Sarawak Cable acquires Sarwaja Timur

Another exciting chapter of corporate milestone was created in the vibrant business world with the acquisition of Sarwaja Timur Sdn Bhd (312748-V), an established steel fabrication and hot dip galvanizing company in Sarawak, by Sarawak Cable Berhad.

During the EGM of Sarawak Cable Berhad, held on 18 December 2010, the shareholders, having taken into consideration of all the salient terms and conditions as detailed in the Circular dated 3 December, 2010, including the positive enhancement to the net assets and profitability of Sarawak Cable Group, the promising prospects of Sarwaja Timur Sdn Bhd, and the recommendation of the Board of Directors, voted overwhelmingly for the acquisition of 75% equity interest in Sarwaja Timur Sdn Bhd at a total sum of RM28.875m to be satisfied via issuance of 10,000,000 new ordinary shares of RM0.50 each („SHARES?) at an issue price of RM1.2038 and the cash payment of approximately RM16.8m. Concurrently, a placement of upto 5,000,000 new shares to institutional investors to be identified will also be undertaken. The remaining 25% of the equity interest in Sarwaja Timur Sdn Bhd will be acquired by Austin Corp. (Malaysia) Sdn Bhd.

It has been well published that Sarawak Cable Group is in the manufacture of power cables and wires, with trading of power cables and wires and supply, installation and commissioning of power cables as its secondary business activities. Sarwaja Timur Sdn Bhd, on the other hand, is principally involved in the manufacturing, fabrication, galvanizing and sale of steel structures chiefly for the power transmission, telecommunication and infrastructure development projects. It owns and operates a full scale plant and provides products and services, among others, for power transmission towers and poles, telecommunication towers and poles, high/low tension galvanized steel distribution poles, galvanized highway guardrails and steel structure fabrication and erection.

As a major and valued customer of Sarawak Cable Group, the acquisition of Sarwaja Timur Sdn Bhd will provide Sarawak Cable Group an immediate access into the power transmission line manufacturing and related services which Sarawak Cable Group lacks. With the additional capacity, Sarawak Cable Group will be able to offer a comprehensive package of power transmission products and markets its services as a one-stop manufacturing base and integrated solutions provider for power transmission line projects, thus providing the Sarawak Cable Group with stronger negotiation powers when tendering for contracts. With Austin Corp. (Malaysia) Sdn Bhd, an expert provider of project management services for the power transmission line industry in Malaysia, on board, a comprehensive and complete strategic alliance is created.

It is understood that the number of issued and paid-up share capital will be increased from 120,000,000 shares as at the latest practicable date, to 135,000,000 shares upon the issuance and allotment of the Consideration Shares and the Private Placement Shares and in return, Sarawak Energy Berhad will increase its shareholding to 21.6% from 15.9%.

With the implementation of the Sarawak Corridor of Renewable Energy (“SCORE”), the planned 7,000 km of new and upgraded roads by 2012, 1,900 km of these in Sabah and Sarawak, the numerous projects approved under the Tenth Malaysian Plan 2011 – 2015 (“10MP”) and the glowing prospects of utilities sector in East Malaysia, the future of this merged entity is undoubtedly bright.

While answering questions from the shareholders and subsequent press conference, the Managing Director and CEO of the Sarawak Cable Group, Mr. Aaron Toh, gave special thanks to the Directors, Shareholders, Customers and the relevant authorities for their cooperation, assistance and support.

Board members, Dato Sri Mahmud Abu Bekir Taib – Non-Independent Non-Executive Chairman, Datuk Fong Joo Chung – Non-Independent Non-Executive Deputy Chairman, Mr Aaron Toh Chee Ching – Managing Director/ CEO, Mr Yek Siew Liong – Non-Independent Non-Executive Director, Mr Kevin How Kow – Independent Non-Executive Director, and Mr Erman Bin Radin – Independent Non-Executive Director, were also present at the EGM.