Keppel Infrastructure Trust (KIT) and its partner in the Philippines, Metro Pacific Investments Corporation (MPIC), have entered into a conditional sale and purchase agreement with Philippine Investment Alliance for Instructure (PINAI).
Under the agreement, KIT and MPIC will acquire 100% interest of Philippine Tank Storage International (Holdings) (PTSI), which, in turn, owns Philippine Coastal Storage & Pipeline Corporation (PCSPC) from PINAI, a fund.
PCSPC is the largest petroleum products import storage facility in the Philippines. The facility comprises three tank farms and one marine terminal area with a combined land size of about 150 hectares.
The facility is located in the Subic Bay Freeport Zone, and is well-placed to capture demand from Metro Manilla, as well as Central and North Luzon, which account for more than half of the oil product demand in the Philippines.
Upon the completion of the acquisition, KIT will indirectly hold 80% of the shares in PTSI. MPIC will indirectly hold 20% of the shares in PTSI.
SEE: Dividends for Keppel Infrastructure Trust to stay stable: DBS
PTSI’s audited net profit and earnings before interest, taxes, depreciation and amortisation (EBITDA) for the financial year ended Dec 31, 2019, was US$9.4 million and US$28.8 million respectively.
Its book value and net asset value as at Dec 31, 2019, stood at US$72.2 million.
The purchase consideration payable by KIT is estimated to be some US$267.0 million ($357.6 million). The amount is subject to adjustments after the completion.
KIT is also in discussions with MPIC on a proposed grant of a call option, which will allow MPIC’s subsidiary to have a right to purchase up to 30% of PTSI.
“The strategic acquisition of PCSPC will allow KIT to diversify, grow and strengthen the resilience of KIT’s distributable cash flow,” says Matthew Pollard, CEO of KIT’s manager.
“As the largest petroleum products import storage facility in the Philippines, where demand for petroleum products is expected to grow, PCSPC presents an attractive opportunity for KIT to capture opportunities arising from the strong macroeconomic outlook as well as robust growth fundamentals for imported petroleum products in the Philippines,” he adds.
Units in KIT closed flat at 55 cents on Dec 8.