CCM garners interest for private placement

KUALA LUMPUR: Chemical Company of Malaysia Bhd (CCM), which has received shareholders’ approval for its proposed placement of 10% of its share capital to raise RM60.1 million, is in talks with 14 institutional investors from Malaysia and Singapore for its book-building exercise.
CCM group managing director Leonard Ariff Abdul Shatar said it is unclear if existing shareholder Permodalan Nasional Bhd (PNB) will participate in the placement exercise at this stage but noted that it has approached PNB during its roadshow.
“The book-building will begin soon and initial indications seem to be a lot of interest in the book-building exercise.
We’ve approached only the institutions and Maybank Investment Bank approached the sophisticated investors,” he told a press conference after its EGM today, where shareholders also approved its proposed distribution and proposed share consolidation exercises.
Leonard believes that the private placement will be fully subscribed based on response from the funds so far.
The demerger exercise of CCM Duopharma from CCM and the degearing exercise at CCM’s level, will see CCM’s chemicals and polymers business overtaking its pharmaceutical business in terms of profit.
“Most people think that the pharmaceutical (business) is sexier, but chemicals and polymers are pretty sexy as well. Shareholders think that we’re demerging the most profitable part of our operations but in actual fact, chemical and polymers are more profitable,” Leonard said.
He said CCM will become a small capitalisation company but its profitability will still be strong. It is seeing the impact of a more focused approach to CCM when it discounts the pharmaceutical business.
“What is left in CCM is two profitable businesses, chemicals and polymers that supply into the growing water treatment and rubber glove industries in Malaysia.
“We believe that shareholders holding the two shares (CCM and CCM Duopharma) separately will be more valuable to them than holding on a consolidated basis. We want to make sure chemicals and polymers have the right amount of investments and they aren’t competing for investment dollars with pharmaceuticals,” said Leonard.
CCM plans to pare down its gearing to 0.7 times by end of 2018, from 1.51 times expected in this year, by selling its other assets, including its land in Nilai and disposing its shares in Korea-listed PanGen Biotech.