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KUALA LUMPUR, May 9 (Bernama) -- SCGM Bhd has entered into a conditional share sale agreement (SSA) with Japanese companies Mitsui and Co and FP Corporation (FPCO) to dispose of its entire equity interest or 106.47 million shares held in Lee Soon Seng Plastic Industries (LSSPI) for RM544.38 million.
The plastic packaging solutions company said LSSPI is its sole subsidiary and represents the entire core business of the group, hence upon completion of the proposed disposal, SCGM will not have any core business, subsidiary or associated company.
In a filing to Bursa Malaysia today, SCGM said the proposed disposal entails Mitsui acquiring a 60 per cent of equity interest for RM326.63 million cash and FPCO acquiring the remaining 40 per cent of LSSPI for RM217.75 million.
SCGM managing director Datuk Seri Lee Hock Chai said the exercise is an opportunity for the company to unlock the value of its investment in LSSPI over the past 38 years.
“It also allows shareholders to partially realise their investments in the company in cash as SCGM intends to distribute part of the proceeds to all entitled shareholders.
“SCGM is expected to record a net gain of disposal of approximately RM393.69 million after accounting for estimated expenses for the proposed disposal,” he commented.
Meanwhile, LSSPI has also entered into a conditional sale and purchase agreement with SCGM for the transfer of three contiguous parcels of land with factory buildings and other ancillary buildings located in Kulai, Johor for RM18.80 million cash.
Out of the proceeds of RM544.38 million, SCGM has earmarked RM425.56 million for the proposed distribution to entitled shareholders within nine months, and RM18.80 million for the transfer of properties immediately upon completion of the proposed disposal to the purchasers.
Another RM84 million will be allocated for acquisition of new business/assets to be identified or working capital within 24 months and the balance of RM16 million to defray estimated expenses for the exercise.
The group said the proposed distribution entails capital reduction and repayment of 36 sen per share and proposed special dividend of RM1.85 per share.
Upon completion of the SSA, it noted the purchasers will pay the disposal consideration in cash in three tranches.
The first tranche of RM490.38 million will be paid to SCGM directly, while the second tranche of RM53 million will be placed with an escrow agent in an interest bearing account for the purpose of paying, satisfying or discharging liability of the company for a period of 12 months from the completion.
The third tranche of RM1 million will be placed in an interest bearing account with a licensed bank in Malaysia to be held or operated jointly by the purchasers and the vendor for the purpose of paying, satisfying or discharging liability of the company for a period of 36 months from the completion.
“The proposed disposal of LSSPI is subject to approvals by at least 75 per cent of total number of issued shares held by SCGM shareholders at an extraordinary general meeting to be convened, and any other relevant authorities and/or parties if required.
“The transfer of properties does not require approval by SCGM shareholders. Both exercises are expected to be completed by the third quarter of 2022,” it added.
SCGM shares were suspended for trading on the Main Market of Bursa Malaysia Securities with effect from 9.00 am today and will resume trading with effect from 9.00 am, Tuesday, May 10.
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