This article first appeared in The Edge Financial Daily on June 17, 2019

KUALA LUMPUR: SIG Gases Bhd has signed the sale and purchase agreement (SPA) to dispose of its core unit Southern Industrial Gas Sdn Bhd (SIGSB) for RM202.61 million cash.

The industrial gas producer’s board intends to reward shareholders with nearly 90% of disposal proceeds, while the balance of it will be utilised to acquire new businesses or assets and working capital.

In a nutshell, shareholders will be rewarded 95.7 sen per share, which consists of capital repayment of 40 sen and special dividend of 55.7 sen.

In an exchange filing last Friday, SIG Gases said it has entered into a conditional SPA with Air Liquide Malaysia Sdn Bhd to acquire its entire equity interest in SIGSB, which in turn holds a 40% equity interest in Iwatani-SIG Industrial Gases Sdn Bhd.

SIG Gases plans to distribute part of the disposal proceeds way of capital reduction and repayment, followed a proposed special dividend.

The first exercise will cancel the company’s share capital RM75 million, and 40 sen per share will be distributed to shareholders.

The tentative amount proposed for special dividend is about 55.7 sen per share, or RM104.43 million in total.

The remaining proceeds may be distributed to shareholders again, if the company is not able to fully utilise the allocated proceeds or identify any suitable and viable new businesses or assets within the stipulated time frame.

Subject to all approvals being obtained, SIG Gases said the proposals are expected to be completed year end.