KUALA LUMPUR (Jan 14): Cahya Mata Sarawak Bhd (CMSB) is taking majority control in associate company Malaysian Phosphate Additives (Sarawak) Sdn Bhd (MPAS), raising its stake from 49.94% to 60% for RM64.24 million cash.

The increase follows its RM45.54 million investment for a 9.94% stake in MPAS in the third quarter ended Sept 30, 2018. 

“The subscription is a strategic move by CMSB to enable CMSB Group to use consolidation method of accounting to bring MPAS’ earnings into the consolidated statements of CMSB to bolster the group’s future earnings,” CMSB said in a filing with Bursa Malaysia. 

Cahya Mata Sarawak said its subsidiary Samalaju Industries Sdn Bhd has subscribed a total of 64.24 million new ordinary shares in MPASSB. 

CMSB said MPASSB will utilise the proceeds to finance the construction cost of the integrated phosphate plant in Samalaju, Sarawak.

MPASSB was set up as a joint venture company to carry out the project. As at the date of this announcement, the construction work of the Project is still ongoing. 

The first phase of the project, comprising three integrated plants, is targetted to be completed by end of 2020. The three plants producing Yellow Phosphorus, Technical Grade Phosphoric Acid and Food Grade Phosphoric Acid will have an annual production of 48,000 metric tons (MT), 75,000 MT and 60,000 MT respectively.   

Commenting on the subscription, CMSB’s chief executive officer (CEO) Datuk Isaac Lugun said in a separate statement that: “This is a strategic move to increase our footprint in the Sarawak Corridor of Renewable Energy (SCORE). 

“The increase in our stake in MPAS is also in line with our growth strategy for our strategic investments to drive the next wave of growth for CMS Group. In particular, the aim of this growth strategy is for our traditional core businesses and our strategic investments to equally contribute to double the Group’s earnings in the next five years.” 

“MPAS’ first phase of production is expected to commence by end of 2020 and this project is expected to contribute significantly towards our Group’s earnings in the future,” he added. 

Share price of Cahya Mata Sarawak fell 7 sen or 2.15% to close at RM3.18 today, giving it a market capitalisation of RM3.42 billion. The counter saw 1.19 million shares traded.