Scomi Group to merge with engineering arm
KUALA LUMPUR: Scomi Engineering Bhd (SEB) will proceed with its merger exercise with parent company Scomi Group Bhd even without Scomi Energy Services Bhd (SESB), said SEB CEO Rohaida Ali Badaruddin.
At a court-convened meeting last Friday, SEB shareholders cast 93.52% votes in favour of the proposed merger after grilling board members for three hours. Scomi had secured shareholders’ approval for the merger last Thursday, with 99.27% of votes in favour.
The three-way merger was to see the consolidation of Scomi, SEB and SESB to become a single entity. However, SESB was taken out of the equation after their shareholders rejected the deal, leaving only SEB and Scomi to proceed with the merger.
Scomi said in a Bursa Malaysia filing that the group will not proceed with the implementation of the proposed merger with SESB.
Despite that, Rohaida told reporters that SEB was pleased with the outcome of the meeting, which would see SEB becoming a private entity upon completion of the process.
“So, for now, we will be focusing on going through with the (merger) process and we target to complete the process before the end of February this year,” she said, adding that the merged entity of Scomi and SEB could lead to cost savings of RM5 million annually.
Rohaida said the group will maintain its public transport business despite focusing on the renewable energy sector going forward.
SEB’s outstanding order book totals RM1.9 billion, of which 95% are overseas projects, she said. The projects will keep it busy for the next four to five years.
SEB, a 72.33%-owned subsidiary of Scomi, provides public transport systems and solutions, centred on rail and commercial vehicles. Meanwhile, SESB, in which Scomi owns a 65.65% stake, provides services to the oil and gas as well as coal industries.
To recap, Scomi planned to consolidate SEB and SESB into the group to create one listed entity, a key move to develop new growth areas in renewables and chemicals business.
It involved the acquisition by Scomi and the transfer of all SEB and SESB shares not already owned by Scomi at an offer price of 30 sen for each SEB share and 12.6 sen for each SESB share.
The proposed merger would enable the Scomi group to leverage on the combined financial resources and strengths to compete in and undertake future contracts in the transport and energy industries.
Scomi has been in the red for six consecutive quarters. For the second quarter ended Sept 30, 2017, the group’s net loss widened to RM26 million from RM21 million in the previous corresponding quarter.
SEB’s net loss widened from RM2.63 million to RM31.28 million for the sixmonth period ended Sept 30, 2017.
On Bursa Malaysia last Friday, SEB gained 2% to 25.5 sen with 2.74 million shares done, while Scomi shed 5.56% to 17 sen. SESB was up two sen to 15.5 sen, with 33.38 million shares traded.