PETALING JAYA: Hong Leong Industries Bhd
(HLI) has entered into a conditional sales and purchase agreement yesterday to dispose of its entire issued and paid-up share capital in wholly-owned subsidiary Hume Cemboard Industries Sdn Bhd (HCB) to manufacturer Saint-Gobain (M) Sdn Bhd, for a cash consideration to be confirmed later.
In a filing with Bursa Malaysia yesterday, HLI said the selling price of the shares in HCB – which is principally involved in the manufacture and sale of fibre cement products – shall be an amount equal to the sum of the latter’s net asset value once all conditions precedent on the sale agreement have been fulfilled, plus a premium of RM20mil.
HLI has estimated the indicative selling price to be in the region of RM79.5mil, with the disposal process targeted to be completed by the second or third quarter of the fiscal year ending June 30, 2024.
Of interest is the condition that certain properties of HCB not be considered as part of the disposal, including two respective plants in Petaling Jaya and in Kanthan, Perak; as well as the land on which those plants sit.
Notably, HCB has to sell these “excluded assets” to other entities related to HLI.
Providing more illustrated transparency to the deal, HLI said based on the indicative purchase price of RM79.5mil, and assuming a Nov 30 completion date, the indicative net gain on disposal arising from the proposed disposal would be RM12.9mil.
“Based on 314.4 million HLI shares in issue as at June 30, 2022, the indicative consolidated earnings per share of the company is estimated to increase by 4.1 sen after the completion of the proposed disposal,” HLI said.
HLI reiterated that the aforementioned figures are indicative with no assurance they could be achieved.
Rationalising the disposal, HLI said in its announcement that the proposed disposal will enable the company to realise its investment in HCB and exit its non-core fibre cement board business.
“Upon completion of the proposed disposal, HLI will continue to be involved in the manufacturing, assembling and distribution of motorcycles, scooters and related parts and products.
HLI will also continue the manufacturing and sale of ceramic tiles; and distribution and trading of marine-related products,” it said.
The group added the proceeds will be placed with financial institutions pending identification of suitable investment opportunities and other expansion plans.
