KUALA LUMPUR (March 14): Energy infrastructure and marine services provider Coastal Contracts Bhd has ventured into the tourism industry by acquiring an 82% equity interest in a company undertaking an overwater resort in Sabah for RM18.98 million.

The group said it acquired the stake in Jewel of Mabul Development Sdn Bhd (JOMD) by acquiring 100,000 shares in the company from Richard Christopher Barnes and subscribing for another 1.72 million shares.

JOMD owns 31.15 hectares of land in Pulau Mabul in Sabah's Semporna district on which the company is developing an overwater bungalow resort. Certain piling works for the land has been partly completed by the company, said Coastal Contracts in a filing with Bursa Malaysia.

KK Soho House Sdn Bhd — owned by Barnes and existing JOMD director Lo Ming Leong — holds the remaining 18% stake in JOMD.

“The parties agree to operate and manage JOMD as an efficient business entity and shall be jointly responsible for the construction, development, completion and operation of the resort project,” said Coastal Contracts.

The group said it will inject RM50 million in the form of share subscription in JOMD to develop Phase 1 of the resort project.

As at end-December 2023, Coastal Contracts' cash and bank balance stood at RM170.07 million with bank borrowings of RM55.69 million, its latest financial statement showed.

Meanwhile, as at end-March 2023, JOMD recorded a net loss of RM487,000 while its net assets totalled RM4.65 million

Coastal Contracts said the acquisition is part of the group’s strategy to deliver its long-term sustainable growth and value creation to its shareholders as well as to diversify its income streams by identifying and engaging in new viable business.

“The acquisition will provide an opportunity for Coastal Group to venture into the tourism industry, which is expected to fully recover to pre-pandemic levels in 2024,” it added.

Shares in Coastal Contracts closed up four sen or 2.53% at RM1.62 on Thursday, giving the group a market capitalisation of RM888.87 million.