PERWAJA HOLDINGS BERHAD
KLSE (MYR): PERWAJA (5146)
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
aliyusof
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Posted by aliyusof > 2015-05-09 06:18 | Report Abuse
Abu Sahid absent in Perwaja deal
By NG BEI SHAN beishan@thestar.com.my
StarBiz
9 May 2015
THE absence of Perwaja Holdings Bhd’s major shareholder, Tan Sri Abu Sahid Mohamed, was conspicuous during the signing ceremony between the company and its potential partner, TianJin Zhiyuan Investment Group Co Ltd.
The gutsy businessman has a 63% interest in the local steelmaker with a market value of RM114.8mil.
When contacted, Abu Sahid tells StarBizWeek: “I don’t know the deal… It is a memorandum of understanding (MoU), so I won’t know if it’s a done deal. But if it’s good for the company, why not? Datuk Alan Ong sits on Maju Holdings Sdn Bhd’s board. He is a smart guy. He knows what to do.”
Maju Holdings is Abu Sahid’s flagship company.
While Abu Sahid’s tone sounded ambiguous, the partner whom he had roped in nine years back, Tan Sri Pheng Yin Huah, has a different tone.
Speaking at the signing ceremony, Pheng said: “Transformation is not a choice; it is a necessary path to take.”
Pheng told an audience which included bankers and the media that Zhiyuan’s injection of some RM300mil into the PN17 company would give its halted operations a new lease of life.
Perwaja’s Kemaman plant in Terengganu has stopped operations since August 2013. It still owes Tenaga Nasional Bhd and Petroliam Nasional Bhd utility expenses of RM450mil.
The two parties have signed an MoU for Zhiyuan to invest in Perwaja.
In the first part of the plan, Zhiyuan would invest no less than RM100mil to restart Perwaja’s existing operations. Of the RM100mil, RM30mil would be in the form of lease depository for the leasing of Perwaja’s land.
Next, Zhiyuan would pump in more money to bring in new machinery, as well as to modify Perwaja’s existing ones so that it can venture into making semi-finished alloy products.
According to Zhiyuan’s chairman Zhang Zhong, the China-based investor intended to see the plant producing 400,000 tonnes of alloy per year in three to six months after the completion of the deal.
Eventually, Perwaja will be repositioned to be a stainless steelmaker, producing up to 800,000 tonnes of alloy annually.
But all that is subject to the approval of the regulators and Perwaja’s creditors.
For one, the land that Perwaja intends to lease to Zhiyuan is charged to the banks. Without a nod from the lenders, both parties would not be able to kickstart the plan.
Commenting on creditors’ response towards this collaboration, Perwaja’s Ong says: “We’d hope that the creditors are in
favour (of this plan).”
Bear in mind that Perwaja’s total debt stands at RM2.2bil and it has many stakeholders to answer to. Its cumulative losses recorded RM1.9bil as at its second quarter ended Dec 31, 2014.
The book value of its Kemaman plant and land was worth RM51.3mil as at June 30, 2014, while the group’s total book value stood at RM1.23bil.
Asked why Zhiyuan chose Perwaja, Zhang says the group – which was set up in the late 1990s – has the expertise and network to transform Perwaja.
Zhiyuan has ventures in minerals, chemicals, alloys, real estate and logistics, with a footprint across several countries.
Zhang adds that the plan is for Perwaja to move upwards to a higher-value alloy and steer away from its traditional steel business.
There is a glut in steel supply globally and the stiff competition has depressed steel prices.
Steel billet prices have fallen more than 20% or about US$100 (RM361.5) per tonne year-on-year to US$300 (RM1,084.5.