduces logistics costs of transporting the products from F&N's main Shah Alam plant or from Kuching while facilitating speedier delivery to market. The company said it can scale up production seamlessly to thrice the current capacity with no additional investment required. (Bernama)

KNM Group: Proposes fund raising exercise involving rights issuance of RM200m
KNM Group (KNM) has proposed to undertake a fund raising exercise involving a rights issuance of RM200m. In a filing to Bursa Malaysia, KNM said the definitive terms for the rights issue would be determined by the Board of the Company subject to the advice of the Company’s Corporate Advisors to be appointed in due course. The company will be seeking its shareholders' approval for the proposed rights issue at a general meeting to be convened at an appropriate date once the definitive terms of the proposed rights Issue has been approved by the Board and the relevant authorities. KNM said further announcement(s) on the corporate proposal in respect of the proposed rights issue would be made in due course. (Financial Daily)

Scomi Engineering: Looking into O&G business in Brazil
Scomi Engineering is conducting due diligence on a plan to venture into the oil and gas business in Brazil, including opening a plant there to produce drilling fluids. According to Scomi Brazil country president Hilmy Zaini Zainal, the due diligence, which will be completed within the next few months will help Scomi decide the best partners for its venture. He said although they  do not have a clear cut position on what they want to do yet, they have decided to put our resources in oil and gas developments in Brazil, instead of just being involved in monorail projects. Hilmy said he do not rule out a partnership with Montagense Projetos Especiais SA (MPE), which is involved in oil and gas, fabricating topside models. Scomi and MPE are partners for the RM2.6bn monorail project in Sao Paulo, secured last year. (Financial Daily)

Puncak Niaga: Gets RM500m contracts in oil & gas sector
Puncak Niaga Holdings has managed to secure contracts worth RM500m, said its executive chairman Tan Sri Rozali Ismail. Its involvement in the industry is via wholly-owned unit, Puncak Oil and Gas Sdn Bhd (POG), which had stakes in Global Offshore (M) Sdn Bhd and KGL Ltd last year. Rozali said the company has been involved in many projects and was ready for expansion overseas after recruiting experienced and capable staff to expand the oil and gas operations. He said the company has secured projects worth RM500m which are expected to bring in revenue of between RM1bn and RM1.5bn, adding that the company would bid to develop the marginal fields from Petronas. (Bernama)

LBS Bina: Banking on new project launches this year
LBS Bina Group is banking on new project launches and a large land bank to record better financial results in FY2012. As at Apr 29 this year, LBS clocked in property sales of RM357.6m, and as at end-March, it roped in an unbilled sales of RM693m. LBS MD Datuk Lim Hock San said with a strong outlook this year, the group will be launching 14 projects, comprising 2,812 units with a GDV of RM1.69bn, together with some 22 ongoing projects with a GDV of RM1.81bn. These include projects in D' Island Residence, Bandar Saujana Putra, Taman Golden Hills in Cameron Highlands and Bandar Putera Indah in Batu Pahat Johor. Lim said with a land bank of some 920ha worth an estimated GDV of RM9.3bn, the group is confident of achieving further improvement in its performance for FY2012. (Business Times)

TSH Resources: Seals power deal with SESB
TSH Resources has sealed a renewable energy power purchase agreement (PPA) with Sabah Electricity Sdn Bhd (SESB) to sell electricity at 30 sen per kWh for 9 years. It told the stock exchange that its wholly-owned subsidiary TSH Bio-Energy Sdn Bhd entered into the agreement on Apr 27. TSH had initially signed a 21-year small renewable energy purchase agreement with SESB in 2002 for the sale of electricity generated from its power plant and dispatched to SESB’s Kalumpang sub-station at the rate of 21.25 sen per kWh. It said that contract, which would have expired in 2024, would be replaced by the renewable energy PPA upon commencement of a feed-in tariff date to be agreed on by both parties. (StarBiz)

AmFIRST REIT: Eyes RM500m Klang Valley properties
Am ARA REIT Managers Sdn Bhd, the manager of AmFIRST Real Estate Investment Trust (AmFIRST REIT), plans to buy properties worth RM500m in the Klang Valley, following the implementation of the rights issue for the trust in Jul this year, said its chief executive officer, Lim Yoon Peng. Unitholders of AmFIRST REIT unanimously approved the proposed renounceable rights issue and a proposed increase in fund size at the unitholders' meeting Monday. Lim said he is looking at office buildings with high capital appreciation potential at strategic locations in the Klang Valley. (Business Times)

