KUALA LUMPUR: OSK Holdings Bhd's single largest shareholder Tan Sri Ong Leong Huat, who holds a 40.22% stake, has promised that there will be no lay-offs after the merger of the group with its property arm OSK Property Holdings Bhd and PJ Development Holdings Bhd (PJD).

"No, I do not think we need (to launch a) VSS (voluntary separation scheme). The total number of employees (of the merged entity) is comparatively small when compared with that of other (property) companies," he told reporters after OSK Holdings' extraordinary general meeting (EGM) here yesterday.

"Rather, we may look to attract more talents as the merged group will further expand its business post merger," said Ong.

The total workforce of the merged entity is estimated at 2,000 people.

Earlier at the EGM, OSK Holdings shareholders approved the group's acquisition of OSK Property and PJD. It secured 99.97% of the votes polled at the meeting, paving the way for the merger to be completed by early September this year.

The corporate exercise involves OSK Holdings acquiring 72.4% and 31.6% equity interest in OSK Property and PJD for RM346.4 million or RM1.95 apiece and RM223.64 million or RM1.56 each respectively. Thereafter, OSK Holdings will undertake a mandatory general offer to acquire the remaining shares and outstanding warrants in the two companies from the minority shareholders and the warrant holders respectively.

On the merged group's prospects, Ong said its property business will rely on the unbilled sales and new launches.

"Looking at it right now, we have about RM1.5 billion unbilled sales, which means there is a steady pipeline of revenue that we can book for the next three years," he said.

"In addition, we will be launching new projects worth RM1 billion in gross development value (GDV) within the next 12 months. These projects are located in Gohtong Jaya and Kuantan in Pahang, Cheras in Kuala Lumpur and Cyberjaya, Selangor," he noted.

Last October, Ong had announced the plan to merge the three companies, which will have a combined worth of some RM3 billion, on par with other major developers such as Mah Sing Group Bhd, IGB Corp Bhd and UOA Development Bhd.

Ong said the merged group will have a total undeveloped land bank of 1,297 acres (525ha) in Malaysia and five acres in Melbourne, Australia worth a combined GDV of RM13.3 billion.

In a filing with Bursa Malaysia yesterday, OSK Holdings declared a special cash dividend of 15 sen per share for the financial year ending December  2015, payable on Aug 4.

The entitlement date is July 16, 2015.

Meanwhile, Ong conceded that the group has witnessed a slowdown in sales growth.

"However, Malaysia's property market is still relatively stable. The government is in the midst of building two million affordable homes to cater to the people's needs," he said.

Going forward, Ong said the group will focus on "scalable business" that will provide better returns to shareholders but did not elaborate.

"We already have a substantial existing business. Moving forward, we will review what is the area that has more space [for] growth that can give our shareholders better returns," he said.

Following the merger, Ong expects the contribution from property development to remain at 40% of the group's earnings, 40% from financial services, and the remaining 20% from hotels and building materials.

On the weakening ringgit against the US dollar, Ong said OSK Holdings has minimal exposure to foreign exchange fluctuation as most of its transactions are in ringgit.

Nevertheless, he is of the view that the country's economic fundamentals are still relatively strong.

OSK Property and PJD saw their shares slide after Ong announced the takeover by his main vehicle OSK Holdings last October, as minority shareholders had viewed the offer prices for the shares and warrants in both companies were below their market value. Both OSK Property and PJD were then trading at values slightly higher than 10% of the offer prices.

Shares in OSK Holdings (fundamental: 1.4; valuation: 2.6) closed down two sen or 0.9% at RM2.20 yesterday, for a market capitalisation of RM2.111 billion.

OSK Property's (fundamental: 1.9; valuation: 3) share price closed unchanged at RM1.92, with a market cap of RM471.38 million, while PJD (fundamental: 1.9; valuation: 3) closed one sen or 0.66% lower at RM1.50, bringing its market cap to RM685.26 million.

This article first appeared in The Edge Financial Daily, on July 7, 2015.