Asia Petroleum Hub (APH) is in talks with an investor to fully finance its troubled multibillion-dollar oil terminal in Johor, one of its main contractors said today.Muhibbah Engineering Bhd said in a filing to Bursa Malaysia that APH “has identified an investor and was in negotiations with the investor to fully finance the completion of the APH hub project, including making due payments to contractors.”
Singapore Business Times (BT) had reported on Wednesday that financier CIMB Bank had placed APH under receivership over a RM1.4 billion three-year bridge loan granted in 2006.
APH drew down RM840 million for project costs but executives told BT that costs had escalated and APH was looking for investors for a further RM2 billion in new financing.
Muhibbah is one of the contractors for the petroleum hub and bunkering facility at the reclaimed island of Tanjung Bin with receivables for work and related costs amounting to RM 370.8 million at the end of last year.
Its share price sank by 20 per cent to RM1.52 yesterday following the report, its steepest drop in more than three years.
However, the shares recovered this morning and were last traded at RM1.60 with over 9 million shares done before trading was halted for one hour from 10.39am.
“As this is a oil and gas project with a secured business and the said investor due to finalise its financing transaction with APH, there are reasonable grounds to hold that the receivables are recoverable in due course,” Muhibbah said in its filing.
BT had reported that the move to put APH under receivership could spell the end for the development which was once billed as one of the world’s largest fully integrated terminals with a storage capacity of 924,000 cubic metres.
CIMB Research had said the worst case scenario for Muhibbah was that it would have to write down RM300 million owed by APH which could push it into losses for the 2011 financial year.
APH had awarded Muhibbah the contracts for marine piling and jetty works worth RM820 million.
The research house added however that APH is likely to negotiate for more time to resolve the matter and rope in a new investor.
The BT report also said that a tussle has emerged over the ownership of APH, involving its majority shareholder, private terminal operator KIC Oil and Gas, Malaysian tycoon Tan Sri Syed Mokhtar Albukhary, and an apparently Umno-linked company called Trek Perintis.
The report added that more than three years ago, the Cabinet decided that Seaport Terminal, a private company controlled by Syed Mokhtar should be allowed to take up a 35 per cent stake in the project but the tussle between Seaport and KIC has not as yet been resolved.