Kulim shareholders set for RM1b windfall

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KUALA LUMPUR: Kulim (M) Bhd will distribute RM1 billion or 78 sen per share from the proceeds of the sale of its 73.48 million shares that represent its entire 48.97% stake in New Britain Palm Oil Ltd (NBPOL) to Sime Darby Plantation Sdn Bhd for £525.4 million (RM2.75 billion).

Kulim, via a filing with the local bourse yesterday, said it will distribute the RM1 billion over a period of two years after the disposal. From the sale proceeds, it said it will use RM600 million to repay bank borrowings within the next six months, which should bring down its gearing from 0.4 times to 0.21 times.

Meanwhile, another RM300 million will be used as general working capital for the next 12 months.

It will also set aside RM850 million from the proceeds for investments or acquisitions of viable assets and businesses in the next two years. Specifically, it intends to part finance its oil palm plantation expansion and its venture into the oil and gas sector in Indonesia.

The filing also said that it had received a formal offer document from Sime Darby Plantation yesterday to acquire its NBPOL stake at an offer price of £7.15 per share.

The offer price was at a premium of 85% to NBPOL’s last closing price of £3.87 on Oct 8 at the London Stock Exchange.

It represented a massive gain for Kulim, whose original cost of investment of the 73.48 million shares was about RM216.39 million. It had originally acquired 96 million NBPOL shares for RM282.71 million in 1996, but had disposed of 22.52 million shares with a cumulative gain of about RM113.35 million.

Kulim said on Oct 9 that it intended to accept Sime Darby’s offer. The company will now put the proposed disposal to the shareholders at an extraordinary general meeting.

 

This article first appeared in The Edge Financial Daily, on October 24, 2014.