KUCHING: Cahya Mata Sarawak Bhd (CMS) plans to raise RM1bil in syariah-compliant fund for its capital expenditure (capex) requirements and working capital.
According to group chairman Tan Sri Syed Anwar Jamalullail, the Sarawak conglomerate expects to undertake a proposed sukuk programme of up to RM1bil in nominal value for a period of up to 20 years.
“This proposed sukuk programme will help fund CMS’s working capital and capital expenditure requirements as well as offset general corporate expenses.
“By having substantial cash reserves, strong positive cashflow and access to long-term debt funding through the planned sukuk in this challenging economic climate, CMS has the flexibility to more easily capitalise on attractive investment opportunities which may arise from time to time,” Syed Anwar said in a statement in the company’s 2015 annual report.
He said due to acquisitions and investment in major projects, the company’s level of cash and cash equivalents was reduced to RM323mil in financial year ended Dec 31, 2015 (FY15) from RM804.68mil in FY14.
CMS paid a total of RM222.2mil to buy a 50% stake in Sacofa Sdn Bhd, a state-controlled telecommunication infrastructure and services company.
The amount included RM35.41mil for Sacofa warrants.
The company also acquired an additional 5% equity interest in OM Materials (Sarawak) Sdn Bhd for US$18.45mil. OM Sarawak owns a ferrosilicon smelting plant in Samalaju Industrial Park in Sarawak Corridor of Renewal Energy (SCORE).
Syed Anwar said the company had invested higher-than-normal capex in its new cement-grinding plant project near here and the 175-room Samalaju Resort Hotel.
“For 2016 and 2017, we expect to incur a considerable sum (in equity terms) to finance our 40% stake in Malaysian Phosphate Additives (Sarawak) Sdn Bhd’s integrated phosphate complex at a projected cost of about RM2bil,” he added.
Via wholly-owned subsidiary Samalaju Industries Sdn Bhd, CMS’ joint-venture partners in the project are Malaysian Phosphate Ventures Sdn Bhd (also 40% stake) and Arif Enigma Sdn Bhd (20%), an associate of Tradewinds Plantation Bhd.
The proposed phosphate additives plant, which is under construction in Samalaju Industrial Park, is expected to be commissioned in 2018.
On completion, the project would be South-East Asia’s largest integrated additives complex, and would house nine different plants to produce food, fertiliser and halal feed phosphate.
Syed Anwar said the OM Sarawak and integrated phosphate project would serve as catalysts to accelerate CMS growth while delivering long-term sustainable profits.
On the acquisition of Sacofa, he described it as an “exciting” move that would enable CMS to extend its core capabilities as an infrastructure facilitator and support Sarawak as an ally on the telecommunication infrastructure development front.
“Today, Sacofa has strong earnings visibility as it is the state’s only provider of telecommunication towers. This bodes well for the company’s growth and will provide income stability to CMS.”
Sacofa now operates about 600 telecommunication towers throughout Sarawak.