Kuching (Sarawak), Thursday, 29 November 2018 – Cahya Mata Sarawak Berhad (CMSB – 2852) is pleased to announce that CMS Resources Sdn Bhd (CMSR), a 51% owned subsidiary company of CMSB had, on 29 November 2018 entered into a Share Sale and Purchase Agreement with Kasuma Resort Sdn Bhd (KRSB) for the acquisition of 56,000 ordinary shares, representing 56% equity interest in Borneo Granite Sdn Bhd (BGSB) from KRSB for a total cash consideration of RM 31 million. The remaining 49% equity interest in CMSR is owned by Sarawak Economic Development Corporation.
Commenting on the acquisition, CMSB’s Group Chief Executive Officer – Operations, Mr Goh Chii Bing, said: “The Acquisition is a strategic investment by the Group in a granite quarry located in the southern region of Sarawak, which is a very limited natural resource in the State. Granite is required in large quantities for the construction of the Pan Borneo Highway project and this investment positions CMSR as the key supplier of granite for this project.”
CMSR also took into consideration the unaudited net assets of BGSB as at 31 August 2018, the market value of its plant and machinery, its financial performance and the tenure of its quarry licence under Permodalan ASSAR Sdn Bhd. Upon the acquisition, BGSB is expected to generate a strong upward trajectory in its future earnings, with a positive cash flow in the years to come under the management of CMSR.
The quarry occupies about 139 hectares of land with two hill reserves. It is readily operational and has a logistic advantage for outbound delivery through a waterway enabling CMSR to immediately solve the present shortage of stones instead of acquiring a greenfield granite reserve, which will take a minimum of two years to be operational.
The acquisition is set to further expand the CMSB group’s quarry operations and a planned strategic investment to secure a reliable and immediate source of granite stone for the Group’s existing and impending projects.
Mr Goh Chii Bing added: “BGSB is targeting an annual production of 1.0 million metric tons. Combined with CMSR’s second production line with an annual production output of 1.3 million metric tons at Sibanyis Quarry, we will see a significantly enhanced capacity expansion of CMSR’s quarry operations. This is particularly timely as peak demand of stones materials for Pan Borneo Highway project is between 2019 to 2021; particularly the requirement to use granite stones for its premix wearing course.
“BGSB is well placed to benefit from other projects such as the pending implementation of the coastal road and the second trunk road project by the State Government. In addition, more infrastructure projects are already in the pipeline to be implemented over the next two years by the State Government through open tenders. These projects are expected to create huge demand for stones during the construction period, even after the Pan Borneo Highway project’s completion.
“We believe that our growth strategy for our strategic investments is beginning to come to fruition, whereby our traditional core businesses and our strategic investments are coming together to meet the growing demands of a rapidly developing State.”