Chemical Company of Malaysia: RM75m fertilizer plant to cater for Sabah, Kalimantan
The RM75m Chemical Company of Malaysia Bhd's (CCM) fertilizer plant opened Monday will cater to Sabah and Kalimantan markets, CCM Group of Companies Chairmen Tan Sri Hamad Kama Piah Che Othman said Monday. He said the plant located at the Palm Oil Industrial Cluster (POIC) was the second in Sabah and Sarawak after Bintulu and CCM's fourth facility in the Asean region would boost the group's fertilizer manufacturing capacity to 670,000 tonnes a year. The plant, which started operations in mid-2011, will increase production by an additional 130,000 tonnes a year or about half the output of its main plant in Shah Alam. (Bernama)

Power: Troubled Northern Utility up for sale again?
Industry sources said speculations have resurfaced that troubled Northern Utility Resources Sdn Bhd (NUR) is up for sale again. Accoridng to one source, the receivers of the company are eager to get NUR off their hands as it has been put under receivership since 2004. He added that NUR has a licence to sell electricity back to the national grid which might attract buyers. NUR operates an in-situ independent power utility (IPU) within the Kulim Hi-Tech Park (KHTP) in Kedah and is the first IPU awarded a 30-year concession in 1997 to build a power plant and distribute electricity in the hi-tech park. The shareholders of NUR are Manfield Development Sdn Bhd with 40% interest and Jalinan Muhibah Sdn Bhd, Khazanah Nasional Bhd and Tenaga Nasional Bhd (TNB) each with 20% interest. (StarBiz)

Government: SC receives 19 corporate proposals in 1Q 2012
The Securities Commission (SC) received a total of 19 corporate  proposals in  1Q 2012 as compared to 41 proposals in  4Q 2011. In line with the trend of increasing preference for fund-raising through issuance of corporate bonds and sukuk, it said the majority or 79% of the proposals were for issuance of private debt securities (PDS). Out of the 19 corporate proposals, it said that 15 were for PDS while the remaining four or 21% were equity applications. Out of the four equity applications, two were for initial public offerings (IPOs), as compared to one in the 2011, it added. According to the commission, approved ringgitdenominated sukuk issuances in 1Q 2012 stood at RM11bn, which reflects an increase from the RM7.7bn registered in the same quarter last year. It noted that the total amount of funds to be raised from the IPO and private debt securities approved in 1Q 2012 was RM21.9bn, compared to RM49bn in 4Q 2011. (Bernama)

Economy: Malaysia to introduce minimum wage, panel to address wage issues
Malaysia will introduce a minimum wage for the first time in a move to bolster incomes amid rising living costs and speculation of a snap general election. An estimated 3.2m workers are expected to gain from the move but labour unions, which have been battling for a minimum wage for the past 15 years, described the base rate as too little. Private sector workers in peninsular Malaysia will receive a minimum salary of RM900 a month while workers in the states of Sabah and Sarawak on Borneo island will get RM800. Human Resources Minister Datuk Seri Dr S. Subramaniam said a committee would be set up to make adjustments to the minimum wage system for certain industries. He said the committee was needed to address specific issues which might arise from the absorption of some of the fixed allowances into the salary. (The Star)

Kinsteel debt downgraded
Malaysian Rating Corp Bhd (MARC) has lowered its ratings on  Kinsteel Bhd's RM200mil debt notes with a negative outlook. “The rating actions incorporate Kinsteel group's deteriorating financial performance on the back of raw material price volatility and subdued demand for steel products, increased borrowings and weakening liquidity position from extending financial support to fully subscribe to subsidiary  Perwaja Holdings Berhad's (PHB) loan stock issue,” it said.  (Source: The Star)

MISC: Cuts 1400 jobs. Malaysian International Shipping Corporation Bhd (MISC) is retrenching some 1,400 employees worldwide this year following its exit from the liner business.The first phase of the retrenchment was carried out on March 31 while the second phase will be implemented on June 30. (Source: The Sun Daily)