UMW proposes RM1.1bil rights issue in takeover of MBM Resources

UMW Holdings Bhd has proposed a renounceable rights issue to raise up to RM1.10bil.

KUALA LUMPUR: UMW Holdings Bhd has proposed a renounceable rights issue to raise up to RM1.10bil to repay a bridging loan to finance the purchase of MBM Resources Bhd and Central Shore Sdn Bhd.

It said on Tuesday the corporate exercise would be to acquire to all the MBM Resources shares held by Med-Bumikar Mara Sdn Bhd and Central Shore (a unit of Med-Bumikar) representing a 50.07% stake.

With a 50.07% stake, it would result in UMW undertaking a mandatory take-over offer for all the remaining MBM Resources shares.

It also said the proposed rights would raise up to RM1.1bil after taking into consideration the MBM Resources purchase price, funding for the proposed mandatory offer.

The cash portion of the proposed Perodua acquisition amounting to RM117.5mil will be funded via internally generated funds.  

StarBiz reported on Tuesday UMW is likely to make a cash call by selling new shares to raise funds for the takeover of MBM Resources  and an additional stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

The acquisition plans, which will raise UMW’s equity interest in Perodua to 70.6% from the current 38%.

On March 9, UMW offered to buy all the o shares in MBM Resources held by Med-Bumikar Mara  and Central Shore collectively representing a 50.07% interest in MBM Resources for RM501mil, or RM2.56 apiece.

Currently, MBM Resources holds a 22.58% effective equity interest in Perodua.

If UMW’s proposal is accepted, then its shareholding will rise from nil to 50.07% in MBM Resources, and UMW will be obliged to extend a mandatory general offer for the rest of MBM Resources’ minority shareholders.

Separately, UMW has also proposed to additionally acquire 14 million ordinary shares, or 10%, in Perodua held by PNB Equity Resource Corp Sdn Bhd (PERC), at a price of RM417.5mil, or RM29.80 apiece. PERC is the private equity investment arm of PNB.

The offer will be satisfied via the issuance of 49.26 million new UMW shares at an issue price of RM6.09 and RM117.5mil cash. Cumulatively, as a result of both the acquisition proposals, UMW’s interest will further increase to 70.6%.

Both acquisitions are not conditional upon each other and the offer period remains open until March 28.