Thursday, September 19, 2013

Barry Tan advised Ibraco gets Treatment Plant project

Ibraco announces proposed JV for treatment plant

by Sharon Kong, Posted on September 18, 2013, Wednesday
KUCHING: Ibraco Bhd (Ibraco) has proposed a joint venture (JV) between its 70 per cent-owned subsidiary Ibraco HGS Sdn Bhd (Ibraco HGS), BDA Properties Sdn Bhd (BDAP) and Warisar Sdn Bhd (Warisar) for the design, construction and completion of a centralised sewerage treatment plant (STP) on land designated for a treatment plant and joint development on the remaining lands.
In a statement to Bursa Malaysia yesterday, Ibraco said the proposed STP is to construct a plant in Bintulu, encompassing 5.8 acres with an additional 10 metres width green buffer along the perimeter.
The proposed STP will consist of a pumping station, secondary screen, aerated grit and grease chamber, blower house, sequencing batch reactor tank, equalisation tank, chlorination tank and house, sludge holding tank, sludge thickening, sludge dewatering house and sludge storage shed, stand-by diesel generation set and administrative house.
Upon completion of the proposed STP, the Ibraco Group will be granted the rights to the proposed joint development (PJD).
“Pursuant to the PJD, the development lands are envisaged to be developed into shopoffices, commercial mall, offices and hotel developments which are expected to create a comprehensive major urban service centre with various commercial related developments,” the group explained in its filing to Bursa.
“These are expected to generate economic benefits to the surrounding areas due to the good infastructure and accessibility of the development lands.”
Ibraco further added in the statement that in line with the positive outlook of both Sarawak and Bintulu, the board is of the opinion that there is significant potential in the development lands.
As such, with the completion of the Sarawak Corridor of Renewable Energy (SCORE) and 10th Malaysia Plan projects, the board expects growing demands for both residential and commercial properties in Bintulu.
Furthermore, with the proposed development manager being awarded and undertaken by a wholly-owned subsidiary of Ibraco – Ibraco Construction Sdn Bhd – the key functions related to the construction and development of the proposed JV will be undertaken in-house.
“As such, this will enable us to have a better control and coordination of the proposed JV and is expected to imporve the efficiency in the construction and development in terms of time and cost,” Ibraco reiterated.
Overall, the board is optiomistic of the future prospects of the proposals and ultimately, the Ibraco group, as it believes the proposals will enhance the future earning of the group and that the proposed JV is expected to generate a stable stream of cash flows in the future financial years.
Ibraco also stated that the proposed JV is not expected to have any material effect on the net assets per share of the group as the development lands are alienated to Bintulu Development Authority.
In addition, it pointed out that the JV will be fundded partly by bank borrowings by the group and the gearing level of the Ibraco will be increased accordingly.
“The construction of the proposed STP is expected to commence in the fourth quarter of 2013 (4Q13) and is expected to be completed by the end of 2014, thus it is not expected to have any effect on the earnings and earnings per share (EPS) of the group for the estimated financial year ended 2013 (FYE13)
“As for the construction of the PJD, it is expected to commence in FYE14 and is not expected to have any effect on the earnings and EPS of the group for FYE13,” Ibraco explained.
Thus, in accordance with the timing and commencement of the construction in relation to the proposed JV, the proposed development manager is not expected to have any effects on the earnings and EPS of the group for FYE13.

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