KUALA LUMPUR (Oct 30): Kuchai Development Bhd plans to distribute to its shareholders, via a dividend-in-specie, up to 1.98 million Kluang Rubber Co (Malaya) Bhd shares on the basis of one Kluang Rubber share for every 62.6 shares held in Kuchai.
Kuchai said the 1.98 million Kluang Rubber shares consist of Kuchai's current holding of 959,522 shares in Kluang Rubber and the 1.02 million shares to be received from the dividend-in-specie by Sungei Bagan Rubber Co (Malaya) Bhd — a company which Kuchai is a shareholder of.
Fractions of Kluang Rubber shares will be disregarded.
In a filing with Bursa Malaysia today, Kuchai said the proposed dividend-in-specie is to reward its shareholders for their continuous support and to unlock shareholders' value by giving them the option to continue participating directly in Kluang Rubber.
"(It is also) to enable the shareholders to potentially benefit directly from the future performance of Kluang Rubber, as well as from the improved liquidity of Kluang Rubber shares," it added.
The proposed dividend-in-specie will be paid out of Kuchai's retained earnings.
Kuchai said Sungei Bagan intends to distribute up to 3.84 million shares in Kluang Rubber via a dividend-in-specie to its shareholders.
As a result of the dividend-in-specie, Kuchai is expected to receive 1.02 million shares or a 3.13% equity interest in Kluang Rubber.
Kuchai said the original cost of investment of the 959,522 Kluang Rubber shares was RM3.97 million prior to 2000.
However, the proposed dividend-in-specie is subject to Kuchai shareholders' approval at its forthcoming annual general meeting.
"The proposed dividend-in-specie is expected to be carried out following the completion of the proposed dividend-in-specie by Sungei Bagan. Barring unforeseen circumstances, it is expected to be completed by Jan 30, 2019," said Kuchai.
Upon completion of the proposed dividend-in-specie, Kuchai's shareholding in Kluang Rubber will be reduced to zero.
Kuchai shares closed unchanged at RM1.73, with 10,000 shares done, in the morning session, bringing a market capitalisation of RM214.08 million. Shares of Kluang Rubber, meanwhile, were untraded in early trade today, The counter last closed at RM3.85 with a market cap of RM243.21 million.