This article first appeared in The Edge Financial Daily on September 13, 2019

KUALA LUMPUR: 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 that it is currently experiencing, said Straits.

In an exchange filing, 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 tonnes of marine fuel oil on a monthly basis.

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

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

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

Shares in Straits closed half a sen higher yesterday at 21 sen on Bursa Malaysia, bringing it a market capitalisation of RM136.64 million.