PETALING JAYA: Cahya Mata Sarawak Bhd (CMS), via its wholly-owned subsidiary Samalaju Industries Sdn Bhd, has entered into a conditional share sale agreement (SSA) with OM Materials (S) Pte Ltd.
The SSA is for the proposed disposals of CMS’ entire 25% equity interests in OM Materials (Sarawak) Sdn Bhd (OM Sarawak) and OM Materials (Samalaju) Sdn Bhd (OM Samalaju) for a total cash consideration of US$120mil (RM530.65mil).
However, the net disposal consideration amounted to US$109.23mil (RM483.03mil) after a full and final settlement and full discharge of all shareholders’ loans, including interest, extended by CMS to OM Sarawak and OM Samalaju.
In a filing with Bursa Malaysia, CMS said the net disposal consideration was arrived at on a “willing-buyer willing-seller” basis.
This is done after taking into consideration the financial results of both OM Sarawak and OM Samalaju, according to CMS.
In addition, Asia Equity Research Sdn Bhd (AER) has appraised a fair equity value of US$107.4mil (RM474.93mil) for the sale of shares, following its business valuation report dated May 25, 2022.
Therefore, the aforementioned net disposal consideration of RM483.03mil represents a premium of 1.7% or RM8.1mil to AER’s valuation of RM474.93mil.
For the valuation, AER has adopted a price-to-book (P/B) multiple approach, price-to-earnings ratio (PER) approach, and enterprise value (EV)/earnings before interest, taxes, depreciation and amortisation approach.
AER has concluded that the P/B for OM Sarawak and OM Samalaju of 1.61 times is within the range of P/Bs for selected comparable companies listed on Bursa Malaysia that is between 0.6 times and 2.4 times.
It was also concluded that the PER of OM Sarawak and OM Samalaju of 5.3 times is within the range or PERs of the abovementioned comparable companies that is between 3.9 times and 9.9 times.
The EV of 5.8 times for OM Sarawak and OM Samalaju is also within the range of EVs of the comparable companies that lies between 4.9 times and 7.6 times.
The group said the a part from the proceeds of the disposal will be used for its future acquisition as well as investments.
Some proceeds will also be used for the group’s capital expenditure, which include plants improvements and purchase of additional machineries.
Meanwhile, the group has allocated some proceeds to meet its working capital requirements for its day-to-day operations, which may include staff salaries and related costs, overhead expenses, maintenance expenses, operating and administrative expenses.
A small portion of the proceeds will also be utilised for the expenses of the disposals.