DRB-Hicom to gain RM735mil from Alam Flora stake sale

PETALING JAYA: DRB-Hicom Bhd is expected to make a gain of RM735.4mil from its proposed sale of Alam Flora Sdn Bhd (AFSB) to Malakoff Corp Bhd’s unit.

In its filings with Bursa Malaysia, the diversified conglomerate said its wholly owned subsidiary - Hicom Holdings Bhd - had entered into a conditional share sale agreement with Tunas Pancar Sdn Bhd to dispose of its entire 97.37% stake, or 74 million shares, in AFSB for RM944.6mil cash.

AFSB is principally involved in the provision of integrated solid waste collection and public cleansing management services.

“The proposed disposal provides an opportunity for the DRB-Hicom group to unlock the value and monetise its investment in AFSB group at an attractive price,” the company said.

“Based on the disposal consideration, the proposed disposal will give rise to an estimated net gain of RM735.4mil,” it added.

DRB-Hicom said part of the proceeds from the proposed disposal would be used to repay its borrowings. This, it said, would enable the company to preserve its internally generated funds.

The group added that the proposed disposal would allow DRBHicom to partly use the proceeds for its 50.1%-subsidiary, Proton Holdings Bhd, which is currently undergoing a turnaround programme.

“This turnaround programme is underpinned by a 10-year business plan which involves quality improvement, cost optimisation and new model launches.

“The proceeds, if required by Proton, will be mainly used to part-finance the development cost for new models expected to be incurred within the next 12 months,” it said.