TNB ups offer price for Integrax


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KUALA LUMPUR: Tenaga Nasional Bhd (TNB) upped its offer for the acquisition of port operator Integrax Bhd by 50 sen to RM3.25 per share yesterday, bowing to pressure from Perak Corp Bhd, which had earlier rejected the utility’s original RM2.75-per-share offer unless it is raised to RM3.25.

The revised offer price represents a price-to-book ratio of 1.58 times based on Integrax’s audited consolidated net assets per share of RM2.06 as at Dec 31, 2013.

In a notice to Integrax’s board of directors filed with Bursa Malaysia yesterday, CIMB Investment Bank Bhd (CIMB IB), on behalf of TNB, said Integrax shareholders who had accepted the earlier offer will be entitled to receive the revised offer price.

“The revised offer shall remain open for acceptances up to 5pm on March 31, 2015. All other terms and conditions as stated in the offer document shall remain unchanged,” said CIMB IB.

CIMB IB said it is satisfied that the offer by TNB (fundamental: 1.3; valuation: 1.8) will not fail due to the insufficient financial capability of TNB, and that every shareholder who accepts the revised offer will be paid in full in cash.

At RM3.25 apiece, TNB, which holds 22.12% of Integrax, will now have to fork out RM761.38 million to take over Integrax (fundamental: 1.65; valuation: 0.6), an additional RM117.14 million from the earlier RM644.24 million amount.

With yesterday’s revised offer, Perak Corp (fundamental: 1.9; valuation: 1.2) is set to accept TNB’s takeover bid for Integrax, leaving the port operator’s only other substantial shareholder and deputy chairman Amin Halim Rasip, yet to accept the offer as he had said the real value of Integrax should be more than RM5 per share. Amin holds 23.78% direct and indirect stakes in Integrax.

Integrax shares closed two sen or 0.67% higher at RM3.02 yesterday, giving it a market capitalisation of RM902.42 million.

On Monday, Perak Corp announced that it had decided not to sell its 47.34 million shares or 15.74% stake in Integrax to TNB unless the latter ups its offer price by 50 sen per share to RM3.25.

Perak Corp, whose board met on Tuesday to deliberate on the matter, said its decision took into consideration the recommendation by M&A Securities, Integrax’s independent adviser, which last week described the offer as “not fair” but “reasonable”.

Integrax owns and operates the Lumut Port in Perak, which comprises the Lekir Bulk Terminal (LBT) and the Lumut Maritime Terminal (LMT).

The revised offer was announced together with a 25-year coal-handling agreement that was sealed with TNB yesterday.

In a statement, Integrax said it had entered into a new jetty terminal usage agreement with TNB Manjung Five Sdn Bhd (TNBM5), a wholly-owned subsidiary of TNB, for the provision of handling services by LBT for the import of coal for the consumption of the new 1,000mw coal-fired power plant in Pulau Lekir 1, Telok Rubiah in Manjung, Perak (M5 Power Plant).

Integrax said LBT has existing agreements with TNB Janamanjung Sdn Bhd for the provision of coal-handling services  for the 2,100mw M1, M2 and M3 power plants signed in 1999 (JTUA 1) and for the 1,010mw M4 power plant signed in 2012 (JTUA 2).

It added that currently, the Sultan Azlan Shah power plant comprising the M1, M2 and M3 power plants generate almost 9.9% of the national electricity supply and this is expected to increase to 18.4% with the commissioning of the M4 and M5 power plants.

LBT handles more than seven million tonnes of coal per year under the JTUA 1 agreement and, as of October 2014, had begun handling coal under the JTUA 2 agreement, said Integrax. The M4 power plant, which is expected to commence commercial operations by March this year, will add another three million tonnes per year to LBT’s coal throughput.

The JTUA 3 agreement, meanwhile, entails the provision of coal unloading and delivery services, including the installation of a new conveyor line and modification of the existing jetty for the importation of coal by TNBM5, it said.

This will be specifically for the operation of the M5 power plant, which is expected to commence operations on Nov 1, 2017. It will add a further three million tonnes per year to LBT’s coal throughput, it added.

Integrax said the JTUA 3 agreement is, however, subject to and conditional upon approval being obtained from shareholders of Integrax at an extraordinary general meeting that is to be held in April.

For the financial year ended Dec 31, 2014, Integrax’s net profit declined 5.4% to RM38.7 million from RM40.91 million, while revenue climbed 7.37% to RM99.79 million from RM92.93 million the previous year.

TNB’s share price closed 12 sen higher at RM14.38, while Perak Corp’s counter was up by three sen to settle at RM2.99.


This article first appeared in The Edge Financial Daily, on February 26, 2015.