OMS, which is a wholly-owned subsidiary of Australian Securities Exchange and Bursa Malaysia-listed OM Holdings Ltd (OMH), owns the remaining 75 per cent stake in both OM Sarawak and OM Samalaju.
KUCHING (June 15): Analysts welcomed Cahya Mata Sarawak Bhd’s (CMS) disposal of its entire 25 per cent stake in OM Materials (Sarawak) Sdn Bhd and OM Materials (Samalaju) Sdn Bhd to OM Materials (S) Pte Ltd (OMS) for US$120 million (RM526.62 million).
According to its filing on Bursa Malaysia, a conditional share sale agreement (SSA) has been signed between CMS and OMS.
OMS, which is a wholly-owned subsidiary of Australian Securities Exchange and Bursa Malaysia-listed OM Holdings Ltd (OMH), owns the remaining 75 per cent stake in both OM Sarawak and OM Samalaju.
“Pursuant to the SSA, the disposal consideration includes a full and final settlement and full discharge of all shareholders’ loans, including interest, extended by SISB to (OM Sarawak and OM Samalaju) as of the closing date,” CMS said, noting that the total loans would amount to US$10.77 million (RM47.25 million) as at an assumed closing date of Nov 15, 2022.
Researchers with Maybank Investment Bank Bhd (Maybank IB Research) said this was an opportune exit for CMS in their view.
“We maintain our view that is an opportune exit for CMS amid the present commodity price rally, considering its non-controlling stake in a highly cyclical business,” the bank said in its analysis today.
Of the disposal proceeds, CMS said it has earmarked RM131.66 million for future acquisitions and investments, RM105.68 million for capital expenditure, RM263.31 million for working capital, and RM25.98 million for estimated expenses of the proposed disposal.
“Excluding OM Materials (Sarawak)’s earnings contribution, our FY23 net profit forecast for CMS would lower by 26 per cent,” it added.
OM Sarawak operates a ferrosilicon and manganese alloy smelter in Sarawak with an annual production capacity of about 200,000 to 210,000 tonnes of ferrosilicon and 250,000 to 300,000 tonnes of manganese alloy. It also has a design capacity to produce 250,000 tonnes of sinter ore per annum.
OM Samalaju is involved in project development and project management services, where it develops and manages selected capital projects for OM Sarawak.
Maybank IB Research believes that CMS’ balance sheet will strengthen to a net cash of RM633 million (proforma) from RM106 million as of March 31, 2022.