KUCHING: Cahya Mata Sarawak Bhd (CMS) has entered into shares sale agreement with its long-time joint venture partner, Sarawak Economic Development Corporation (SEDC), for the proposed disposal of two per cent equity interest in its subsidiaries, CMS Resources Sdn Bhd (CMSR) and PPES Works (Sarawak) Sdn Bhd (PPESW).
The transaction involving a total cash consideration of RM17.5 million, will effectively lower CMS’ stake in each of the two subsidiaries to 49 per cent, while SEDC will have a 51 per cent controlling stake in both companies.
Pursuant to the transaction, all of CMSR’s quarry-related operations and PPESW’s construction operations, including its road construction activities, will come under the direct control of SEDC.
It is said that the parties expect to complete the transaction by end of the year.
“CMS, however, will continue to manage CMSR and PPESW’s day-to-day operations until such a time when SEDC may introduce changes to align the management of the two companies with the management of the SEDC group,” said a statement from CMS issued after the exchange of documents for the shares sale agreement yesterday.
Meanwhile, CMS Group managing director Dato Isaac Lugun said it was a known fact that the quarry and construction industries were primarily driven by the government especially licensing and roll-out of mega projects.
“Also, the government relies on those companies with the necessary expertise to drive growth and development in these areas.
“It is therefore imperative that both CMS and SEDC, for our mutual benefit, continue to strengthen collaboration and find new ways to create additional value for both parties and the people of Sarawak.
“This exercise is a positive step towards cementing the group’s ongoing strategic collaboration with the state.
“Furthermore, it also places CMS on a stronger footing to capture business opportunities particularly at the time when several mega infrastructure projects are underway, or in the pipeline,” he said in a statement.
He also said the transaction would ‘cement the marriage of strength and a realignment of CMS business strategy moving forward’.
“SEDC has the necessary platform while CMS possesses the industry knowledge and a healthy balance sheet. These elements constitute a strong rationale for the disposal and we look forward to continuing our long and fruitful relationship with SEDC.”
It is said that CMS and SEDC have a long-standing collaboration over the last 27 years and this successful long-standing private-public partnership has brought about much economic progress for Sarawak, particularly in terms of its infrastructural development.
According to CMS, the transaction is a step in the right direction given the new role
that the Sarawak government has entrusted upon SEDC to play a more direct and catalytic
role in the economic development of the state, including the change in quarry-licensing policy requiring SEDC to have a stake in all quarries in the state.
“Importantly, SEDC has assumed the mantle of the state government’s partner in the economic development of Sarawak,” it added.