KUALA LUMPUR (Aug 28): Citaglobal Bhd (KL:CITAGLB), which is involved in the civil engineering and construction, telecommunications, oil and gas, power generation and manufacturing sectors, plans to team up with Tree Technologies Sdn Bhd, a privately held home-grown electric vehicle maker, to jointly develop a parcel of leasehold industrial land in Gebeng Industrial Estate, Pahang, into an industrial park with green elements.

It did not disclose the estimated gross development value of the proposed industrial park project.

In a filing with Bursa Malaysia on Wednesday, Citaglobal said it has entered into a binding term sheet with Tree Technologies for the proposed joint venture (JV), based on an equity shareholding of 65% for Citaglobal and 35% for Tree Technologies. Measuring 247 acres, the land is owned by Tree Technologies.

The term sheet also encompasses a call option granted by Tree Technologies to Citaglobal to acquire the land for RM90 million to be satisfied via a combination of cash and the issuance of new class B irredeemable convertible preference shares in Citaglobal (ICPS-B) to Tree Technologies at an issue price of 80 sen per ICPS-B. The call option is exercisable within 12 months upon the execution of the option agreement to be entered into between the two parties.

Citaglobal said the issue price of 80 sen per ICPS-B represents a 5.68% premium to the five-day volume weighted average market price of Citaglobal shares as at Aug 27, 2024, being the last full trading day prior to the signing of the term sheet of 75.7 sen.

Both Citaglobal and Tree Technologies have 60 days from the date of this term sheet to enter into the definitive agreements in respect of the proposals.

Citaglobal also pointed out that the proposals are related party transactions as Citaglobal executive chairman, president and major shareholder Tan Sri Mohamad Norza Zakaria is also the sole director and sole shareholder of TIZA Global Sdn Bhd, which is a major shareholder of Citaglobal and also the largest shareholder of Tree Technologies, with a 65.5% stake. Norza is also the sole director of Tree Technologies.

"The proposed JV for an eco-friendly industrial park provides an opportunity for Citaglobal with several potential synergies underpin this strategic decision to leverage the presence of the East Coast Rail Link that is expected to enhance the connectivity, increased the accessibility and economic growth with potential increase in demand for industrial space in Pahang," said Citaglobal.

"Furthermore, the proposed JV enables cross-selling of services and technology, including design, engineering, procurement, construction services, and the development of renewable energy solutions such as battery energy storage systems (BESS), green roofs and rainwater harvesting systems," it added.

Astramina Advisory Sdn Bhd has been appointed as the transaction arranger to Citaglobal for the proposals, as well as the appointed financial adviser to Tree Technologies.

At the midday break on Wednesday, Citaglobal shares were down 1.5 sen or 2.14% at 68.5 sen, with 360,100 shares done. Its market capitalisation stood at RM289.56 million. The stock has fallen 54.3% so far this year.