KUALA LUMPUR: Kulim (Malaysia) Bhd, which received takeover offer from major shareholder Johor Corporation, will present the offer to the shareholders at an EGM.
Kulim said on Wednesday the board, except the interested directors, had a meeting the previous day and discussed the offer
“(The board) has decided to present the proposed SCR (selective capital reduction and repayment exercise) to shareholders of Kulim for their consideration,” it said. It also explained the rationale why shareholders should take up the JCorp offer of RM4.10 cash a share.
On Nov 5, Johor Corp which owns 55.36% of Kulim, and parties acting in concert had put forward the SCR under its proposed takeover.
Kulim said barring any unforeseen circumstance, the proposed SCR was expected to be completed in the third quarter of 2016.
Under the SCR, the entitled shareholders will receive a capital repayment of a RM4.10 cash for every share. The non-entitled shareholders will waive its entitlements to the repayment of capital under the SCR.
As at Nov 9, Kulim had a paid-up share capital of RM305.17mil comprising of 220.68 million shares (excluding treasury shares) and there were 21.12 million outstanding options under the existing employees’ share option scheme and 32.59 million outstanding warrants 2011/2016 excluding the warrants held by the non-entitled shareholders.
As at Nov 9, the non-entitled shareholders collectively hold 755.22 million shares or 61.87% in Kulim or about 59.26% assuming the full exercise of the outstanding ESOS options and 32.59 million outstanding warrants.
“Kulim has been made to understand that the non-entitled shareholders do not intend to exercise their 43.75 million warrants held as at Nov 9 pursuant to the proposed SCR,” it said.
To recap, on Feb 26, Kulim had completed the disposal of its 48.97% equity interest in New Britain Palm Oil Ltd (NBPOL), for RM2.8bil cash.
NBPOL was a major contributor to Kulim Group and was one of the key assets driving the market valuations for Kulim shares.
“Following the disposal of NBPOL, the major assets contributing to the revenue and profitability of the Kulim group comprise of its Malaysian oil palm plantations and its 50.8% investment in E.A. Technique (M) Berhad.
As compared to other listed regional plantation players, Kulim’s plantation size was smaller and earnings contribution from this business segment has also declined as compared to previous financial years.
“Kulim has also recently announced its intention to expand into the oil exploration business in Indonesia. In view of the volatility in oil prices in the last one (1) year, it may take a longer time for this new business segment to be a significant contributor to the Kulim Group.
“Given the challenging market environment and lack of immediate re-rating catalyst of Kulim shares, the proposed SCR represents a good opportunity for Kulim shareholders to realise cash for their investments at an attractive premium above the prevailing market prices of Kulim shares,” it said.
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