CCM to sell pharmaceutical operations to subsidiary


PETALING JAYA: Chemical Company of Malaysia (CCM) Bhd plans to sell six pharmaceutical units in Malaysia, the Philippines and Singapore to 73.7%-owned subsidiary CCM Duopharma Biotech Bhd for RM133.3mil.

Proceeds from the disposal would be reinvested in its subsidiary, CCM told Bursa Malaysia.

The rationalisation of the group’s pharmaceutical assets under CCM Duopharma would allow the company to bid for larger contracts announced by the Health Ministry, it said.

To pay for the acquisition, CCM Duopharma will undertake a renounceable rights issue of 139.48 million new shares at RM1.40 each, to raise as much as RM195.27mil.

The company has allocated RM140mil to pay for the acquisition. It will invest RM50mil to expand the group’s pharmaceutical manufacturing operations.

“The rationalisation is expected to improve the utilisation rate of the combined production facilities by channelling capacity of any production facility within CCM Duopharma to any under-utilised production facilities,” CCM said.

By subscribing to the rights issues, CCM said it would continue to participate in and benefit from the growth, potential earnings and any capacity expansion of the subsidiaries through its shareholding in CCM Duopharma.

The corporate exercise involves three conditional share sale agreements (SSA) between CCM Duopharma and CCM for the proposed acquisition of the entire equity interest in four companies.

In the first SSA, CCM Duopharma agreed to acquire CCM Pharmaceuticals Sdn Bhd and Innovax Sdn Bhd for RM17.6mil together with the cash settlement of advances due from both amounting to RM10.66mil as at Sept 30, 2014.

In the second SSA, it agreed to acquire CCM International (Philippines) Inc from CCM’s wholly-owned subsidiary CCM Investments Ltd for RM1,000.

In the third SSA, it agreed to acquire CCM Pharmaceuticals (S) Pte Ltd (CCM Singapore) from CCM’s wholly-owned subsidiary CCM International Sdn Bhd for RM2.4mil together with the cash settlement of advances due from CCM Singapore to CCM amounting to RM27,000 as at Sept 30, 2014.

Meanwhile, CCM Duopharma’s wholly-owned subsidiary Duopharma (M) Sdn Bhd, also entered into a conditional SSA to acquire the entire equity interest in CCM Pharma Sdn Bhd and Upha Pharmaceutical Manufacturing (M) Sdn Bhd.

This is for RM113.3mil together with the cash settlement of advances due from CCM Pharma and Upha Pharmaceutical to CCM amounting to RM101.1mil as at Sept 30, 2014.

CCM Duopharma also proposed to increase its authorised share capital from RM100mil, comprising 200 million shares, to RM250mil comprising 500 million shares.

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Business , CCM , CCM Duopharma

   

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