KUCHING: Sarawak Consolidated Industries Bhd (SCIB) has received an indicative letter of offer from YTL Cement (Sarawak) Sdn Bhd to acquire SCIB Concrete Manufacturing Sdn Bhd for RM113 million.
YTL Cement is an indirect subsidiary of YTL Corporation Bhd while SCIB Concrete Manufacturing is a wholly-owned subsidiary of SCIB.
SCIB Concrete Manufacturing is involved in the production and sale of concrete products, like precast pipes and spun piles, and trading of construction materials.
Following deliberation, SCIB’s board of directors had decided to accept the indicative offer, which is subject to several conditions, including the successful negotiation and execution of a definitive share sale and purchase agreement, the company said in a press release.
“In line with corporate governance requirements and to ensure a thorough evaluation, SCIB will appoint professional advisers in due time to provide the necessary legal, financial and strategic advice.
“The proposed transaction will also required the shareholders’ approval to be convened in due course,” it added.
SCIB’s executive chairman Datuk Chong Loong Men said the indicative offer from YTL Cement represents an opportunity for the group to explore potential value realisation in one of its core business units.
“While we have accepted the offer in principle, it is still early in the process. We will proceed carefully while seeking advice from our appointed professionals and evaluating the proposal entirety before reaching a final decision.
“SCIB will continue to explore strategic opportunities and carefully consider all options, always with the aim of choosing what best serves the company and our stakeholders,” he added.
The company, which is also involved in the manufacturing and sales of industrialised building systems (IBS) components, said further announcement will be made in due course upon the execution of the definitive agreement on the proposed deal.
SCIB had received approved from Bursa Securities last week on the listing and quotation for up to about 763.62 million new ordinary shares to be issued pursuant to the company’s proposed rights issue with warrants, and listing and quotation of the same number of detachable warrants.
The proposed rights issue is on the basis of one rights share together with one Warrant C for every existing share held by the entitled shareholders of the company on an entitlement date to be announced later.
To ensure it meets the minimum subscription level to raise at least RM10 million, executive chairman Chong has undertaken to subscribe in full for his entitlement of rights shares, and, if required, additional rights shares not taken up by other entitled shareholders by way of excess rights share application.
Based on an illustrative issue price of RM0.07 per right share, SCIB could raise up to RM53.454 million. If that amount could be raised, SCIB will utilise RM20 million of the proceeds from the corporate exercise to partly finance its new factory project,RM19 million for repayment of bank borrowings, RM13.574 million for working capital and RM880,000 to cover the estimated expenses for the exercise.
The construction cost of the new factory is estimated at RM38.62 million while the purchase of machinery is estimated at RM18.95 million, bringing the total to RM57.57 million.
To pave way for the construction of the new factory, SCIB had earlier accepted an offer from Sarawak Land and Survey Department for the acquisition of industrial land totalling RM21.88 acres in Demak Laut Industrial Park Phase IIb (Stage 2) for RM21.62 million. The land was offered as part of SCIB’s plan to relocate its existing factory in Pending Industrial Park here.
Meanwhile, SCIB shares stage a strong relief rally following the announcement of letter of offer from YTL Cement to acquire SCIB Concrete Manufacturing.
On Thursday, the stock opened 3.5sen higher at RM0.20 with about 3.17 million units traded at opening bell at 9am.It rapidly rose to RM0.245 before pulling back, with some 64 million shares changed hands in heavy trading as one of the most active stocks at 11am.
SCIB gained 2sen to RM0.165 on volume of about 7.65 million shares on Thursday.
At RM0.21, SCIB has a market capitalisation of about RM150.3 million (company’s total number of issued shares stands at 699.2 million units)
On a 52-week period, the stock traded between RM0.11 and RM0.29.
