D Bhd ... Dec09

It has proposed a corporate exercise that will see its parent, Jcorp, injecting Tanjung Langsat Port (LTP) and the company that develops the industrial area in the vicinity of the port in exchange for assets currently held by the property developer.

Under the exercise, D Bhd’s existing shareholders will be offered an option to migrate their interest in the property developer to IKSB through a share swap, whereby each D Bhd share is exchanged for 0.6 IKSB share. D Bhd shareholders will get 32 sen per share from the exercise.

IKSB – after assuming the listing status of D Bhd – will sell the existing assets to JCOrp for RM200 million, to be satisfied by RM80 million cash and Rm120 million by exchange of assets between Jcorp and IKSB. The assets that IKSB has proposed to acquire from Jcorp are TLP and TPM Technopark Sdn Bhd for RM303.85 million in exchange of assets between IKSB and Jcorp. TPM is the lead manager and developer of industrial land in Tanjung Langsat.

Jcorp – which currenrly holds a 33% stake in DBHd – will end up with 73.5% of IKSB and after a restricted offer for sale of shares, will reduce its interest to about 68%. Jcorp is seeking an exemption from undertaking a MGO in the new look DBhd (That will be IKSB).

The exercise will effectively see Jcorp inject its port assets into IKSB in return for the property projects that are currently under D Bhd. The shareholders of DBhd will get 0.6 IKSB shares and a 32 sen cash per share.

Financially, DBhd has been a laggard, with revenue of only Rm4.1 million and a net loss of rm3.27 million recorded in the second quarter ended June 30, 2009. It made losses Rm12.6 million and RM15.9 million in FY2008 and FY2007 ended Dec 31.

It has also experiencing a decline in shareholders’ funds for the past two years. Total shareholders equity fell to RM124 million and RM112 million in FY2007 and FY2008 respectively.

On the other hand, TLP is expected to be the catalyst for IKSB’s growth. The third port in Johor after Pasir Gudang and Tanjung Pelepas, TPL is dedicated to serve the petrochemical and oil and gas industry. Jcorp has invested about RM500 million under the second phase of the TLP expansion plan in 2009.

The 908 acre TLP will be fully completed by 2012. Its futures development will be backed by the 4000 acre Tanjung Langsat Industrial Estate. Tanjung Langsat is zoned for marine support facilities and the oil and gas industry under the IDR masterplan.

As for Jcorp, it will end up with 1200 acres of land in Pahang and another 90 acres in Johor that is currently under D Bhd.


For shareholders, they will get 32 sen per share and shares of a company that is into port operations that will ensure slow but steady and increased cash flow over time. The only setback is that port operations are capital intensive and have long gestation periods.