The disposal is an opportunity for the group to monetise its investment upfront at a healthy premium over the current market price
By FARA AISYAH / Pic By ISMAIL CHE RUS
UEM Edgenta Bhd plans to sell its 61.2% equity stake or 90.51 million ordinary shares in its New Zealand (NZ)-based subsidiary Opus International Consultants Ltd (OIC) for RM523.9 million or NZ$1.78 (RM5.57) per share, following a notice of intention received from WSP Global Inc.
Group MD/CEO Datuk Azmir Merican said proceeds from the disposal will be used to pare down the company’s debts, among others.
“It will also provide UEM Edgenta with the financial resources and enable management to focus on driving as well as supporting the organic growth and operational excellence initiatives in our core sectors — spanning healthcare, infrastructure and real estate in key markets, namely in Malaysia, Singapore, Indonesia, Taiwan, India, other South- East Asian countries, and the Middle East region,” Azmir said in a statement.
Apart from that, the disposal of OIC is an opportunity for the group to monetise its investment upfront at a healthy premium over the current market price and will enable it to reduce its gross gearing from 0.8 times to 0.4 times.
UEM Edgenta said the disposal will also provide the opportunity to sustain dividend payout to its shareholders in the future.
WSP’s intention to purchase will be via all-cash consideration of NZ$1.78 per OIC share. OIC is listed on the NZ Stock Exchange.
In addition, the terms of the offer allow the OIC board to declare and pay to OIC shareholders a fully imputed cash dividend of up to NZ$0.07 per OIC share without an offer price adjustment, adding up to NZ$10.4 million.
The offer of NZ$1.78 plus the NZ$0.07 dividend would represent cash proceeds to OIC shareholders of NZ$1.85 per OIC share, totalling to NZ$273.6 million.
Gross proceeds to UEM Edgenta amount to NZ$167.4 million for its 61.2% equity stake in OIC.
The cash offer price of NZ$1.78 per OIC share combined with the cash dividend of NZ$0.07 per OIC share rep- resents a very attractive premium to the current share price and the recent trading history of OIC.
As such, the premium to the closing price per OIC share of NZ$0.99 was 86.9% on Aug 11, 2017, which is the last business day prior to this announcement.
There is a premium of 58.1% to OIC’s 52-week high daily closing share price of NZ$1.17.
There were also a premium of 85.1% and 84.8% to the one- and three-month volume weighted average price per OIC share of NZ$0.9994 and NZ$1.0012 respectively, for the period ended Aug 11, 2017.
According to an analyst who declined to be named, it is considered a good deal for UEM Edgenta as it allows the company to reduce its gearing and save on interest expenses on the profit and loss statement.
“The deal was sealed at a good premium so it’s definitely worth it for the company,” he added.
UEM Edgenta’s counter was suspended between 9am and 10am yesterday to make way for the announcement.
Once trading resumed, its shares went as high as RM2.64 before closing at RM2.55 yesterday. Hence, 485,200 shares exchanged hands, giving the company a market capitalisation of RM2.18 billion.