The conversion will give it an immediate 24.4% stake in the O&G services company from an earlier 7.66% before the announcement was made.
Previously, Shah Hakim @ Shahzanim Zain was the company’s single largest shareholder.
In an announcement to Bursa Malaysia yesterday, Scomi said that IJM had converted its convertible redeemable secured bonds of an aggregate nominal value of RM110mil to an equity stake.
The conversion was done at a share price of 36.5 sen, which is slightly more than double its current share price of 15 sen with a par value of 10 sen.
Pursuant to this transaction, Shah Hakim will see his effective direct and indirect stakes in Scomi being diluted to 18.3%.
Datuk Kamaluddin Abdullah, a major shareholder, will see his effective stake being diluted to 9% from 11.08%.
Major institutional holding funds such as Amadia Investments Ltd, TAEL One Partners Ltd and United Overseas Bank Ltd will also see each of their stakes being diluted to 7.9%, respectively.
It was reported in the press that the tenure of the three-year RM110mil convertible bonds that were issued to IJM had expired some time last week.
The timing of such an exercise also means that the diversified group is entering Scomi at a time when shares of O&G stocks have been battered down and are hovering near or at their 12-year lows.
For Scomi, its shares are hovering at its more-than-13-year lows; closing 0.5 sen lower to 15 sen in yesterday’s trade.
Both of these subsidiaries are Bursa-listed. Scomi Energy Services closed 0.5 sen higher to 21 sen yesterday, while Scomi Engineering was untraded.
Sources said that when IJM first emerged in Scomi back in 2012 when oil prices were at their peak, the company was offered the option of either a direct exposure in Scomi or Scomi Energy, but it chose the latter instead.
It would be interesting to see how the company deals with its increased shareholding in the Scomi Group.
Market observers said that as a new major shareholder, it is only natural for IJM to seek more board representation in Scomi to play a more meaningful role in the group.
Meanwhile, the broader O&G industry has attracted interest, as market forces price in the extraordinary market actions to stabilise supplies by both the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec members in the week.
Oil prices have risen in the past two weeks but are still lower by 5.5% in the year-to-date period.
For the week so far, ICE Brent crude oil has continued to rally 7.85% on these extraordinary actions by both Opec and non-Opec members.
Meanwhile, in the most recent second quarter ended September 2015, Scomi Group saw its net profit decline by 15.3% to RM5mil from RM5.91mil a year ago.
Second-quarter revenue was also lower and dropped by 27.08% to RM337.76mil from RM463.23mil in the same quarter a year ago.
The group said that performance was weighed by all three major business segments: the oilfield services, transport solutions and marine services segments.