KUALA LUMPUR (June 14): Can-One Bhd has decided to sell its sweetened creamer and evaporated creamer manufacturing unit to Asia Dairy Creations Sdn Bhd for between RM800 million to RM1 billion. 

This follows a letter of offer received from Asia Dairy Creations, a special purpose vehicle managed by Southern Capital Group Pte Ltd, to buy F&B Nutrition on June 3.

Can-One said the proposed disposal is expected to result in a net gain of RM610.8 million based on the floor price of RM800 million, and RM810.8 million based on the maximum price of RM1 billion.

In a filing with Bursa Malaysia today, Can-One said it has signed a definitive sale and purchase agreement (SPA) with Singapore-based Wholesome Dairies Pte Ltd (WDPL), the holding company of Asia Dairy Creations, for the proposed disposal. This will be done through the disposal of Can Ridge Sdn Bhd, a wholly-owned subsidiary of Can-One, to WDPL.

Can-One currently owns an 18.75% stake in F&B Nutrition, while Amber Alliance Sdn Bhd and Can Ridge, both wholly-owned subsidiaries of Can-One, hold 75% and 6.25% respectively.

Can-One will implement an internal reorganisation exercise which will see Can Ridge eventually holding the entire issued capital of F&B Nutrition prior to the completion of the SPA.

The disposal consideration will be paid by WDPL to Can-One in two tranches: the first amounting to RM750 million and the second of between RM50 million and RM250 million.

Can-One said the offer from Asia Dairy Creations comes at an opportune time as the proposed disposal will now allow it to unlock value and monetise its investments in F&B Nutrition and utilise the gross proceeds to pare down the group’s bank borrowing. As at March 31, 2019, the group’s total bank borrowings stood at RM2.02 billion.

The offer will also allow Can-One to streamline its business operations and focus on its general packaging business.

"The utilisation of the Tranche 1 amount by the company to pare down RM750 million in bank borrowings would result in estimated gross interest savings of RM38.3 million per year and improve the group’s gearing," it added.

For the financial year ended Dec 31, 2018, F&B Nutrition contributed RM841.57 million or 61.37% to Can-One's revenue.

Barring any unforeseen circumstances, the proposed disposal is expected to be completed by the fourth quarter of 2019. RHB Investment Bank Bhd is the principal adviser to Can-One for the proposed disposal.

Can-One shares closed 9 sen or 2.36% higher at RM3.90 today, with 1.19 million shares done, bringing a market capitalisation of RM749.40 million. Year-to-date, its share price has risen 97%.