Reference is made to Dialog Group Berhad's ("DIALOG" or “the Company”) announcement on 5 April 2018.
This announcement is an update on the progress made since the signing of the Memorandum of Understanding (“MOU”) with the State Government of Johor Darul Ta’zim and the State Secretary, Johor (Incorporated) at the launch of Pengerang Deepwater Terminals Phase 3 in April 2018, and the commencement of land reclamation activities in May 2018.
1. INTRODUCTION
DIALOG is pleased to announce that the Group has commenced the construction of a storage terminal, common tankage facilities (including shared infrastructure) and deepwater marine facilities (“Jetty 3”) (collectively, “Terminals and Facilities”), for Phase 3 of Pengerang Deepwater Terminals.
2. ENTRY INTO LONG TERM STORAGE AGREEMENT WITH BP SINGAPORE PTE LIMITED
In line with DIALOG’s development plans for Phase 3, Pengerang Terminals (Five) Sdn. Bhd. (“PT5”), an indirect wholly owned subsidiary company of DIALOG has entered into a Long Term Storage Agreement ("LTSA") with BP Singapore Pte Limited ("BPS”).
PT5, currently a wholly owned company of Dialog Terminals Sdn. Bhd. (“DTSB”), which is in turn wholly owned by DIALOG, will be structured whereby DTSB will hold 90% equity interests in PT5 and Permodalan Darul Ta’zim Sdn Bhd, a wholly owned company of the State Secretary, Johor (Incorporated) (“SSI”) to hold 10%.
BPS, a direct and indirect subsidiary company of BP International Limited and BP p.l.c respectively, is a private limited liability company incorporated and domiciled in Singapore. Its principal activities include the marketing and trading of petroleum products.
PT5 will develop, construct and operate storage tanks with capacity of 430,000 m3 for clean petroleum products, and provide storage services in respect thereof to BPS as the term customer, with completion date expected in mid 2021.
3. COMMON TANKAGE FACILITIES & JETTY 3
Pengerang CTF Sdn. Bhd. (“PCTF”), currently an indirect wholly owned subsidiary of DIALOG, will undertake the development of the common tankage facilities (including shared infrastructure) and Jetty 3.
PCTF, currently a wholly owned company of DTSB, will be structured whereby DTSB will hold 80% equity interest in PCTF and Permodalan Darul Ta’zim Sdn Bhd, a wholly owned company of SSI, will hold up to 20%.
4. ABOUT PHASE 3 OF PENGERANG DEEPWATER TERMINALS (“PDT”)
Phase 3 of PDT has been designated for the development of more dedicated petroleum and petrochemical storage terminals for medium to long term customers, potentially comprising oil traders, multinational oil companies, refineries and petrochemical plants. This will support various downstream operations including those of the refinery and petrochemical plants within the Pengerang Integrated Petroleum Complex.
Phase 3 is being developed on approximately 300 acres of land that is currently being reclaimed within PDT, with an indicative initial investment cost of RM 2.5 billion. Land reclamation activities, which commenced in May 2018, is currently 62% complete and is on track for completion at the end of 2019.
The LTSA and the commencement of construction mentioned above is in line with DIALOG’s progressive development plans for Phase 3 that was announced on 5 April 2018, and its strategy to continue increasing long term recurring income for the Group. The development of Phase 3 will also provide more opportunities for services to be provided by the Group’s engineering, construction, fabrication and plant maintenance divisions.
5. FINANCIAL EFFECTS
The LTSA is not expected to contribute to the earnings and net assets of DIALOG and its group of companies for the financial year ending 30 June 2019. The LTSA, however, is expected to contribute positively to the earnings and net assets per share of DIALOG for the financial years ending 30 June 2022 onwards. The LTSA will not have any effect on the share capital and shareholding structure of DIALOG.
6. RISKS
The risk factors affecting the LTSA includes changes in economic, political and regulatory environment and operational risk such as completion risk which DIALOG will take appropriate measure to manage and minimize.
7. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
None of the Directors, major shareholders and persons connected to them has any interest, direct or indirect, in the LTSA.
