KUALA LUMPUR (June 17): Silk Holdings Bhd said the proposed disposal of its entire holdings in Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd, the concessionaire for the Kajang Dispersal Link Expressway, will provide room for the group to look into other opportunities to expand its business.

Its executive chairman Datuk Mohd Azlan Hashim said the proceeds from the proposed disposal will allow the group some flexibility to look for opportunities to expand its existing operations, as well as to explore other segments.

"We have just started to go into the chemical tankers business. Currently we have the oil and gas (O&G) support services business, the chemical tankers business and the highway. So with the rationalisation of the highway, we will be left with the two other businesses.

"With the consideration we expect to receive, we should be able to focus our attention on not just these two areas but also [on] perhaps any other opportunities that may come up that we are comfortable with getting into," he told reporters at a press conference following the group's annual general meeting today.

To recap, Silk had entered into a heads of agreement (HoA) with WZ Satu Bhd for the sale of the highway, for a total consideration of RM368 million, comprising a combination of cash and shares.

Under the agreement, WZ Satu would satisfy the share portion of the payment, consisting of 125 million new WZ Satu shares at RM1.03 per share, while the balance RM239.25 million will be settled in cash by co-investors of WZ Satu that have yet to be identified.

Post-disposal, WZ Satu intends to retain a major shareholding in the highway, while Silk will end up with approximately 27% equity stake in WZ Satu.

Asked if Taliworks Corp Bhd, which was also in talks with Silk to acquire the highway, was one of the co-investors, Mohd Azlan said the group is in informal discussions with many parties on the proposed divestment.

"There has been no co-investors that have been identified to us at this juncture. They would like to retain the flexibility, in order to bring in co-investors. We've been engaged in discussions with various parties.

"From time to time, people come up to us and we keep an open mind. We have [wanted] to rationalise the asset and people are aware of that. We never signed anything though, we have not signed any agreement with any other party," he said.

Asked whether there has been any opposition from its bondholders on the proposed disposal of the highway, Mohd Azlan said Silk has not heard anything from them yet.

"Well we haven't heard anything from them yet. In fairness, it is still the early days, we just signed the HoA. Our sukuk holders have been very supportive of us. We haven't had any particular issues with them. At the appropriate time, we will have to seek their consent. We have not come to that point yet," he said.

As at the 17 months ended Dec 31, 2015 (FY15), the O&G support services segment accounted for approximately 67% of its topline, while the balance was contributed by the highway division.

The group reported a widened net loss of RM29.67 million for FY15 compared to its loss of RM10.41 million in the same period a year earlier. Revenue for the year was 63% higher at RM596.04 million from RM364.78 million in the previous year.