KUALA LUMPUR (Sept 14): Oil and gas service provider Propel Global Bhd is disposing of its entire 55% equity interest in Propel Chemicals Sdn Bhd (PCSB) to Hextar Kimia Sdn Bhd for RM16.5 million cash.

PCSB is a licensed supplier of Petroliam Nasional Bhd and has been providing a wide range of production and integrity chemicals for production enhancement and maintenance of oil and gas (O&G) production facilities. Rancak Nikmat Sdn Bhd holds a 36.9% stake in PCSB while Wiramas Baiduri Sdn Bhd holds an 8.1% stake.

Propel Global said the proposed disposal provides an opportunity for the group to unlock the value and monetise its investment in PCSB, providing the group with the financial resources to grow other parts of its business. In line with the group’s strategic direction, Propel Global is expanding its capabilities in the O&G and technical services segments, focusing on engineering, technical and technology services.

In a filing with Bursa Malaysia on Thursday, Propel Global said it has entered into a term sheet with Hextar Kimia to set out the key commercial terms and conditions in respect of the proposed disposal.

Hextar Kimia is involved in the business of manufacture, blending, bulk storage, repackaging and supply of specialty chemicals, catalyst and absorbents. The company is 51% owned by Ekopintar Sdn Bhd, while the remaining 49% is held by Hextar Global Bhd.

The terms set out in the term sheet are subject to the signing of a definitive share sale agreement (SSA) within one month or with such extension of time as may be mutually agreed between the parties.

"A detailed announcement will be made by the company upon signing of the definitive SSA in respect of the proposed disposal," Propel Global said, adding that the execution of the term sheet is not subject to the approval of shareholders of the company and/or any other relevant authorities.

RHB Investment Bank Bhd has been appointed as the principal adviser for the proposed disposal.

Propel Global’s shares closed unchanged at 17 sen on Thursday, giving it a market capitalisation of RM102.7 million. The stock's share price has declined 17.07% so far this year.