MMC Corp to take Aliran Ihsan private for RM181m
MMC Corp Bhd has proposed to take its subsidiary, Aliran Ihsan Resources Bhd (AIRB), private through a selective capital reduction and repayment exercise with a payout of RM181.12 million or RM1.84 per share to shareholders.
The payout is a premium of about 10.2%, 10.8% and 15% to the five-day, one-month and three-month volume weighted average market price of AIRB shares including July 6 of RM1.67, RM1.66 and RM1.60 respectively, said MMC in a letter to AIRB published in an exchange filing yesterday.
The RM1.84 price also took into account of AIRB's price-to-earnings ratio of 11.6 times and price-to-book ratio of 1.4 times based on the audited earnings per share of the company and its subsidiaries for the financial year ended Dec 31, 2011, of 15.80 sen and the audited net assets of AIRB as at Dec 31,2011, of RM1.29.
Affin Investment Bank Bhd, in a research report yesterday on the privatisation, said the exercise should add an additional RM6 million to MMC's financial year 2012 (FY12) net profit (assuming a full year contribution) of RM349.3 million.
Affin Investment has maintained an "Add" call on MMC. It said the additional profits would suggest a potential 1.7% earnings enhancement to MMC's FY12 bottomline.
The investment bank estimates AIRB to contribute 6% to MMC's FY12 group net profit.
The exercise will result in the reduction of AIRB's paid-up capital to RM83.62 million from RM264.74 million currently, making AIRB a wholly-owned subsidiary of MMC.
As at July 9, MMC holds 166.3 million shares or 62.82% stake in AIRB.
MMC said given the near term expiry of AIRB's main concession/contract coupled with the low liquidity and trading volume of AIRB's shares, the proposal offers shareholders a reasonable exit value.
The proposal is conditional upon the approval from the Securities Commission, other shareholders, and confirmation from the High Court of Malaya on the capital reduction, consent of revelant creditors and lenders if required and other relevant authorities.
MMC said its nominated directors in AIRB and person connected with them will abstain from deliberation and voting on the proposal.