PETALING JAYA: UEM EDGENTA Bhd plans to utilise majority of its proceeds to repay borrowings following the nod from its shareholders to dispose its 61.2 per cent stake in Opus International Consultants Limited (OIC) to WSP Global Inc.
The stake sale in the New Zealand-listed subsidiary would involve gross proceeds of RM528.6 million for the 61.2 per cent stake or NZD1.92 (about RM5.84) per OIC share and with an estimated gain of about RM292.3 million on a consolidated basis.
Its chief executive officer Datuk Azmir Merican said the disposal would enable the company to strengthen its balance sheet and embark on the next phase of growth.
About RM415.2 million from the total proceed would be used to repay debt within six months, which allows to reduce UEM Edgenta's gross gearing significantly to 0.38 times from 0.79 times.
The company's total outstanding borrowings is at RM1.2 billion. Meanwhile, net gearing would also be reduced to 0.25 times.
While noting the disposal, which is expected to be completed by end of 2017, Azmir said the company will no longer be exposed to OIC's overseas operations, particularly in Canada and Australia.
He noted that for the past two years OIC has been hit by soft economies and slow down in the oil and gas industry.
“The disposal also represents an opportunity for us to unlock the value of our equity interest in OIC,” he added.
He said the company would allocate general purposes and working capital worth of RM110 million within 24 months and estimated expenses for the disposal worth of RM3.4 million within on month.
"Following the disposal of OIC, our main focus is to streamline operations, drive organic growth and re-locate our resources into three core sectors - infrastructure,healthcare and real estate," he told reporters after the company's extraordinary general meeting in Petaling Jaya, today.
UEM Edgenta's main revenue contributions are derived from the infrastructure (50 per cent), healthcare (35 per cent) and real estate (15 per cent).
"We are on the lookout to have sustainable long-term business play-field. We want to improve our core sectors offerings for both domestic and international, which would result in better yields," he added.
Azmir said the company is confident of having the right plans for the reinvestment in the right spaces going forward.
"We aim to further improve our performance delivery by driving operational and organisational excellence, implement enterprise resource planning to enhance our back-end support system and integration of processes, while continue to adopt and implement various technology enablers," he said.