Sime Darby reduces stake in E&O

PETALING JAYA: Sime Darby Bhd's wholly-owned subsidiary Sime Darby Nominees Sdn Bhd (SDN) is disposing 110 million ordinary stock units of RM1 each in Eastern & Oriental Bhd (E&O) to Morning Crest Sdn Bhd for RM319 million or RM2.90 per stock.
The 110 million stocks represent 9.9% equity interest in E&O, excluding treasury stocks. Morning Crest is a company substantially owned by Datuk Terry Tham Ka Hon, with 999 shares.
Tham, 61, is the managing director of E&O. He is also the managing director of E&O Property Development Bhd.
"The proposed disposal will further align the interests of Tham and key senior personnel with that of E&O. In addition, Sime Darby will make a return on investment of about 28% on its average cost of investment and a profit of RM56 million in the three years since its initial acquisition.
"Upon completion of the sale, Sime Darby's equity stake in E&O will be reduced to about 22% (excluding treasury stocks). However, Sime Darby will be able to continue to equity account for its proportionate shareholdings in E&O's earnings going forward," it said in a filing with Bursa Malaysia yesterday.
The disposal consideration was arrived at on a willing buyer-willing seller basis after taking into consideration the prevailing market stock price of E&O stock and SDN's average cost of investment of about RM2.27 per E&O stock.
The average cost of investment to Sime Darby of the sale securities is about RM250 million or RM2.27 per sale stock. The sale securities were acquired between 2011 and 2013. The carrying amount of the sale securities as at June 30, 2013 was about RM263 million or RM2.39 per E&O stock.
Sime Darby said the proceeds from the proposed disposal will be utilised for working capital purposes. The disposal is expected to be completed by the third quarter of this year.