CCM demerger from Duopharma unit to enhance capital structure

KUALA LUMPUR: Chemical Company of Malaysia Bhd (CCM) expects to reduce its debt to about RM100 million from the current RM440 million following its corporate exercise announcement to Bursa Malaysia yesterday.

The exercise includes the sale of its Shah Alam land for RM190 million, identifying non-core assets to be disposed, as well as the private placement of up to 10 per cent of its pharmaceutical unit, Duopharma Biotech Bhd's (CCMD) shares.

Meanwhile, CCM group managing director Leonard Ariff Abdul Shatar said the group's debt level currently stood at around RM440 million, of which RM400 million were long-term borrowings, and the rest were working capital.

“Following the corporate exercise, we can reduce our annual interest by one fourth, which amounts to RM21 million.

“We can also reduce our gearing to 0.6 times from the current 0.7 times,” he told a media briefing yesterday.

On the de-merging of CCMD via distribution in specie, Leonard Ariff said the exercise would allow CCM's shareholders to receive dividends in the form of CCMD's shares, worth around RM400 million, by year-end.

“Since we are reducing CCM's capital, we are proposing that every three CCM shares become one.

“This would allow CCM shareholders to receive CCMD shares as dividends at the end of the year,” he said.

Following the de-merger exercise, which is expected to be completed by year-end, CCM's major shareholder, Permodalan Nasional Bhd's equity in CCMD would increase to more than 50 per cent from the current four per cent.