Borneo Aqua plans RM131m unit buy to diversify into mining

by **Cals** Mon 23 Nov 2015, 00:22

Borneo Aqua plans RM131m unit buy to diversify into mining

By Danial Idraki / theedgemarkets.com | November 20, 2015 : 8:08 PM MYT

KUALA LUMPUR (Nov 20): [size=16]Borneo Aqua Harvest Bhd ([You must be registered and logged in to see this image.] Valuation: 0.00, Fundamental: 0.80), which is primarily in the aquaculture business, is proposing to buy the entire equity interest of Wullersdorf Resources Sdn Bhd from its managing director (MD) and two others for RM131 million, to diversify into the exploration for minerals and mining business.

Wullersdorf has not commenced operations since its incorporation on July 10. "The proposed acquisition is undertaken in conjunction with Wullersdorf being identified as a special purpose vehicle to venture into the mining business on a piece of sublease land," according to Borneo Aqua's filing on Bursa Malaysia today.

Of note is that Southsea Gold Sdn Bhd, a company with common shareholders as Wullersdorf, had been granted a 35-year lease (Jan 1, 2014 to Dec 31, 2048) on a 1,000-ha tract in Bukit Mantri, Tawau, Sabah, for mining purposes.

On Oct 1 this year, Wullersdorf entered into a sublease agreement with Southsea Gold, whereby the latter subleased to Wullersdorf a portion of the main lease land measuring about 317.7ha for 33 years at an annual rent of RM60,000.

Currently, Datuk Lo Fui Ming, the MD and chief executive officer as well as major shareholder of Borneo Aqua, has a 70% equity interest in Wullersdorf, while Mohd Amir Masry and Dr Tan Su Haw hold 25% and 5%, respectively.

Lo, who also sits on Southsea Gold's board of directors, holds an 11.59% direct and a deemed interest of 0.06% in Borneo Aqua, the latter by virtue of his son Teck Yong's interest in the group (a direct 0.86%); Teck Yong is also a director of Borneo Aqua.

While the Borneo Aqua Group intends to continue with its existing core aquaculture business, its long-term growth plan includes diversifying its business by venturing into other viable and income-generating business, said the group.

"The expected additional long-term income through the mining business is expected to contribute positively to the future earnings of the Borneo Aqua Group.

Any discovery of mineral resources in the sublease area that can be mined economically shall contribute additional economic and financial benefits to the group, it added.

The acquisition of Wullersdorf will be done through the issuance of 104.52 million new Borneo Aqua shares at an issue price of 94 sen per share and the issuance of 34.84 million irredeemable convertible preference shares (ICPS) at an issue price of 94 sen per ICPS.

To facilitate the proposed acquisition, the group is also proposing to increase its authorised share capital from RM50 million to RM200 million.

The board expects the proposals, which require the approval of its shareholders at an extraordinary general meeting to be convened, to be completed by second quarter of 2016.

Borneo Aqua suspended the trading of its shares from 2.30pm yesterday (Nov 19). It was last traded at RM1.19 — which valued it at RM509.7 million — after spiking 28% from the 93 sen seen on Nov 16. The counter will resume trading on Monday.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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