Thursday 28 Mar 2024
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KUALA LUMPUR (May 5): Diversified group Cahya Mata Sarawak Bhd (CMS) is selling its entire 25% stakes in OM Materials (Sarawak) Sdn Bhd (OM Sarawak) and OM Materials (Samalaju) Sdn Bhd (OM Samalaju) to OM Materials (S) Pte Ltd (OMS) for a combined US$120 million (RM521 million) cash.

Currently, the remaining 75% stakes in both OM Sarawak and OM Samalaju are owned by OMS. OMS is a wholly-owned subsidiary of OM Holdings Ltd (OMH), a company listed on the Australian Securities Exchange and Bursa Malaysia.

In a filing with Bursa on Thursday (May 5), CMS said its wholly-owned subsidiary Samalaju Industries Sdn Bhd (SISB) has inked a binding offer with OMS for the proposed disposals.

The offer is subject to a definitive agreement to be entered into between SISB and OMS by May 30.

"The cash consideration of US$120 million for the sale shares includes a full and final settlement and full discharge of all shareholders' loans, including interest, extended by SISB to the subject companies as of the closing date.

"The total shareholders' loans, including interest, owing by the subject companies to SISB stood at US$10.51 million as at March 31, 2022," said CMS.

According to a separate filing by OMH, OM Sarawak owns and operates a ferrosilicon and manganese alloy smelter in Sarawak with an annual production capacity of approximately 200,000 to 210,000 tonnes of ferrosilicon, and approximately 250,000 to 300,000 tonnes of manganese alloy. The plant also consists of a sinter plant that has a design capacity to produce 250,000 tonnes of sinter ore per year.

Meanwhile, OM Samalaju develops and manages selected capital projects for OM Sarawak.

"The acquisition is advantageous to the OMH group and its strategy of investing further in ferroalloy smelting, building organically on the success of the OM Sarawak smelter facility," said OMH.

It added that the purchase consideration will be funded through a combination of existing cash reserves, future operating cash flows, and/or bank borrowings, and/or an equity raising in the second half of 2022.

"Together with our recent secondary listing in Bursa Malaysia, this transaction marks a key milestone in our journey and complements the wider OMH strategy of growing our Sarawak smelter and becoming the leading supplier of ferroalloys globally — building significant value for all shareholders," said OMH executive chairman and chief executive officer Low Ngee Tong.

At noon market break, CMS shares ended up five sen or 4.7% at RM1.12, translating into a market capitalisation of RM1.2 billion. OMH shares, meanwhile, were 13 sen or 4.7% higher at RM2.88, giving the group a market capitalisation of RM2.13 billion.

Edited ByKang Siew Li
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