KUCHING: Sarawak Cable Bhd (Sarawak Cable) has entered into a sales and purchase agreement for 100 per cent equity interest in Universal Cable (M) Bhd (Universal Cable) and Leader Cable Industry Bhd (Leaber Cable) for a total of RM120 million.
The group in a statement to Bursa Malaysia yesterday revealed that it had on October 20 entered into the SPA with HNG Capital Sdn Bhd (HNG) to effect the proposed acquisitions.
The target companies are two major cable manufacturers in Malaysia and have been involved in the manufacturing of power and telecommunication cables for more than 30 years, producing an extensive range of power and telecommunication cables.
“Over the years, the target companies have focused on improving its technical capability to manufacture cables of increasing complexity to capture markets once dominated by imported cables,” Sarawak Cable said in the statement yesterday.
“At the same time, they has also expanded its export markets (export sales made up approximately 19 per cent of sales for the FYE 31 December 2013) and its products are currently sold to neighbouring countries including Australia and New Zealand.”
Sarawak Cable was confident that this move will help expand its power cable manufacturing base to Peninsular Malaysia, as well as enhance its manufacturing capability.
Currently, the Sarawak Cable manufactures two types of power cables and wires, namely low voltage power cables and wires and high voltage bare conductors.
“At present, the group also purchases power cables from other manufacturers for it to supply a comprehensive range of cables as a one-stop supply centre of power cables and wires in Sarawak,” it explained.
“These external products are primarily medium voltage and high voltage power cables which are not economical for the group to manufacture in-house due to limitations in its production capacity.
“Following the proposed acquisitions, Sarawak Cable will have the facilities and technology know-how for the manufacturing of the higher margin MV and HV power cables to broaden its product offerings to satisfy the requirements of its customers.”
The target companies, with its established track record associated with quality products and technical capability is well position to benefit from the increased demand for power cables in the future arising from the capital investment by Tenaga Nasional Bhd, Sarawak Corridor of Renewable Energy, Refinery and Petrochemical Integrated Development and other infrastructure development in Malaysia in the future.
Currently, Sarawak Cable has not identified the financial resources required to execute the plans as the financial resources required is dependent on the type and size of the projects awarded to it.