PETALING JAYA: UEM Edgenta Bhd ’s gearing is poised to drop by half after it announced plans to dispose of its 61.2% stake in New Zealand-based public-listed subsidiary, Opus International Consultants Ltd (OIC).
The asset management service provider said its gross gearing would drop to 0.4 times from 0.8 times after the corporate exercise is completed.
The gearing is also inclusive of the drawdown of its RM300mil sukuk in April 2017, the company said in a statement.
“The proposed disposal of OIC is an opportunity for UEM Edgenta to monetise its investments upfront at a healthy premium over the current market price,” it said.
The buyer, which had expressed the intent to purchase, is Canadian company WSP Global Inc that is listed on the Toronto Stock Exchange.
WSP provides management and consultancy services to the built and natural environment industries.
UEM Edgenta’s managing director and chief executive officer Datuk Azmir Merican said in the statement the proceeds from the exercise would be used mainly to pare down its debts.
“It will also provide UEM Edgenta with the financial resources and enable management to focus on driving as well as supporting the organic growth and operational excellence initiatives in our core sectors in healthcare, infrastructure and real estate in our key markets,” Azmir said.
WSP will purchase the OIC stake with an all-cash consideration that is worth NZ$1.78 per OIC share, totalling NZ$263.2mil (RM823.6mil).
“In addition, the terms of the offer allow the OIC board to declare and pay to OIC shareholders a fully imputed cash dividend of up to NZ$0.07 per OIC share without an offer price adjustment (totalling NZ$10.4mil or RM32.4mil),” UEM Edgenta’s statement said.
“The offer of NZ$1.78 plus the NZ$0.07 dividend would represent cash proceeds to OIC shareholders of NZ$1.85 per OIC share (totalling NZ$273.6mil or RM856mil).
“Gross proceeds to UEM Edgenta amount to NZ$167.4mil (about RM523.9mil) for its 61.2% equity stake in OIC,” it added.
UEM Edgenta said the net offer price of NZ$1.85 per OIC share is a “very attractive premium” to the current share price and the recent trading history of OIC.
The company said that it is a premium of 86.9% to the closing price per OIC share of NZ$0.99 on Aug 11, 2017; 58.1% higher than OIC’s 52-week high daily closing share price of NZ$1.17; and 85.1% and 84.8% to the one and three-month volume weighted average price per OIC share, respectively.
The deal is still subject to UEM Edgenta’s shareholders’ approval in a general meeting that will be held in the fourth quarter of this year.
“The company’s major shareholder, UEM Group, has provided an undertaking to vote in favour of the proposed disposal,” the statement said.