KUCHING: RAM Ratings Services Bhd (RAM0 is of the view that Cahya Mata Sarawak Bhd’s (CMS) recently announced offer to acquire 50 per cent of Sacofa Sdn Bhd (Sacofa) will not materially impact the Group, which is rated AA3/Stable/P1 by RAM.
“The proposed acquisition, which will cost CMS about RM187 million, can be funded entirely by internally generated funds; the group had a large cash hoard of RM830 million as at end-2014,” it said in a statement on Thursday.
“As such, the Group’s gearing level is expected to remain strong at below 0.1 times and its funds from operations debt coverage at above 1.5 times subsequent to the acquisition.
Notwithstanding its neutral rating impact, RAM was of the opinion that the acquisition of Sacofa will, if approved, contribute positively to CMS’s overall performance, providing the latter with stable recurring income.
Sacofa is currently the sole provider of telecommunication towers to local telecommunication players such as Celcom, DiGi and Maxis in Sarawak. For the past three years, Sacofa has generated an average revenue and pre-tax profit of RM150 million and RM74 million respectively, mainly through the leasing of its telecommunication towers.
CMS started off as a cement manufacturer in Sarawak, and has since expanded into various other businesses including trading in construction materials, construction and road maintenance, property development, education as well as financial services. The Group is currently a major private-sector player in Sarawak and the sole cement and clinker manufacturer in the State.
Sacofa was incorporated in Malaysia on July 11, 2001 by the government of Sarawak as the State’s quasi-telecommunications infrastructure arm to facilitate the development and expansion of the State’s telecommunication network infrastructure.
The Company holds a 20-year concession to construct, own and manage telecommunication towers and infrastructure in Sarawak.