KUALA LUMPUR (Sept 12): Straits Inter Logistics Bhd’s unit has signed a memorandum of agreement (MoA) to acquire a 13 year-old oil tanker named Poseidon for a total of US$4.84 million or RM20.45 million cash from Hibiscus Fuels Ltd.

The proposed acquisition is in line with the group’s strategy to enlarge its asset base, in view of the higher business volume and the expansion phase it currently experiences, Straits said.

In an exchange filing today, Straits said the MoA was signed between SMF Ixora Ltd and Hibiscus Fuels. SMF Ixora is a wholly-owned subsidiary of Straits Marine Fuel & Energy Sdn Bhd, which in turn is a 67%-owned subsidiary company of the group.

Poseidon provides oil bunkering services and is capable of undertaking a maximum of some 35,000 metric tonnes of marine fuel oil on a monthly basis.

Straits said the vessel’s purchase price is at a 16.55% discount over market value, as ascribed by an independent registered valuer.

SMF Ixora plans to satisfy the consideration entirely via cash, from internally-generated funds or bank borrowings, over a period of 60 months from the date of the MoA.

“The addition of Poseidon will enlarge the asset base of Straits and its subsidiary companies and would provide the group, the flexibility in respect of its allocation and utilization of vessels in undertaking its business activities.

“Further[more], the vessel will be chartered to SMF for its business activities, which are mainly catered for the demand for the trading of marine fuel oil, as well as the provision of oil bunkering services of marine fuel oil, whilst nine vessels currently owned by the group will be catered for the demand in the trading of marine gas oil and the provision of oil bunkering services of marine gas oil in Malaysia,” Straits said.

“The group expects the utilisation of Poseidon [to] increase the sales volume of the group in its entirety, which will increase the financial performance of the group, moving forward.”

Shares of Straits closed half a sen higher today at 21 sen on Bursa’s ACE Market, bringing a market capitalisation of RM136.64 million.