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Malaysian oil & gas still a honeypot for some

Malaysian oil & gas still a honeypot for some
The weak oil price environment has apparently not deterred even more new players from jumping into the market with Asia Bioenergy Technologies (AsiaBio) the latest to try its luck in the oil and gas (O&G) transportation sector through the proposed acquisition of two shipping companies for downstream activities, local reports said.

Asia Bioenergy is primarily an investment holding company that operates as a technology incubator, particularly in the bioenergy sector.

AsiaBio reporetedly entered into a heads of agreement (HoA) with Singapore's Hoe Leong Corp Ltd (HLCL) and local company Reachmont Logistics Sdn Bhd (RLSB) to facilitate the acquisition of Semua Shipping Sdn Bhd (SSSB) and Semado Maritime Sdn Bhd (SMSB).

AsiaBio’s non-independent executive director Steve Tan Sik Eek was quoted as saying that the agreement, which has a three-month validity, is a precursor to a firm deal that  would help Asia Bioenergy expand into the downstream O&G segment.

Tan said the proposed deal will see the shares in SSSB and SMSB transferred to a special purpose vehicle (SPV) collectively held by HLCL, Ebony Ritz Sdn Bhd and RLSB, and would eventually be acquired by AsiaBio via a share swap worth around MYR168m ($46.5m), which will in turn make the SPV a stakeholder in Asia Bioenergy.

Conditions include the SPV providing an after-tax profit guarantee of MYR8m for the financial year ended 31 December 2014 (FY14) and will be expected to contribute MYR14m for FY15.

Tan expects the diversification improve Asia Bioenergy's balance sheet and is part of its long-term investment strategy.