KUALA LUMPUR (Sept 27): Ranhill Holdings Bhd has entered into an agreement with Singapore-listed SIIC Environment Holdings Ltd for the proposed disposal of a 60% stake in Ranhill Water (Hong Kong) Ltd (RWHK) for RMB273.9 million (about RM169.11 million).

This follows the Aug 31 term sheet which preceded today's agreement between the parties.

According to its filing to the exchange today, Ranhill said it has, together with its wholly-owned subsidiary Ranhill Water Technologies (Cayman) Ltd (RWT Cayman), which is the holding company of RWHK, signed a sale and purchase agreement with SIIC and Asia Wisdom Investments Ltd, which is an indirect wholly-owned subsidiary of SIIC for the proposed divestment.

As part of the terms, RWHK will undertake an internal restructuring prior to the completion of the divestment, by transferring its 51% interest in Ranhill International Trade (Hong Kong) Investment Ltd and its 100% interest in Ranhill Venture (Hong Kong) Ltd to RWT Cayman.

Following the internal restructuring, RWHK, together with its remaining subsidiaries and joint venture, will be the assets involved in the proposed divestment.

RWHK is principally involved in investment holding and provision of consultancy, project management, operations and maintenance services relating to wastewater treatment plants.

The SIIC Group is a top-tier integrated player in China's environmental industry. Besides water treatment, it is also in solid waste treatment and other environment-related businesses.

Ranhill said it intends to utilise RM120 million, or 71% of its disposal proceeds, for investment in new power projects.

"The group views the proposed divestment not only as a divestment of asset but also a formation of a strategic partnership with SIIC and its subsidiaries.

"The proposed divestment is essential for and complements the continuous growth of Ranhill's wastewater business in China, particularly in the industrial wastewater treatment sector," the group said.

Ranhill believes such a partnership will facilitate the procurement of wastewater concessions in China by providing broader access to potential clients and target markets, it said.

In conjunction with the announcement today, Ranhill shares have been suspended since afternoon till 5pm.

It last settled unchanged at 94.5 sen, for a market capitalisation of RM839.46 million.