Muhibbah

Sources say Muhibbah and CIMB could end up as shareholders n APH through a debt to equity swap. Muhibbah and CIMB, which each owns over 75% of the unsecured and secured debt of APH respectively, will take charge of the Johor hub. They are targeting to complete the project within the next two to three years. This provides a conclusion to the project which has been delayed for over two years. APH still owes Muhibbah rm371 million for the project.

APH owes CIMB a reported rm840 million, which was drawn down from a rm1.4 billion three year bridging loan and the bank gave to APH in 2006. Early Jan 2012, CIMB placed APH into receivership for the second time, and appointed Pricewaterhouse Coopers to facilitate a restructuring exercise.

However it is learnt that Muhibbah and CIMB have yet to make any provisions regarding the project. This development should now ease investor concerns over the need for provisions, a risk which had been highlighted in Muhibbah’s annual report and affected sentiment for the stock. Industry observers say the progress should finally help the project take off and could provide APH the strong backing it needs.

APH’s existing two shareholders are private terminal operator KIC Oil & Gas, which owns 90% stake. With the latest developments, it is unsure what APH’s future path with new shareholders – CIMB and Muhibbah.