IJM entry into Scomi to get nod
Proposed bond issue likely to be passed at EGM
PETALING JAYA: Shareholders of Scomi Group Bhd, including factions that had previously opposed the entry of IJM Corp Bhd, are now ready to vote in favour of the construction giant becoming the former’s biggest shareholder, sources familiar with the situation said.
This means the proposed issuance of RM110mil worth of bonds to IJM, the sole item on the agenda for the EGM set for Jan 31, is likely to sail through, contrary to earlier reports that two opposing sides within Scomi were preparing to lock horns.
The bond issuance, when converted, would make IJM the single largest shareholder in Scomi with a 24.36% stake. IJM, which now has a 10% interest in Scomi, first emerged in the oilfield services provider last September when it subscribed to a private placement for 33 sen a share, or RM33mil.
Scomi was then in dire financial straits because RM200mil of its debt papers had been downgraded by Malaysian Rating Corp Bhd, after the delay of an asset sale in Nigeria that was supposed to have netted it RM57.6mil.
IJM will not be entitled to vote at the EGM because it is an interested party.
Maju Group executive chairman Tan Sri Abu Sahid Mohamed and his associate Datuk Phillip Siew Mun Chuang were believed to have initially opposed the entry of IJM, citing the dilution of their stakes should the latter convert its debt into equity.
They were also said to have the backing of Datuk Kamaluddin Abdullah, Scomi’s controlling shareholder and the son of former prime minister Tun Abdullah Ahmad Badawi. His partner, Scomi group CEO Shah Hakim Zain, was said to be aligned to IJM.
According to a circular to shareholders posted on the stock exchange on Wednesday, Scomi had received a RM118mil bridging loan which it used to settle in full its outstanding debt obligations in October last year.
“The proposed bonds issue together with the completed proposed placement will provide Scomi with a strategic partner in IJM.
“The entry of IJM as a substantial shareholder would enable Scomi to leverage on IJM’s expertise in civil engineering, which will complement the existing businesses of Scomi in executing projects, both locally and internationally.
“Given that IJM is an established player in the civil engineering industry with investments in infrastructure assets, both locally and internationally, the board of Scomi believes it will be able to tap into the experience of IJM in project management, in particular cost, quality and time management, and also to explore possible collaborations with IJM in the bidding for engineering, procurement or construction projects in the future,” Scomi said in the filing.
Bursa Malaysia and the Securities Commission have given their nod to the issuance of the new shares that would be converted from the bonds.
A simple majority of votes is needed to approve the issuance. If shareholders give it the green light, IJM has three years to convert its debt into shares.