KUALA LUMPUR, May 17 — Borneo Oil Bhd has entered into a sale of shares agreement with MT 23 Resources Ltd (MT 23) to acquire 28.36 million shares or 22.49 per cent of the existing equity interest in Makin Teguh Sdn Bhd (MTSB), a manufacturer of clinker and cement products, for RM73.56 million.

In a filing with Bursa Malaysia today, Borneo Oil said the purchase consideration will be satisfied by way of treasury shares transfer and cash from internally generated funds.

Following an announcement made on April 7, MT 23 has transferred 19.54 million shares of the issued and paid-up share capital of MTSB to Borneo Oil, and agreed to sell a further 28.36 million MTSB shares, representing a total of 38 per cent shareholdings in MTSB.

The acquisition presents an opportunity for Borneo Oil—the largest private owner of limestone reserves of cement grade quality in Sabah—to move its quarrying resources downstream to boost profits.

“There is synergy between the group’s existing limestone quarrying business operations and MTSB’s clinker and cement plant.

“The outlook for Sabah’s clinker and cement industry is favourable, given the high cement prices in Sabah compared with the rest of Malaysia and its proximity to the Brunei, Indonesia, Malaysia and the Philippines East Asean Growth Area (BIMP-EAGA),” Borneo Oil said.

It noted that the already high price of cement in Sabah has been made worse in recent months due to the drastic increase in logistics costs and fluctuation in foreign exchange rates.

There are 11 integrated clinker and cement plants in Malaysia—nine in West Malaysia and two in Sarawak, but there are none in Sabah, it said.

“The Covid-19 shutdowns in 2020 and 2021 created an unprecedented urgency for Sabah to become more self-reliant in various sectors of economic importance, including food and construction materials.

“Sabah can no longer afford to rely on 100 per cent imported clinker and cement, therefore, the setting up of a clinker and cement plant in Sabah is timely,” it added. — Bernama