Malaysia: Sime Darby Enters MOUs for Disposal of its Oil and Gas Assets
Sime Darby Engineering Sdn Bhd has entered into two separate non-binding memoranda of understanding (MOUs) for the proposed disposal of its assets in the Oil & Gas business unit with Petroliam Nasional Bhd (Petronas) and Malaysia Marine and Heavy Engineering Holdings Bhd (MHB).
The MOUs, signed this morning, involve among others, the disposals of the following:
1. Teluk Ramunia fabrication yard to Petronas for a provisional disposal price of RM296 million (97.8million U.S. dollars) to be satisfied entirely in cash; and
2. Pasir Gudang fabrication yard to MHB for a provisional disposal price of RM399 million (131.8 million U.S. Dollars) to be satisfied entirely in cash.
The provisional disposal price of RM695 million is above the RM641 million book value of the assets as at 31 March 2011.
The decision to dispose of the assets was made following the completion of the Group’s Portfolio Review exercise.
Sime Darby’s President & Group Chief Executive Dato’ Mohd Bakke Salleh commented: “In order for SDE to move up the value chain and enjoy better returns, the Group would need to further commit its financial resources into a business which is no longer in-line with the Group’s strategic direction.”
Mohd Bakke added that the Board and Management of Sime Darby have decided that the Group should focus its resources in areas in which it already has or can achieve sector leadership.
The salient terms of the MOUs are as follows:
1. the sale of the Pasir Gudang and Teluk Ramunia fabrication yards together with all movable and immovable assets located in the yards;
2. MHB or its nominated subsidiary will offer employment to all SDE employees in connection with the fabrication yard business on terms to be mutually agreed; and;
3. SDE will continue to perform and complete its obligations in respect of its existing committed projects/contracts.
Source: Sime Darby, May 27, 2011;