Sime Darby to divest Jining ports for RM182m

PETALING JAYA: Sime Darby Bhd’s indirect wholly-owned subsidiary 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% stake 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.

Sime Darby group CEO Datuk Jeffri Salim Davidson said the agreements that it has entered into allows for a staggered exit from its investment in its three Jining Ports over three years and is in line with its strategy to divest non-core assets of the group.

He said with the demerger and its focus on its 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 in the Jining ports, which have contributed RMB141 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 fits in with the exercise being undertaken by the Jining government to consolidate the fragmented river port industry in Jining. So, it is a winwin 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.