By Alvin Tang
KUCHING: Hubline Bhd is to diversify into aviation business via the proposed acquisition of a 51% stake in Layang Layang Aerospace Sdn Bhd
The shipping firm signed a shares sale agreement with vendors Dayang Majanga @ Mondongi and Johan Poong Abdullah for the proposed acquisition of 510,000 shares (51%) in Layang Layang Aerospace for about RM14.2 million last Friday (Dec 21).
Dayang Majanga currently holds 542,500 shares or 54.25% equity interest while Johan 57,500 shares or 5.57% in Layang Layang Aerospace.
The company’s other shareholders are Rotorwing (M’sia) Sdn Bhd (20%),James Ibrahim (10%) and Borneo Binautama Sdn Bhd (10%).
The principal activity of Layang Layang Aerospace is in aircraft chartering,transportation of cargo,aircraft repairing and as supplier of spare parts,Hubline said in a filing with Bursa Malaysia.
Hubline intends to secure bank financing up to RM12 million for the proposed acquisition.
Simultaneously,Hubline signed a profit guarantee agreement with the vendors.
“The vendors,jointly,severally and unconditionally guarantees to Hubline that the existing and identified businesses of Layang Layang group will generate a profit after tax of not less than RM10.5 million in total with a minimum of RM3 million profit after tax for any one year, for the financial years ending 31 December 2019,2020 and 2021,or its equivalent 36 months (guarantee period) after taking into account the intended change of financial year end to 30 September to be co-terminus with the financial year of Hubline,” said Hubline.
Layang Layang Aerospace owns a 80% stake in Layang Layang Flying Academy Sdn Bhd,which is involved in helicopter and pilot training.
“They (group) currently owns seven helicopters and four fixed wing aircrafts.They charter in a further six helicopters and one aircraft which they manage on full time basis,bringing the total number of helicopters and aircrafts under management to 13 and five respectively.
“Where there is greater demand for additional helicopters for specific events,they have pre-established networks that allow them to charter in additional helicopters from various other helicopter owners,” said Hubline, its core business of which is in dry bulk shipping.
The Layang Layang group is involved in the provision of flying doctor service,emergency medical services,including night and day mission,search and rescue operation,passenger and air cargo transportation,aerial sightseeing,aerial survey,mapping and photography as well as aerial precision lifting and construction services.
Other services are aviation consultancy services,aircraft mechanical & structural survey and valuation services,provision of aeroplane and helicopter training programmes as well as providing training for both private and commercial pilot licences.
Layang Layang customers include government departments,corporates as well as students both locally and from overseas.
The operation bases where Layang Layang group has hangers are located in Miri,Kuching,Sibu and Kota Kinabalu,Sabah.
The group also has refueling facilities in Marudi,Kapit,Sri Aman,Sarikei,Mukah,Belaga,Limbang,Long Akah,Lio Matoh and Ramuda.
Layang Layang Flying Academy,which has been awarded pioneer status from MIDA for 10 years,has training centres in Kota Kinabalu,Ipoh and Kuala Penyu.
On the rationale of the proposed acquisition of Layang Layang,Hubline said this was in line with its business expansion plan to increase its revenue base as the aviation business complements its current line of business.
According to Hubline,the proposed acquisition of Layang Layang was expected to broaden the group’s revenue into air logistics and other areas of aviation,with the expectation of generating positive earnings for the group.
“There is potential for the aviation business to enhance Hubline’s existing business prospects as the scope for expansion is good.
“Aside from Layang Layang Academy being the only academy in Malaysia that caters for both helicopter and airplane pilot training,examples of the potential for expansion include the extension of the current contracts under the flying doctor service and emergency medical services in Sabah and Sarawak,participation in the oil and gas sector and participating in the tourism sector,” it added.
