Cahya Mata injects RM64mil into phosphate additives plant


At yesterday

PETALING JAYA: Cahya Mata Sarawak Bhd (CMS) is injecting RM64.24mil into its joint-venture (JV) phosphate additives plant via a subscription of new shares in Malaysian Phosphate Additives (Sarawak) Sdn Bhd (MPAS).

In a filing with Bursa Malaysia yesterday, CMS said the firm is subscribing to 64.24 million new shares or a 20% stake in MPAS for RM64.24mil.

The proceeds will be used to part-finance the MPAS project.

“Although the subscription is expected to contribute positively to the future earnings of CMS, there can be no guarantee that the anticipated benefits from the subscription would be realised.

“As such, there can be no assurance that the subscription would enable CMS to improve its financial performance in the future, and the requirement for the company to recoup its investment could be longer than anticipated,” it said.

Following the subscription, CMS will increase its stake in MPAS to 60% from 49.94% at the moment.

The other shareholders in MPAS include Malaysian Phosphate Venture Sdn Bhd (MPV) and Tradewinds Corp Bhd that own 34% and 16%, respectively.

The first phase of MPAS is expected to commence by end-2020.

Commenting on the subscription, CMS group chief executive officer for corporate, Datuk Isaac Lugun, said: “This is a strategic move to increase our footprint in the Sarawak Corridor of Renewable Energy.

“The increase in our stake in MPAS is also in line with our growth strategy for our strategic investments to drive the next wave of growth for the CMS group.

“In particular, the aim of this growth strategy is for our traditional core businesses and our strategic investments to equally contribute to double the group’s earnings in the next five years.”

Following the capital injection, MPV and Tradewinds’ stakes would be reduced to 27.2% and 12.8%, respectively.

MPAS was set up as a JV company to construct and operate an integrated phosphate complex in Samalaju Industrial Park, Sarawak.

Construction work for the plant is currently ongoing and the first phase, comprising three integrated plants, is targeted to be completed by the end of 2020.

The three plants will have an annual production capacity of 48,000 tonnes, 75,000 tonnes and 60,000 tonnes, respectively.

Food phosphate is used mainly in the refining of crude palm oil and in the production of various types of food and beverages, cola fizzy drinks, food source for cakes and noodles, while fertiliser phosphate is used in the production of compound fertiliser, nitrogen phosphorous potassium.

It has been reported that shareholders have invested over RM200mil and earthworks have begun on the 350-acre site.

Shares in CMS closed seven sen lower to RM3.18 yesterday.

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Business , cms , phosphate , Cahya Mata , additives ,

   

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