KUALA LUMPUR (April 27): Asia Bioenergy Technologies Bhd’s Heads of Agreement (HOA) with Singapore’s Hoe Leong Corporation Ltd (HLCL) and Reachmont Logistics Sdn Bhd (RLSB) for the acquisition of Semua Shipping Sdn Bhd (SSSB) and Semado Maritime Sdn Bhd (SMSB) has been extended for another three months.

In a filing with Bursa Malaysia today, Asia Bioenergy (fundamental: 0.6; valuation: 0.3) said the company, HLCL and RLSB have agreed to extend the period of the HOA for another three months to July 26, 2015.

No reasons were given for the extension.

The HOA will pave the way for Asia Bionenergy’s foray into the oil and gas (O&G) transportation industry, through the acquisition of the two shipping companies SSSB and SMSB for downstream activities, in what the company terms as a “long investment strategy” and is expected to improve its balance sheet.

Upon acquisition, the shares in SSSB and SMSB will be transferred to a Special Purpose Vehicle (SPV) collectively held by HLCL, RLSB and Ebony Ritz Sdn Bhd.

The SPV would then be acquired by Asia Bioenergy via a share swap worth around RM16 million, which will see the SPV hold a 25% stakeholder in Asia Bioenergy.

The SPV is expected to provide a profit after tax (PAT) guarantee of RM8 million for the financial year ended Dec 31, 2014 and is expected to contribute RM14 million for financial year ended Dec 31, 2015.

Asia Bioenergy shares closed half a sen or 5% lower at 9.5 sen, with a market capitalisation of RM86.67 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)