Friday 29 Mar 2024
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Boustead Looks To Cut Debt

Boustead is looking to pare its debt through the disposal of three non-core assets to the tune of RM500 mil. That’s in addition to a proposed rights issue to raise about RM1 bil.


KUALA LUMPUR (April 4): Boustead Holdings Bhd, which has high borrowings of RM8.03 billion, expects the disposals of a quarry land and a plantation land in Johor, and a stake in property company Jendela Hikmat Sdn Bhd to realise half of a billion ringgit.

Following its recent rights issue plan and some non-core assets disposal, the group expects its gearing ratio to be pared down to 0.9 times by the end of this year, from 1.1 times currently.

The group's deputy chairman and managing director Tan Sri Lodin Wok Kamaruddin said debt reduction is the group's priority as its gearing is quite high.

The group's high borrowings have become a concern for analysts. As of Dec 31, 2015 (FY15), the group's borrowings stood at RM8.03 billion, which translated to a gearing ratio of 1.1 times.

"We expect the disposal of three non-core assets [to] generate half a billion ringgit of cash," Lodin told reporters after the group's annual general and extraordinary meetings.

According to the annual report, the disposal of the plantation land in Johor will net the group a profit of RM120 million, while the 30% stake in Jendela Hikmat will realise a profit of RM198 million.

Meanwhile, the group has in its extraordinary general meeting today passed its proposed rights issue that will involve the issuance of up to 413.67 million new shares at 50 sen. The plan is expected to raise over RM1 billion for the group.

The group, which saw its net profit for the financial year ended Dec 31, 2015 (FY15) slumped 97% year-on-year, also expects its financial performance to be better.

This is underpinned by the turnaround of its heavy industries division and the focusing on government navy contracts, according to Lodin.

Boustead posted a profit after tax of RM13 million for the financial year ended Dec 31, 2015 (FY15), 96.81% lower compared to RM408 million in FY14, after its revenue fell 18.34% year-on-year to RM8.66 billion. The sharp declined in net profit was also due to higher net losses of RM137 million from the group's heavy industries provision.

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