BIMB Holdings Bhd is seeking full control by buying the remaining 49% stake in Bank Islam Malaysia Bhd for about US$885 million (RM2.87 billion), to be funded by a combination of rights issue and sukuk.
BIMB, which owns 51% of Bank Islam said it will pay its 30.47% shareholder Dubai Financial Group LLC (DFG) US$550 million for about 690 million shares and will pay another US$334.6 million to its 51% parent Lembaga Tabung Haji (LTH) for its 18.53% (about 419.2 million shares) stake in the first Islamic bank in the country.
“The proposed acquisitions would facilitate the implementation of coherent group wide corporate strategies and proposals for Bank Islam with BIMB having full control over Bank Islam,” said BIMB in rationalising its multiple proposals in an exchange filing yesterday.
BIMB said the acquisitions will not change its risk profile due to its current large shareholdings of Bank Islam.
BIMB is rather bullish on Bank Islam’s future prospect which is driven by its new corporate plans and targets that will “lend support to the overall earnings momentum at BIMB and its subsidiaries and will enhance BIMB’s profitability from the remaining 49% profit contributions from Bank Islam.”
In order to fund the purchases, BIMB has proposed a renounceable rights issue of 426.71 million new shares with 426.71 million free warrants at RM3.60 per rights share on the basis of two rights shares and two warrants for every five existing BIMB shares held by the entitled shareholders. The rights issue will raise about RM1.54 billion to be used for the Bank Islam share purchase.
In addition, BIMB has proposed to issue a 10-year Islamic securities of up to RM2.2 billion in nominal value to raise a maximum of RM1.47 billion, also to be used to acquire Bank Islam.
BIMB said that the maximum gross proceed of about RM3.01 billion would be sufficient to fund the proposals, leaving a maximum balance of about RM18 million to be used for working capital.
The talk of the DFG sale has surfaced in the media since late 2012 and the negotiations had undergone through two extensions by Bank Negara Malaysia since, until this announced deal which is to be completed by the fourth-quarter of 2013.
DFG, which paid about RM828.3 million for its shares in October 2006, stands to gain about RM951.7 million for its investment while LTH, which paid altogether RM450.9 million since October 2006, will pocket about RM629.1 million.
The figures may change due to the volatility of the ringgit to the US dollar as the purchase is denominated in US dollar.
BIMB, which was trading at RM4.12, requested a trading halt of its shares yesterday.