KUALA LUMPUR (March 7): Ancom Bhd has proposed a distribution of up to 18.4 million shares or a 10.24% stake in Nylex (Malaysia) Bhd to Ancom shareholders by way of dividend-in-specie.

The chemical manufacturer said the distribution of one Nylex share for every 20 Ancom shares held offers shareholders an opportunity to invest directly in Nylex at no cost.

The group said it would distribute 14.2 million Nylex shares in the minimum scenario and 18.4 million shares in the maximum scenario. Ancom currently holds a 50.3% stake or 90.1 million shares in Nylex.

Following the exercise, Ancom's shareholding in Nylex will be reduced to between 42.34% and 40.03% under the minimum and maximum scenarios, respectively, Ancom said in a filing with Bursa Malaysia.

The proposed special dividend will be paid from Ancom's retained earnings, it added.

"The final number of dividend shares to be distributed will depend on the actual number of issued shares in Ancom (excluding treasury shares) as at the dividend entitlement date.

"For illustrative purposes, a dividend entitled shareholder who holds 200 Ancom shares and who will be entitled to 10 dividend shares will instead receive cash of RM18.20 (being 10 dividend shares multiplied by indicative value per dividend share of RM1.82 based on the closing price of the Nylex shares on the latest practicable date," said Ancom.

Ancom, in its filing, also proposed a share split involving the subdivision of every one share into three shares.

The exercise, it said, may result in improved trading liquidity for Ancom and potentially reduce stock price volatility by increasing the number of shares.

The group said its issued share capital will increase to 881.4 million shares in the minimum scenario and up to 1.1 billion shares in the maximum scenario after the share split.

In a separate statement, Ancom group chief executive officer Lee Cheun Wei said: "We have decided to pay out dividend-in-specie to our shareholders, giving them an opportunity to benefit from the future of Nylex as and when it acquires a new venture. The gesture is our way of thanking them for their unwavering support throughout the years."

Lee added that Ancom is confident about its future prospects, augmented by the consolidation of Nylex businesses, alongside expansion plans in motion that include the recent acquisition of a livestock chemicals company and the imminent completion of the new manufacturing plant for agricultural chemicals.

"Recent geopolitical events have also driven industrial chemicals prices higher, benefitting large distributors like us. On the whole, we expect further breakthroughs in our financial performance premised on the aforementioned factors, which also mean greater value creation for our shareholders," said Lee.

On Jan 26, Ancom finalised the acquisition of all assets and liabilities of Nylex for a purchase consideration of RM179.3 million, to be satisfied via a combination of cash and new issuance of 31.1 million new Ancom shares. The new Ancom shares are set to be listed on March 24, which will bring the total outstanding shares of Ancom to 284.6 million.

Nylex, meanwhile, is now classified as a cash company.

Ancom shares closed 25 sen or 6.2% lower at RM3.78, valuing the group at RM992.12 million.

Nylex shares dropped 15.47% or 28 sen to RM1.53, giving a market capitalisation of RM297.34 million.