Kuchai Development-Sg Bagan deal revised downwards to RM267.78 mil on Semenyih land exclusion

• The exclusion was due to the state authority’s rejection of the land transfer from Kuchai to Sungei Bagan.

KUALA LUMPUR (Oct 3): The total sum for the proposed disposal of Kuchai Development Bhd’s (KL:KUCHAI) assets and liabilities to Sungei Bagan Rubber Company (M) Bhd (KL:SBAGAN) has been revised lower following the exclusion of an agricultural land parcel in Semenyih, Selangor.

The exclusion was due to the state authority’s rejection of the land transfer from Kuchai to Sungei Bagan.

As a result, the disposal sum has been adjusted to RM267.78 million from RM275.47 million, while the number of consideration shares to be issued has also been reduced to 26.75 million from 27.52 million.

Kuchai’s direct equity interest in Sungei Bagan will increase from nil to 28.79% after receiving the consideration shares, slightly lower than the previously reported 29.37%.

Upon completion of the exercise, the combined shareholding of Kuchai and its persons acting in concert in Sungei Bagan is expected to be 61.87%, against 62.18% reported previously.

Aside from the Semenyih land, Kuchai’s assets that will be sold to Sungei Bagan include a freehold commercial property on Emerald Hill Road in Singapore, Singapore dollar bonds, US dollar redeemable preference shares, equity instruments on the Singapore Stock Exchange, and other receivables.

The most valuable asset in Kuchai’s portfolio is a block of 3.032 million shares in Singapore-listed Great Eastern Holdings Ltd (SGX:F34), the largest and oldest life insurance company in Singapore and Malaysia.

With all other conditions either fulfilled or deemed fulfilled, the share purchase agreement (SPA) became unconditional on Thursday. Among the conditions precedent in the SPA are that both Kuchai and Sungei Bagan have to obtain the approval of their shareholders, and Sungei Bagan has to be satisfied with the results of Kuchai's due diligence. Kuchai also has to obtain all necessary consent and approvals for the disposal of the assets and liabilities, including from governmental authorities, financial institutions and relevant third parties as required by contractual agreements or deemed necessary by Sungei Bagan.

The exercise, announced last December, is part of efforts to consolidate the assets of the two sister companies linked to Kluang Rubber Company (M) Bhd (KL:KLUANG).

At Thursday’s closing bell, shares of Kuchai rose two sen or 1.02% at RM1.98, giving it a market capitalisation of RM242.5 million. Sungei Bagan was up five sen or 0.85% at RM5.91, translating into a market capitalisation of RM387.8 million.

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