This 2011 file photo shows workers at the Petaling Jaya factory.
KUALA LUMPUR: British American Tobacco (M) Bhd
(BAT) will cease its manufacturing operations in the country under an operations restructuring that will see it sourcing tobacco products for the domestic market from other British American Tobacco group factories regionally.
The tobacco firm - whose products include Dunhill, Peter Stuyvesant, Pall Mall and Benson & Hedges - said its unit Tobacco Importers and Manufacturers Sdn Bhd, which makes tobacco products and semi-finished goods (such as processed tobacco) at its facility in Jalan Universiti, Petaling Jaya, would wind down its factory operations in stages.
The process was targeted to be completed by the second half of 2017, it said in its statement to Bursa Malaysia on Thursday,
The BAT group, incidentally, is headquartered on the same site as its manufacturing facility.
The winding down of the factory operations will affect about 230 employees, who will be provided with a benefits package as well as the option to undergo a career-transition programme.
BAT said the restructuring was in line with the company’s efforts towards realising a new and more sustainable business model, amid an increasingly challenging business environment.
“The high excise environment has ultimately led to the sharp rise in illegal cigarettes and significantly lower legal sales volumes, resulting in rising cigarette production costs,” it explained.
“This increasingly challenging environment requires the company to restructure and transform its business which apart from the winding down of factory operations include the sharpening of its commercial capabilities whilst optimising the supply chain and transactional activities to ensure that BAT remains a competitive consumer-focused market leader.”
The land where the facility is located will be disposed of by way of a public tender exercise.
BAT said an independent real estate agent had been appointed to act for and on behalf of the company to deal with all matters relating to the proposed land sale.
As for the equipment and machinery currently used in the facility, BAT said they would be sold to related parties within the British American Tobacco group under the company’s recurrent related party transaction mandate at the time of the sale, once approved by shareholders, and in accordance with the listing requirements.
The restructuring, which involves the winding down of factory operations, is not subject to the approval of BAT's shareholders. However, the proposed disposal of land is subject to its shareholders' approval.
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