KUALA LUMPUR (Sept 28): Muar Ban Lee Group Bhd's (MBL) wholly-owned unit Muar Ban Lee Engineering Sdn Bhd (MBLE) is subscribing to a 51% stake in PT Serdang Jaya Perdana (SJP), which is IDR 15.3 billion or RM4.57 million, to venture into the upstream industry of palm kernel oil processing and manufacturing.
In a filing to Bursa Malaysia today, MBL said that MBLE has today subscribed to a new additional allotment of IDR 15.3 billion paid up share capital in SJP at par value, equivalent to 51% shareholdings, to be satisfied in cash generated internally.
Pursuant to the subscription, SJP will become a subsidiary of MBLE.
"The purchase consideration was arrived at on a willing buyer-willing seller basis, and after taking into consideration the audited consolidated net assets of SJP as at Dec 31, 2014 and the potential earnings of SJP," MBL said.
MBL said the subscription will be completed within 60 days.
MBLE is principally involved in manufacturing and trading in all kinds of machinery, tools, plants, hardwares, building materials, accessories and engineering requisites, while SJP operates a palm kernel crushing plant where crude palm kernel oil is extracted from palm kernel.
The board of MBL, save for the interested directors, after having considered all aspects of the subscription, is of the opinion that it is in the best interest of MBL to venture into the upstream industry of palm kernel oil processing and manufacturing through the subscription.
It added that the proposed subscription is fair and reasonable and, on normal commercial terms, is in the best interest of the company and its shareholders as a whole and is not detrimental to the interest of the minority shareholders.
The earnings per share of SJP is IDR 3,581 (equivalent to RM1.07) and its fair value is IDR 26,234 (equivalent to RM7.84) per ordinary share as per financial result for the year ended Dec 31, 2014.
The share application money shall be paid to SJP upon submission of share application, MBL added.
It added that the subscription is not expected to have any material effect on MBL's consolidated earnings, earnings per share, net asset (NA), NA per share and gearing, as well as MBL's share capital and substantial shareholders' shareholding.
The subscription is not subject to the approval of the shareholders of MBL and relevant government authorities. However, approval from the government authorities in Indonesia, the directors and shareholders of SJP, and the directors of MBL are requested, MBL said.
The Audit Committee of MBL also opined that it is in the best interest of MBL to venture into the upstream industry of palm kernel oil processing and manufacturing through the subscription. It was fair and reasonable, and not detrimental to the interest of the minority shareholders as the subscription is expected to contribute positively to the consolidated future earnings of MBL.
Shares in MBL closed unchanged at 71 sen for a market capitalisation of RM65.1 million.
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