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MMC consolidating port holdings, to buy 49% of Penang Port from majority shareholder

MMC consolidating port holdings, to buy 49% of Penang Port from majority shareholder
Malaysian infrastructure conglomerate MMC Corp Bhd is buying a 49% stake in Penang Port from its majority shareholder Seaport Terminal (Johore) Sdn Bhd (STJSB) for MYR200m ($49.6m) in cash.

MMC group, which already has interests in the two other major container ports on Malaysia's west coast, said in a stock market announcement that it had signed a conditional agreement to acquire the shares in Penang Port Sdn Bhd (PPSB) from STJSB, although the latter will maintain a 51% stake in PPSB, which is since struggling to turn around into a competitive regional port after being bought over ny STJSB in 2014.

Being Malaysia's oldest port, many legacy issues are hampering efficient and cost-effective operations. MMC, it is hoped, will bring its proven winning formula.

Prime among these is a condition for PPSB to dump its loss-making ferry service business. This has also to be on acceptable terms, including the assumption of all costs and liabilities arising from the ferry operations.

MMC reiterated that there was no assurance that its expectation of PPSB’s financial performance would be achieved.

MMC said the proposed purchase was in line with the group’s initiative to make further strategic investments in one of its core businesses, ports and logistics, and to strengthen its financial performance and position.

The proposed acquisition is expected to be completed in the first quarter of 2017.