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Kumpulan Powernet to buy 51% stake in transportation firm, hopes to help fight Covid-19

TheEdge Wed, Oct 21, 2020 08:43pm - 1 month ago

KUALA LUMPUR (Oct 21): Kumpulan Powernet Bhd is seeking to venture into the logistics business by acquiring a 51% stake in chemical and gas transportation firm Chemtrax Sdn Bhd for RM10 million.

Chemtrax, headquartered in Pasir Gudang, Johor, is principally involved in the provision of chemical and gas transportation and forwarding services. The firm has logistics facilities with depots and yards in Pasir Gudang and Simpang Renggam, Johor and Kuantan, Pahang.

Kumpulan Powernet said it has signed an agreement to buy the stake from Sabaka Group Sdn Bhd, which currently wholly owns Chemtrax.

The group said it could immediately leverage on the long-term established experience of Chemtrax and its existing platforms across chemical and gas transportation businesses for the multinational companies.

"As Chemtrax is heavily involved in the transportation of amongst others, synthetic latex and nitrile butadiene rubber, which are key materials for latex gloves, the company expects that Chemtrax would be able to benefit from the current surge of demand of latex gloves across the world arising from the Covid-19 pandemic," the group said in a bourse filing.

In a separate press statement, Kumpulan Powernet group managing director Mustakim Mat Nun said the proposed acquisition is consistent with the group's intention to explore the logistics segment upon the emergence of a new shareholder a year ago.

The founder and group chief executive officer of Serba Dinamik Holdings Bhd, Datuk Dr Mohd Abdul Karim Abdullah, in his personal capacity bought a 20.04% stake in Kumpulan Powernet last year.

"We are also happy that we are able to somewhat contribute to the fight and containment of the Covid-19 pandemic via our acquisition of Chemtrax. The increase in demand for nitrile gloves has also resulted in a spike in demand for the specialised services of Chemtrax," Mustakim said.

The audited earnings before interest, taxes, depreciation and amortisation (EBITDA) of Chemtrax as at the financial year ended Dec 31, 2019 (FY19) stood at approximately RM5.8 million.

Mustakim said Sabaka has guaranteed the aggregate EBITDA of Chemtrax in FY20 and FY21, based on business forecasts, will not be less than RM5 million for each year.

Based on the 51% stake to be acquired, the contribution to Kumpulan Powernet will be RM2.55 million for FY20 and FY21, based on the EBITDA guarantee, he said.

"With the EBITDA guarantee as provided under the terms of the proposed acquisition, we expect the proposed acquisition would immediately yield accretive and provide long-term sustainability to the company's revenue and profitability," added Mustakim.

At market close today, shares in Kumpulan Powernet were up 18 sen or 5.45% at RM3.48 with a market capitalisation of RM393.53 million.

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