News of the Day - 15 April 2015

• Defending the Ringgit

Malaysia is raising US$2bn (RM7.4bn) in the bond market as it seeks to defend the ringgit, Bloomberg reports. The ringgit – the region’s worst performing currency – has lost almost 15% in value against the dollar since June and Malaysia’s foreign reserves plunged to US$105bn at the end of March, a US$25bn drop from a year ago. Putrajaya had reportedly appointed HSBC Holdings, CIMB Group and Standard Chartered to arrange the sovereign sale, which might be finalised as soon as this week, the business news portal quoted sources as saying.

• Bumi Armada in JV with ElectroGas Malta for FSU project at Delimara, Malta 

Bumi Armada has entered into agreements with ElectroGas Malta for the conversion, supply and operations and maintenance of a floating storage unit (FSU) for the project relating to the construction and operation of an LNG receiving terminal located at Delimara, Malta. The effective date of the contracts is 13 Apr 2015 for a firm period of 18 years and two months. The estimated aggregate value of the contracts is approximately US$300m (RM1.1bn). The FSU is expected to commence operations in the Delimara, Malta in 2016.

With an average contract value of RM61m p.a., the contract is small but a positive surprise nevertheless. It gives Bumi Armada a new long-term income stream and boosts the order book by 4.5% to an estimated RM25.6bn, a new high. 

• Benalec MOU with Pestech for power supply infrastructure job in Johor 

Benalec Holdings Bhd, which is reclaiming land in Johor which will be developed into an integrated petroleum and petrochemical hub, has signed a memorandum of understanding (MoU) with Pestech International Bhd for the power supply infrastructure. The marine construction firm said that Benalec Sdn Bhd, via its unit Tanjung Piai Maritime Industries Sdn Bhd (TPMISB), had entered into an MoU with Pestech International’s unit Pestech Sdn Bhd (PSB) for exclusive exploratory efforts to establish power supply infrastructure to the Tanjung Piai Integrated Petroleum and Maritime Industrial Park. 

• CMS won contract to build Sarawak Museum Campus for RM308m.

Cahya Mata Sarawak Bhd, through unit CMS Works Sdn Bhd’s subsidiary PPES Works (Sarawak) Sdn Bhd, has won the contract to build the proposed Sarawak Museum Campus and Heritage Trail, Kuching, for RM308m. The company said on Tuesday that the project, awarded by the Sarawak government, comprised the design, construction, fitting out and exhibitory for a world-class museum and an adjoining annexe building with a combined floor space of 30,000 sq m. 

• Boustead injecting RM199m cash for a 50% stake in Irat Properties S/B 

Boustead Holdings Bhd is injecting RM199m cash for a 50% stake in Irat Properties Sdn Bhd, which in turn is taking control of two companies involved in the automated enforcement system (AES). The company said on Tuesday it was buying 93.3m Irat shares – comprising of 60m new Irat shares for RM128m cash and an additional 33.3m new Irat shares at RM2.13 each for RM71m. The remaining 50% equity interest in Irat is held by existing shareholders, LTAT and Irat Holdings Sdn Bhd. Boustead Holdings deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said with this viable acquisition, the group was set to strengthen its earnings potential. 

“We are especially positive on our prospects in the property sector given the fact that this acquisition includes two properties in the heart of Kuala Lumpur, namely the Chulan Tower Office Block and The Royale Chulan Kuala Lumpur Hotel valued at a total of RM508mil,” he said.

• Lay Hong’s proposed private placement only to institutional investors 

Lay Hong Bhd, which last month decided to halve the size of its planned private placement following a major shareholder’s protest, can only place out the shares to institutional investors.

• Bank of China is the renminbi clearing bank in Malaysia 

Prime Minister Datuk Seri Najib Tun Razak today launched the Bank of China as the renminbi clearing bank in Kuala Lumpur to facilitate and reduce the cost of doing business here. Malaysia is the second country after Singapore in ASEAN to establish a renminbi clearing bank with China. Prior to the agreement, conversion of the ringgit into yuan would need to be first converted into the US dollar and then thereafter to the renminbi. With a clearing house in Malaysia, the ringgit can be directly converted to yuan, hence reducing the cost of transaction.