PETALING JAYA: Petronas Chemicals Group Bhd (PCG) has entered into a share purchase agreement to divest 25% equity interest in its wholly-owned subsidiary Petronas Chemicals Fertiliser Sabah Sdn Bhd (PCFS) to the Sabah government’s SMJ Sdn Bhd for RM1.25 billion.
In a filing with Bursa Malaysia today, PCG said PCFS would continue to be its subsidiary upon completion of the divestment exercise, which is expected to be completed by the end of the second quarter of 2023.
“Upon completion of the divestment, PCG and SMJ shall have 75% and 25% of the ownership in PCFS, respectively,” said PCG.
PCFS was incorporated in October 2011 to construct, own and operate an integrated ammonia and urea plant with a capacity of 735 kilotonnes per annum (KTPA) and 1,225 KTPA, respectively, in the Sipitang Oil and Gas Industrial Park, Sabah.
PCG noted that the Sabah government had expressed its interest to own equity in PCFS since the group undertook the construction of the integrated ammonia and urea plant.
“The group had considered the state as a potential strategic partner in PCFS as the partnership would provide PCG with the ability to position itself as the preferred partner in shaping and delivering the state’s aspiration to have greater participation in the petrochemical industry.
“It also will give the opportunity to develop a robust working relationship with the state, which could unlock areas of cooperation that could derive mutual benefits,” it added.
In a separate statement, PCG managing director and CEO Yusri Yusof said the group is confident the collaboration would further spur the development within the Sipitang Oil and Gas Industrial Park, creating more economic benefits for the bigger surrounding communities in Sabah.
Da Vinci Group BV update
In a separate filing, PCG said Da Vinci Group BV (DVG) achieved exceptional financial performance and realised earnings before interest, taxes, depreciation, and amortisation (Ebitda) of €83 million (RM405 million) for the financial year 2020.
This was a result of lower raw material and inventory costs, combined with strong market demand owing to supply chain disruptions and geopolitical conflicts.
It added that due to the exceptional financial performance, the earn-out portion of the purchase consideration has increased by €70 million (RM341.6 million) resulting in the revised acquisition cost of €233 million (RM1.14 billion).
“We are pleased with the results of this acquisition to date and look forward to continued growth in this business,” PCG said.
DVG is a private limited liability company, incorporated in the Netherlands with global operations involving own-brand reselling, formulating and manufacturing of silicones, lube oil additives and chemicals.
As part of the acquisition in 2019, PCG, via its wholly-owned Petronas Chemicals International BV, had entered into an earn-out scheme as part of retention programmes for DVG’s key management personnel who previously owned 37.4% of DVG’s shares, collectively.
In the earn-out scheme, 20% to 30% of recipients’ proceeds from the transaction were deferred for three to five years, where the final payout is based on the equity value of DVG’s business, which is linked to its financial performance.