UMW proposes rights issue of up to RM1.1bil

Company to raise up to RM1.1bil for MBM takeover, Perodua stake increase

PETALING JAYA: UMW Holdings Bhd has proposed to undertake a renounceable rights issue to raise up to RM1.1bil to finance its proposed takeover of MBM Resources Bhd and an additional stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

In its filings with Bursa Malaysia, UMW said the entitlement basis for the proposed rights issue and the issue price for the rights shares would only be fixed at a later date.

It said the exercise was intended to raise gross proceeds of up to RM1.1bil as the necessary funds primarily to repay a bridging facility to finance both the acquisition of a 50.07% stake in MBM, and the resultant mandatory takeover offer for all the remaining MBM shares not already owned by UMW.

“The maximum quantum of gross proceeds to be raised has been determined after taking into consideration the MBM purchase price, funding for the proposed mandatory takeover assuming full acceptance of the proposed offer in the form of cash consideration, working capital requirements of the enlarged UMW group of companies after the completion of the proposed MBM acquisition and the proposed Perodua acquisition, and the estimated expenses relating to the proposals,” UMW said.

“The cash portion of the proposed Perodua acquisition amount- ing to RM117.5mil will be funded via internally generated funds,” it added.

On March 9, UMW offered to buy all the ordinary shares in MBM held by Med-Bumikar Mara Sdn Bhd and Central Shore Sdn Bhd, a wholly owned subsidiary of Med-Bumikar, collectively representing a 50.07% interest in MBM, for RM501mil or RM2.56 apiece.

Currently, MBM holds a 22.58% effective equity interest in Perodua.

If UMW’s proposal is accepted, then its shareholding will rise from nil to 50.07% in MBM, and UMW will be obliged to extend a mandatory general offer for the rest of MBM’s minority shareholders.

Separately, UMW has proposed to acquire 14 million additional ordinary shares, or 10%, in Perodua held by PNB Equity Resource Corp Sdn Bhd (PERC), at a price of RM417.5mil, or RM29.80 apiece. PERC is the private equity investment arm of Permodalan Nasional Bhd.

The offer will be satisfied via the issuance of 49.26 million new UMW shares at an issue price of RM6.09 and RM117.5mil cash. Cumulatively, as a result of both the acquisition proposals, UMW’s interest in Perodua will increase to 70.6%.

Both acquisitions are not conditional upon each other and the offer period remains open until March 28.