Thursday, October 6, 2011

MISC, Dialog ink deal with China Aviation to build RM371m oil storage facility

KUALA LUMPUR: MISC BHD [] and DIALOG GROUP BHD [] via their joint venture company (JVC), Centralised Terminals Sdn Bhd (CTSB), have signed an agreement with China Aviation Oil (Singapore) Corporation Ltd (CAO) to jointly build and maintain an oil storage tank terminal facility within Tanjung Langsat Port, Johor.

MISC in a filing to Bursa Malaysia Securities on Thursday, Oct 6 said the project was expected to commence by early 2012 and be completed by the end of 2013, with a total development cost of an estimated RM371 million.

The petroleum products storage tank terminal f facility would have a storage capacity of 380,000 cubic metres (cbm), it said.

CTSB is 45% owned by MISC and 55% held by Dialog.

Under a shareholders' agreement between CTSB and CAO, the companies would establish a JVC known as Langsat Terminal (Three) Sdn Bhd, in which CTSB would hold a 74% equity stake and the balance 26% to be held by CAO.

CAO is the largest physical jet fuel trader in the Asia Pacific region.

CAO will also enter into a terminal usage agreement with Langsat Terminal Three for the lease of all the capacity of the tankages and related facilities for an initial term of seven years.

MISC said CTSB would finance its portion (including the initial share subscription) of the eventual equity in the facility via internally generated funds, bank borrowings, proceeds from increase in its share capital and/or advances from its shareholders, of which the breakdown was pending finalisation.

'The shareholders agreement will pave the way for MISC and CAO to be strategic business partners in the equity ownership and development of the project.

'The project is expected to enhance MISC's position in the tank terminal business,' it said.

MISC said CTSB's proposed investments in Langsat Terminal Three ''were expected to contribute positively to its long term future earnings.

Presently, MISC and Dialog, through CTSB operates a tank terminal facility in Tanjung Langsat with a capacity of 476,000 cbm, under Langsat Terminal (One) Sdn Bhd.

Development of an additional 171,000 cbm facility at the adjacent Langsat Terminal (Two) is currently underway and is scheduled for completion by end 2011.

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