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Saturday, January 16, 2010

KYM set to wrap up RM102m deal

Property developer KYM will soon conclude a deal to sell 16.5ha of land in Manjung, Perak, to Brazil's Vale for RM101.9 million

VALE S.A., the world's biggest iron ore miner, will soon conclude a deal to buy 16.5ha of land in Manjung, Perak for RM101.9 million from property developer KYM Holdings Bhd, people involved in the talks said yesterday.

The deal was first announced in June 2009, with a year-end wrap-up target initially. However, that has been extended to January 18.

Brazil's Vale plans to invest about US$5 billion (RM16.7 billion) in Perak over five years for the iron ore distribution and pelletising plant project.

KYM's controlling stakeholder Datuk Lim Kheng Yew, a merchant banker turned businessman, told Business Times that the company is close to wrapping up the deal, but declined to speculate on the time line.
After months of lull, the project appears to have gathered pace.

In December, it signed a conditional deal for transhipment services of iron ore cargo with Integrax Bhd. Integrax's Lekir Bulk Terminal Sdn Bhd (LBTSB) owns the Lekir Bulk Terminal (LBT) in Manjung.

As part of the deal, LBTSB will pump in as much as RM200 million to expand LBT and make it a transhipment hub.

But it is understood that KYM is also keen to be part of the US$5 billion project, banking on its close relationship with Vale.

Lim noted the entire land sale to Vale would strengthen KYM's balance sheet, and help reduce interest costs.

As it stands, Vale also has an option to buy another 305.95ha of land in Manjung from KYM for RM93.8 million cash.

Vale will be buying the land from Harta Makmur Sdn Bhd, a 54 per cent unit of KYM. KYM controls Harta Makmur via its 90 per cent shareholding in Tegas Consolidated Sdn Bhd.

Proceeds from the sale will boost KYM's shareholders' funds to RM72.3 million from RM23.85 million as at end October 2009.

Its debt to equity ratio, a measure of debt, will fall to 0.41 times from about 8.9 times, with net asset per share rising to 89 sen from 29 sen before the sale.

The proposed sale of the entire property will help KYM cut debts of RM209.71 million as at January 31 2009.

By Business Times

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