Scomi Group shareholders to benefit from merger

Riding high: The Mumbai Monorail passing through a residential area in the city.

KUALA LUMPUR: Shareholders of Scomi Group Bhd will benefit from the corporate exercise involving a share consolidation based on ballpark figures from its corporate exercise involving the merger of its two subsidiaries and the issuance of free warrants. 

Simple back-of-the-envelope calculations show that Scomi investors are in the money from the exercise. 

This is assuming that investors bought into Scomi shares at its last traded price of 11.5 sen. Every two shares will be consolidated into one share. 

Therefore, every 10 consolidated shares (comprising of 20 original shares) works out to about RM2.30. 

The seven free warrants priced at a theoritical 11.3 sen each works out to a total of 79.1 sen per 10 consolidated shares.

Assuming that shareholders with the consolidated shares, the cost of each share would cost 7.5 sen each.  It is still substantially below the last traded price of 11.5 sen.

On Monday, Scomi Group has put forth a plan to merge its business with two listed subsidiaries — Scomi Energy Services Bhd (SESB) and  Scomi Engineering Bhd (SEB), via a share swap deal with free warrants.

Scomi Group currently holds 65.64% equity interest in SESB and a 72.33% stake in SEB.

The proposed exercise will involving a share consolidation of every two existing ordinary shares into one ordinary share, a bonus issue of seven warrants for every 10 consolidated shares held. 

The plan, the group said, would strengthen its balance sheet in the midst of a challenging business environment and facilitate its future business expansion.

For every five shares held by SESB shareholders, they will receive three new Scomi Group shares.

Additionally, one Scomi Group warrant will be issued for every nine new Scomi Group shares issued to SESB shareholders for a total consideration of RM107.84mil, implying an offer price of 13.4 sen per SESB share.

Meanwhile, for every seven shares held by SEB shareholders, they will receive 10 new Scomi Group shares.

Additionally, one Scomi Group warrant will be issued for every 10 new Scomi Group shares issued to SEB shareholders for a total consideration of RM29.93mil, implying an offer price of 31.6 sen per SEB share.

Trading of Scomi group of companies will resume at 2.30pm on Tuesday. Scomi was last traded at 11.5 sen with a market capitalisation of RM220.51mil.