Thursday 28 Mar 2024
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KUALA LUMPUR (Dec 4): Property development and construction outfit Ireka Corp Bhd has teamed up with the world’s largest manufacturer of rolling stock and rail-related products and systems CRRC Urban Traffic (Europe) Co Ltd (CRRC UT) to venture into rail projects.

In filing with Bursa Malaysia today, Ireka said the Memorandum of Understanding (MoU) served the purpose for the collaboration in rail, urban traffic solution, tourism and infrastructure projects in Malaysia and Southeast Asia.

Ireka and CRRC UT will work together exclusively to explore business opportunities in areas such as logistics, trading of construction and building materials as well as specific rail and infrastructure construction projects.

“The MoU entered between Ireka and CRRC UT establishes a formal working relationship between the parties to jointly pursue projects in the areas set out,” it said.

Simultaneous to the MoU, Ireka had also signed a share subscription agreement with CRRC UT, a member of the China-based CRRC Group to invest in Ireka and subsequently establish a joint venture relationship between both parties, of which Ireka holding 51% and CRRC UT holding 49%.

Ireka said the proposed subscription entails the subscription by CRRC UT of 15.83 million shares, representing about 9.27% of the total number of issued shares in Ireka at an issue price of 57.95 sen per share, for a total price of RM9.18 million. Ireka’s share price closed at 60 sen today.

The gross proceeds will be utilized for the working capital (RM9.03 million) and expenses in relation to the proposed subscription (RM150,000).

Upon completion of share subscription exercise, CRRC UT will emerge as a substantial shareholder holding 8.48% equity interest in Ireka based on the enlarged share capital.

Ireka’s group managing director, Datuk Lai Voon Hon said the stake that CRRC UT has invested in Ireka and the upcoming joint venture is another great step forward for the group’s growth.

“We are particularly pleased to welcome CRRC UT as our new strategic shareholder in the company. I am also proud that CRRC UT has selected Ireka as a trusted partner to grow their presence in Malaysia and South East Asia.

“There is no doubt that CRRC’s technical know-how and our wide business network accumulated over the last 50 years will complement each other well,” he said in a statement today.

The CRRC Group already has a presence in Malaysia and is an active player in the country’s rail industry through its supply of contracts for the LRT System, Express Rail Link and KTM Komuter.

Meanwhile, Ireka is ideally positioned to take on this new challenge because it has a 50-year track record in building a number of major national infrastructure projects.

“Ireka played a significant part in the construction of notable projects like the North-South Highway, KLIA International Airport, Cheras-Kajang Highway and the most recent MRT1 Package V7,” it said.

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