Comintel to give special cash dividend after sale of subsidiary

  • Business
  • Saturday, 21 Oct 2017

KUALA LUMPUR: Comintel Corp Bhd will reward shareholders with a special cash dividend after its proposed disposal of wholly-owned subsidiary BCM Electronics Corp Sdn Bhd for a cash consideration of RM123.8mil, subject to the settlement of related party advances, Comintel said in a Bursa announcement.

The buyer is Aurelius Holdings Sdn Bhd, a newly incorporated investment holding company, where Comintel executive director Loh Hock Chiang is also a shareholder of Aurelius. As at 29 August 2017, Loh holds direct interest of 0.07% in Comintel.

Comintel’s CEO of Comintel’s manufacturing segment Lee Chong Yeow is also a shareholder of Aurelius.

He is connected to Loh by virtue of them being the shareholders of Aurelius, according to a Bursa announcement dated Aug 30.

Loh has abstained and will continue to abstain from all deliberations and voting pertaining to the proposed disposal.

In yesterday’s Bursa filing, Comintel said the special cash dividend to be distributed to shareholders amount to about RM63mil, or a preliminary estimate of 45 sen per ordinary Comintel share.

This will be paid from the proceeds of the proposal, after Comintel has paid RM11.5mil it owes to BCM Electronics.

The resulting net proceeds of RM112.3mil will be used to develop Comintel’s green waste management and waste-to-energy businesses which is estimated at RM40mil, working capital of RM8.2mil, expenses related to the disposal of about RM1.1mil and the proposed special cash dividend.

Comintel is expected to realise a one-off gain of about RM76.3mil from the disposal, which represents an earnings per share of about 55 sen per Comintel share, yesterday’s Bursa filing said.

Comintel said the proposed disposal will give the company the opportunity to unlock and realise the value of its investments in BCM Electronics.

BCM, which is involved in electronics manufacturing services, provides turnkey manufacturing services.

It provides printed circuit board assembly, sub-assembly and box built manufacturing services to original equipment manufacturers of telecommunication equipment, network equipment, tracking and monitoring devices, power solution sand telemetric products.

Comintel said “there is limited leverage to further increase the competitive edge of the electronics manufacturing services (EMS) and EMS-related industries.”

If Comintel is unable to continue to maintain the competitiveness of the EMS business, there could be adverse impact of potentially losing its key customers to its competitor/s, the filing said.

According to Comintel, pursuant to listing requirements, Bursa Securities may classify it as a “cash company” or an “affected listed issuer” following this “major disposal”.

The company will be required to regularise its condition within 12 months or its listed securities may face suspension and delisting from the official list of Bursa Securities.

“It is the intention of the Board to maintain the listing status of Comintel. “The board will endeavour to take the necessary steps to venture into other viable businesses,” it said.

Moving forward, Comintel’s said its strategic plan is to focus on both the waste-to-energy and green waste management businesses.

Comintel shares closed at 91.5 sen, with a day’s range of 72 sen and 98.5 sen.

It jumped 15 sen or 21.7% to 87 sen a share, its highest since June, on 4.1 million shares done, after the mid-day break. At the close of the trading day, total volume amounted to 43.2 million.

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