KUALA LUMPUR: PetroSaudi International Ltd plans to privatise and delist UBG Bhd and its two subsidiaries Putrajaya Perdana Bhd and Loh & Loh Corporation Bhd in a corporate exercise which is expected to cost RM1.4 billion.

PetroSaudi said on Friday, Jan 15 it intends to privatise and delist UBG once it has completed acquiring stakes in UBG currently held by the investment holding company's three major shareholders.

The next step would see it taking over and delisting Putrajaya Perdana and Loh & Loh.

"The entire exercise, assuming full acceptance by the shareholders of UBG, Putrajaya Perdana and Loh & Loh, is scheduled to be completed by the end of the first quarter of 2010 and will cost PetroSaudi about RM1.4 billion," it said.

"This will represent the second significant investment by the Saudi company in Malaysia and signals growing economic ties between Kuala Lumpur and the kingdom of Saudi Arabia," it added.

A PetroSaudi spokesman said if the privatisation of UBG, PPB and LLCB was successful, it would ensure a smooth transition.

"There will be no changes to the management structure and it will be business as usual. We have a deep belief in professional management and see talent in the current UBG organisation. In fact we expect all UBG staff to be well rewarded for their contribution to the growth of the group," said the spokesman.

PetroSaudi, with its head office in Saudi Arabia, focuses on energy, construction and other strategic projects in various regions around the world.

To recap, on Dec 29, it had offered to acquire all shares in UBG currently held by Majestic Masterpiece Sdn Bhd, Concordance Holdings Sdn Bhd and PPES Works Sarawak Sdn Bhd (PPES) for a cash consideration of RM2.50 per share.

Majestic Masterpiece -- a unit of Abu Dhabi-Kuwait-Malaysia Investment Corporation (ADKMIC) whose shareholders include prominent Middle Eastern investors - owns 52.62% of UBG that it acquired in 2008.

On Jan 8, Majestic Masterpiece, Concordance and PPES accepted PetroSaudi's offer to acquire their entire equity interests in UBG subject to inter-alia the approval of the shareholders of the respective companies.

Concordance, a unit of Cahya Mata Sarawak Bhd owns 28.29% of UBG. Its 51% owned PPES has a 8.92% interest in UBG.

PetroSaudis would own more than 33% of UBG after the acquisitions, which would trigger a mandatory general offer for the remaining UBG shares.  It would also have to make an MGO for the remaining shares in Putrajaya Perdana and Loh & Loh not held by UBG.

"This proposed investment will be PSI Group's second foray into the region, following in the footsteps of its groundbreaking US$2.5 billion joint venture with 1Malaysia Development Bhd.

"But PetroSaudi is pursuing the acquisition, privatisation and delisting UBG on its own, and as a separate transaction from the joint-venture with 1MDB," it added.

The spokesman for PetroSaudi said he was confident of significant economic opportunities in Malaysia to be tapped.

He added the UBG acquisition would give it an immediate and strong foothold in Malaysia covering all the right sectors.

PetroSaudi's believed its expertise in the oil and gas sector would assist UBG in extracting more value from its current oil and gas investment in Thailand and help identify more investments in the sector.

It believed that it would also benefit from the construction and engineering expertise and skills of Putrajaya Perdana and Loh & Loh.