CCM shares fall 6.5% on de-gearing, de-merger exercises

KUALA LUMPUR: Chemical Company of Malaysia Bhd's (CCM) de-gearing and de-merger exercises will result in a more nimble and efficient group, said group managing director Leonard Ariff Abdul Shatar.
However, CCM shares fell 11 sen or 6.5% to RM1.58 in the morning session today, with 1.16 million shares changing hands. Meanwhile, CCM Duopharma shares were unchanged at RM2.11 on some 56,500 shares done.
Yesterday, CCM announced that it proposes to distribute its entire 73.37% stake in CCM Duopharma to its shareholders, as part of its strategy to review the group's portfolio and strengthen its balance sheet.
For the de-gearing exercise, Leonard Ariff said the divestment of non-core assets and private placement will reduce the group's debt from RM440 million to about RM100 million, with a lower gearing of 0.6 times from 0.7 times.
"We are now paying about RM21 million per annum in interest cost to service these debts. Post exercise, the absolute value of the loan will shrink and the interest cost will be reduced to a quarter (of RM21 million)," he told reporters at a briefing today.
CCM's current debt comprises RM400 million of long term loans and RM40 million of working capital credit.
CCM's proposed land sale in Shah Alam will bring proceeds of RM190 million, while the private placement is expected to raise RM67.6 million based on an issue price of RM1.49 per share.