This article first appeared in The Edge Malaysia Weekly, on October 12 - 18, 2015.

MISC Bhd, which is controlled by Petroliam Nasional Bhd (Petronas), is said to be again scouting for a buyer for its wholly owned haulage and road transport arm MISC Integrated Logistics Sdn Bhd (MILS), sources familiar with the matter tell The Edge.

It is understood that about eight companies, including some sizeable foreign firms, have expressed interest in MILS. “For foreign companies, with the weak ringgit, they can buy the company (MILS) for cheap,” one source explains.

The local currency has depreciated more than 20% against the US dollar this year, touching 4.1295 last Friday.

Another industry player who is aware of the sale says there is no outright tender, but as MISC — which has been on a divestment trail, disposing of its non-core assets — is known to have wanted to sell the land transport business since last year, several parties are looking at the asset now.

“It’s not a formal bidding process but many parties are pursuing it (MILS),” he adds.

MISC (fundamental: 1.20; valuation: 0.80) did not reply to The Edge’s email enquiry on the matter.

Individuals and companies that are said to have expressed interest in MILS include tycoon Tan Sri Syed Mokhtar Albukhary; Datuk Che Azizuddin Che Ismail, a former CEO and executive director of Konsortium Logistik Bhd; and Utusan Melayu (M) Bhd, in which Umno has a 49.77% stake.

The price tag is said to be in the region of RM250 million.

It is not clear which vehicle will be used by Syed Mokhtar to acquire MILS as the businessman has extensive presence in the logistics industry through his flagship companies, MMC Corp Bhd and DRB-Hicom Bhd.

It is noteworthy that this is not the first time  Utusan Melayu has wanted to take over MILS.

In March last year, the group, through Golden Age Logistics Sdn Bhd, entered into an agreement to buy MILS for RM250 million. The consideration was arrived at on a willing-buyer, willing-seller basis after taking into account MILS’ unaudited net assets of RM246.5 million as at Dec 31, 2013. But the deal fell through in January this year.

Little-known Golden Age is a wholly-owned subsidiary of Utusan Printcorp Sdn Bhd, in which Utusan Melayu has a 40% stake.

In an announcement to Bursa Malaysia, MISC said the deal was not completed as “Golden Age was not able to fulfil its obligations for completion as stipulated in the agreement for sales and purchase of shares dated March 21, 2014”.

Insiders, however, say Utusan Melayu and its units were not able to raise the funds needed for the acquisition.

As at end-June this year, Utusan Melayu’s cash balance stood at RM30.3 million while it had short-term borrowings of RM123.3 million and long-term debt of RM83.8 million.

Meanwhile, MILS could be a prized asset for logistics firms as it is a registered vendor of parent company, Petronas, as well as a multimodal transport operator.

It is worth noting that the previous deal with Golden Age was conditional upon the receipt of a letter of undertaking, or letter of confirmation, from Petronas stating that the national oil firm plus its subsidiaries and associate companies would not terminate any current contract that they might have with MILS, or any licence granted by them to MILS, by reason of the change in shareholding in MILS, from MISC to Golden Age.

However, it is not known if MISC will have such a condition in the new deal.

Before the haulage market was liberalised some 15 years ago, MILS had been one of the five companies given the requisite licence to operate haulage trucks. The others were Konsortium Logistik; Diperdana Holdings Bhd, which has been taken over by Konsortium Logistik; Kontena Nasional Bhd, which is wholly owned by port operator NCB Holdings Bhd; and Multimodal Freight Sdn Bhd, a wholly-owned subsidiary of Keretapi Tanah Melayu Bhd.

The sale of MILS for RM250 million may not be a sizeable transaction for MISC, which has a market capitalisation of RM39.5 billion. But it would add to its coffers, which currently hold RM4.63 billion.

With the divestment of MILS, MISC would move closer to becoming an energy carrier. As at June 30, the shipping giant had RM1 billion worth of assets held for sale.

While on the divestment trail, MISC sold off its loss-making bulk carrier and liner operation as well as a 36.8% stake in Affin Merchant Bank Bhd.

In 2004, MISC hived off 15 bulk carriers to Thailand’s Precious Shipping PCL for US$98 million and sold 32 more bulk carriers to Greece’s Restis group for some US$740 million, exiting the business.

MISC decided to leave the liner business in November 2011 after racking up US$789 million in losses over three consecutive financial years.

At end-2012, the company sold its 50% stake in Gumusut-Kakap Semi-Floating Production System (L) Ltd to E&P Venture Solutions Co Sdn Bhd, a unit of Petronas Carigali Sdn Bhd, for RM934.4 million.

MISC also sold its 15.7% stake in NCB Holdings to Syed Mokhtar’s MMC for RM222 million in December last year. Just two months ago, the shipping giant disposed of its 50% stake in VTTI BV for US$830 million or some RM3.4 billion.

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