KUALA LUMPUR (Sept 9): IJM Corp Bhd is selling a 40% stake in wholly-owned Kuantan Port to China-based port operator Guangxi Beibu Gulf International Port Group Co Ltd for RM333.92 million cash.

In a statement to Bursa Malaysia today, IJM Corp said its wholly-owned subsidiary Road Builder (M) Holdings Bhd has signed a share sale agreement with Guangxi Beibu's wholly-owned unit Beibu Gulf Holding (Hong Kong) Co Ltd which intends to buy 38% of Kuantan Port Consortium Sdn Bhd for RM317.7 million from Road Builder.

IJM Corp said Beibu Gulf has also "executed a letter of undertaking" to buy another 2% in Kuantan Port Consortium for RM16.72 million from Road Builder's 100%-owned unit Essmarine Terminal Sdn Bhd.

"A strategic partnership with Guangxi will bring best practices of port management, and its wide network of clientele will enhance the capacity utilisation of Kuantan Port especially when the port capacity is increased with the development of a NDWT (new deep water terminal).

"In addition, Guangxi will play an active role in attracting foreign direct investments, in particular from China, to invest in the East Coast Corridor, which will contribute positively to the volume of cargoes handled by Kuantan Port," IJM Corp said.

IJM Corp and Guangxi Beibu had earlier signed a memorandum of understanding for the proposed sale of the stake in Kuantan Port Consortium which is the concession owner and operator of the port.

IJM Corp said the sale proceeds will finance the expansion of Kuantan Port and working capital of the IJM Corp.

IJM Corp said the expected gains on disposal at the company level of Road Builder and Essmarine come to about RM285.3 million and RM15.9 million respectively.

"There are no profit impact at the group level. However, the disposal will increase the reserves positively and enhance the group's balance sheet.

"The disposal will not have any significant effect on the earnings, net assets per share or gearing of the group for the financial year ending 31 March 2014. The port expansion is expected to contribute positively to the future earnings of the group," IJM Corpsaid.

The proposed sale is due for completion by the second quarter of financial year ending March 31, 2015. In calendar year terms, IJM Corp expects to finalise the exercise by September 2014.