KUALA LUMPUR (Jan 5): Scomi Group Bhd's three-way-turned-two merger will now proceed with its engineering unit, after shareholders of Scomi Engineering Bhd agreed to the proposal today during a court convened meeting (CCM) here.

Those who voted for the proposed merger represent 93.52% of the total value of votes held by non-interested Scomi Engineering shareholders, against 6.48% that voted against.

On Aug 21 last year, Scomi Group proposed to consolidate its businesses by merging with its engineering and energy units, Scomi Engineering and Scomi Energy Services Bhd respectively, via a members' scheme of arrangement involving a share swap and an issuance of warrants.

The proposed merger, to reduce cost and strengthen its balance sheet, would have resulted in the privatisation of the two units after all shareholders in the respective units swap their shares for Scomi Group shares.

With the shareholders' green light today, Scomi Engineering is set to undergo a delisting process — estimated to take place by end-February — to be wholly owned by Scomi Group. Scomi Energy, on the other hand, will remain a listed entity following the rejection of non-interested shareholders to the proposed merger at a similar CCM yesterday.

The group currently owns 72.3% of Scomi Engineering shares and a 65.6% stake in Scomi Energy.

"We are very pleased by the outcome of the CCM today, and we are very thankful that our investors are savvy enough to understand what is best for the company," Scomi Engineering chief executive officer Rohaida Ali Badaruddin told reporters after the CCM.

Rohaida said under the merged entity, the company will be able to provide its expertise in engineering, procurement, and construction for renewable energy projects at the group level, besides technology sharing and the consolidation of manufacturing facilities.

She also said costs can be trimmed by RM5 million per annum for the consolidated entity.

To date, Scomi Engineering's order book stood at RM1.9 billion, of that 95% are overseas projects in countries such as Brazil, while the remainder are local projects. The projects can sustain the unit for the next four to five years, according to Rohaida.

Scomi Engineering has been in the red for two consecutive years — the financial year ended March 31, 2016 (FY16) and FY17. In its first half (1H) of FY18, the group turned in a cumulative net loss of RM31.28 million against an almost flat revenue of RM66.17 million, compared with net losses of RM2.63 million in 1HFY17.

At 5pm today, Scomi Group shares fell one sen or 5.56% to close at 17 sen. Scomi Engineering shares rose half a sen or 2% to close at 25.5 sen, while Scomi Energy gained two sen to settle at 15.5 sen.