KUALA LUMPUR: Sime Darby Bhd is exiting the non-core ports business by divesting the entire equity interest in its Weifang Port companies for 1.92 billion yuan (about RM1.27 billion).
Indirect wholly-owned subsidiary Sime Darby Overseas (HK) Ltd (SDOHK) has signed agreements to sell its stakes in the eight entities to SPG Bohaiwan Port Group Co Ltd, which is part of state-owned enterprise Shandong Port Group Co.
The companies being divested provide various port services such as loading and unloading of containers, dry bulk, break bulk, general and liquid cargo as well as storage services for the ports’ customers.
In a statement today, Sime Darby said besides the disposal consideration, SDOHK will receive an indicative sum of 541 million yuan (about RM357 million) as repayment of shareholder loans.
"The proceeds from Sime Darby’s sale of the Weifang Port companies will be utilised for future investments in the group’s core businesses in the industrial and motors sectors, for capital expenditure and/or the repayment of short-term borrowings,” it said.
Sime Darby has in recent years been progressively divesting assets which have been identified as non-core, as part of the group’s efforts to streamline its portfolio and redeploy capital to support the growth of its core businesses of industrial and motors.
"These divestments include the disposal of a water management business in Weifang, interests in Tesco Malaysia, Eastern & Oriental Bhd and three river ports in Jining,” it said.
Its chief executive officer Datuk Jeffri Salim Davidson said China remains one of Sime Darby’s most important markets, contributing almost 40 per cent of revenue for the group.
The industrial and motors businesses there span across 120 locations and 14 provinces.
He said the group looks forward to channelling the proceeds received from the divestment into expanding and strengthening its position in the industrial and automotive sectors in China, as well as continuing to scope for opportunities in other markets.
"These last few years have been a challenge for the ports business, and we are grateful to the Shandong provincial government for finalising this agreement to enable us to unlock value which we can now channel towards growing our core businesses,” Jeffri said.
The share sale agreements are expected to be completed by the fourth quarter of 2022. - Bernama