KUCHING: Press Metal Bhd (Press Metal) is selling its 20 per cent stake in Press Metal Bintulu Sdn Bhd (Press Metal Bintulu) to Summit Global Management XII.
B.V (SGM), a 70 per cent owned subsidiary of Sumitomo Corporation for US$140.049 million or equivalent to RM443.955 million. The company in a filing to Bursa Malaysia yesterday said the proposed disposal of its shares will provide an opportunity for the company to unlock the value of its investment in Press Metal Bintulu at a favourable valuation.
Press Metal said the disposal will result in estimated gains of RM341.693 million for the company.
The company added the proceeds raised from the proposed disposal will enable the group to partially repay short-term bank borrowings and to partially finance the mandatory early redemption of its 2011/2019 redeemable convertible secured loan stocks RCSLS, thus reducing the gearing level to better support its operations as well as potentially improve its debt rating.
Press Metal said upon completion of the corporate exercise, Sumitomo will become a substantial shareholder and strategic partner of Press Metal Bintulu.
The company believed that this will enable the group to realise synergies and partnership with Sumitomo Group, one of the world’s largest trading company and a major trader of primary aluminium metal in Japan and other Asian markets by capitalising on its international network and marketing expertise to enable Press Metal Bintulu to reach its full potential.
Additionally, Press Metal said based on Press Metal Bintulu’s existing manufacturing facilities, its production capacity comprised of 320,000 MT per year of aluminium ingots at its Samalaju smelting plant.
The company pointed out that 56 per cent of the revenue of Press Metal Bintulu for the financial year ended December 31, 2012 came from the European market with the remaining 44 per cent derived from the Asia market.
Furthermore, Press Metal said upon completion of the shares disposal, Press Metal will only be able to consolidate 80 per cent of the financial results of Press Metal Bintulu in future, thereby reducing its earnings contribution.
It said for the financial year ended December 2012, Press Metal Bintulu generated revenue of approximately RM127.86 million represented about 5.64 per cent of the total revenue of the group.
However, it said Press Metal Bintulu incurred a loss after tax of approximately RM1.58 million for the financial year ended December 2012.
Moreover, based on unaudited financial statements for the group and Press Metal Bintulu for the nine months ended September 2013, the company noted that Press Metal Bintulu generated revenue of approximately RM978.44 million, representing 42.28 per cent to Press Metal group.
Besides that, it said, Press Metal Bintulu has also contributed to Press Metal Bhd’s group profit after tax of approximately RM55.65 million for the nine months financial period ended September 30, 2013.
To recap, in December 2010, Sumitomo had acquired a 20 per cent equity interest in Press Metal Sarawak Sdn Bhd (Press Metal Sarawak), which operates an aluminium smelter located in Mukah, Sarawak.
The company noted that its aluminium smelter plant in Mukah,Sarawak has a production capacity of 115,000 metric tonne (MT) per year for the production of aluminium ingots and billets.
It said the remaining 80 per cent equity interest of Press Metal Sarawak is held by Press Metal Bhd.