07 May 2012
Gas Malaysia Bhd IPO listing by second quarter of 2012, proceeds to pare down MMC Corp's borrowings from RM 3.3 billion as at December 2011 to RM 1.5 billion - Managing Director Datuk Hasni Harun
(MMCCORP closing stock price last week (4.5.2012) was RM 2.76)
MMC Corp Bhd could raise up to RM750 million from the initial public offering (IPO) of subsidiary Gas Malaysia Bhd, scheduled soon, analysts told the group.
MMC group managing director Datuk Hasni Harun in an interview with Business Times yesterday said the group will use theroceeds from the IPO to pay its debts and consequently further improve its capital structure.
With the amount expected to be raised, Gas Malaysia’s IPO will rank as one of the largest public share sales this year.
“The holding company’s borrowings are RM3.3 billion as at December 2011. We aim to pare down the borrowings to RM1.5 billion,” he said.
Based on the indicative offer price of RM2.20 disclosed in its extraordinary general meeting circular, Hasni said, Gas Malaysia’s market capitalisation upon listing is expected to be at RM2.825 billion.
“MMC is bullish on Gas Malaysia’s prospects as it is poised to deliver strong and sustainable performance driven by continued demand from industrial customers,” he said.
Gas Malaysia is the sole supplier of natural gas to the on-power sector and currently supplies energy to over 700 industrial, 13,352 residential and 528 commercial customers throughout Peninsular Malaysia.
Hasni said Gas Malaysia could be listed on Bursa Malaysia within the second quarter of this year.
“This is also dependent on the prospectus, which will be issued in the next few weeks and is subject to approval of registration by the Securities Commission (SC),” he said.
He said as a holding company and one of the major shareholders, MMC was committed to ensure that the listing went ahead as planned.
“The listing is taking longer to complete as Gas Malaysia needs to comply with certain SC conditions. In addition, the negotiation and finalisation of the new gas supply agreement
with Petronas took longer than expected and was finally signed on February 23,” he said.
"Gas Malaysia's strong and sustainable performance with zero-gearing track record will be an attractive factor for prospective investors," he said.
Based on the disclosure of Gas Malaysia's draft prospectus published on the SC's website on September 13 2011, Hasni said for the financial year ending December 31 2012, the company intends to propose a dividend payout ratio of 100 per cent of its profit after tax under the Malaysian Financial Reporting Standards.
"After that, it targets a dividend payout ratio of not less than 75 per cent of its profit after tax. Given the prospect of being a sound dividend-yielding stock, the proposed listing is expected to generate positive investor interest," he said.
Hasni said the shareholders of Gas Malaysia, which include Tokyo Gas-Mitsui & Co Holdings Sdn Bhd, Petronas Gas Bhd and MMC-Shapadu (Holdings) Sdn Bhd, will be undertaking an IPO of 333.84 million shares at an indicative price to be determined later.
Under the institutional offering of 303.315 million shares, he said 155.637 million shares will be allocated to institutional and selected investors and 147.678 million shares for Bumiputera institutional and selected investors approved by Ministry of International Trade and Industry.
Under the retail offering of 30.525 million shares, 25.68 million shares will be offered to Malaysian citi-zens, companies, cooperatives, societies and institutions, while the remaining balance of 4.845 million shares will be offered to eligible directors and employees of Gas Malaysia.
"Gas Malaysia enjoys monopoly in gas distribution to the non-power sector. It is a strong company with an excellent balance sheet and hence will be able to attract good response for the IPO," he said.
He also said this listing is part of a series of value creation exercises that MMC is undertaking and the group will continue to look at similar opportunities for other subsidiaries that meet the listing criteria.
"MMC is focused on strengthening business capabilities and further explore ways to unlock the value of our assets. We continuously review our investments and will undertake necessary steps to create value for our shareholders.
"As a start, we are looking at relisting our key subsidiary Malakoff, and probably Johor Port, on the local bourse," he said.