KUALA LUMPUR, July 6 — Berjaya Property Bhd’s (BProperty) wholly-owned subsidiary, Alam Baiduri Sdn Bhd (ABSB), has entered into a joint venture (JV) agreement today with Trusmax Investment Co Ltd to establish a RM1.3 billion automotive tyre manufacturing business in Malaysia.

Trusmax is a 100 per cent owned subsidiary of Wanli Tire Co Ltd (Wanli).

In a filing with Bursa Malaysia, BProperty said the JV will be carried out through a new company to be incorporated and will cover the research, development, design, manufacture and sale of automotive tyres, spare parts and components, as well as the provision of after-sales services.

Trusmax will hold a 70 per cent stake in the JV company and will contribute RM569.34 million cash.

ABSB will hold the remaining 30 per cent, which includes RM125.70 million in cash and a 27.47-hectare (about 68-acre) freehold land parcel valued at RM118.31 million.

This brings Trusmax and ABSB’s total capital commitment to RM813.35 million over two years.

The land, part of a larger 150.76-ha (372.55-acre) oil palm plantation acquired in 2017, will be used for the project. 

The agreed valuation takes into account an estimated RM60 million in construction, land conversion and subdivision works to be undertaken by ABSB.

The filing also said 63 per cent, or RM813.35 million, is to be funded via shareholders’ equity and the remaining RM491.45 million (37 per cent) through borrowings.

ABSB’s total commitment of RM185.7 million, comprising RM125.7 million in cash and an estimated RM60 million for land-related works, will be financed through BProperty’s internal funds and borrowings, the filing said.

“The proposed JV will enable BProperty to venture into the automotive tyre manufacturing business by leveraging Wanli’s technical expertise, manufacturing know-how and industry experience,” it said. 

The proposed JV is not expected to have a material impact on BProperty’s issued share capital, substantial shareholders’ shareholdings, net assets or earnings in the immediate term.

However, it is expected to contribute positively to the group’s future earnings once the tyre manufacturing plant begins operations. — Bernama