Boustead to raise RM1.3b from rights issue, asset sale

Boustead to raise RM1.3b from rights issue, asset sale

Tags: BH Insurance (M) Bhd | Boustead Holdings Bhd | Boustead Naval Shipyard | expansion | Plantation land | rights issue | Tan Sri Lodin Wok Kamarudin

Written by Joy Lee
Thursday, 30 July 2009 11:05

KUALA LUMPUR: BOUSTEAD HOLDINGS BHD [ BSTEAD 3.960 0.020 (0.508%) ] plans to divest its non-core businesses by year-end, which along with proceeds from its rights issue, will raise some RM1.3 billion to pare borrowings and to fund expansion.

The firm is in talks with several Indonesian parties to sell off its PLANTATION [ PLANTATION 5,793.760 27.410 (0.475%) ] land in Sumatra, Indonesia measuring 17,000ha, of which about 9,000ha are planted with mature trees.

“We want to rationalise our operations and focus on key areas. Indonesia presents some problems in terms of yield and logistics and we want to focus our plantation activities in Sarawak and Sabah. “We are also looking to sell our 80% stake in BH Insurance (M) Bhd,” managing director Tan Sri Lodin Wok Kamarudin said after the company’s EGM yesterday.

He added that the company hoped to conclude both disposals by year-end. The divestments would bring in some RM500 million to RM600 million.

Boustead yesterday received shareholders’ approval for the rights issue of 260.41 million shares at RM2.80 each to raise up to RM729 million. The issue is on the basis of two shares for every five existing shares held.

“Based on the feedback from shareholders, we are confident the exercise will do very well. This will provide us with fresh funds for new acquisitions when the opportunity comes,” he said.

The funds would be used to trim borrowings, which would result in about RM24 million in interest savings. According to its circular, RM300 million to RM400 million from the proceeds will be used to reduce borrowings, which stood at RM3.6 billion as at March 31, 2009.

Lodin said with the rights issue and the divestment, the company’s gearing would be reduced to between 0.6 and 0.7 times from 1.2 times currently.

The company would also be expanding its property development and shipbuilding businesses, he said, adding that it was going through several proposals for land acquisition, including one or two possible acquisitions in the Klang Valley.

Currently, its landbank consists of over 323.75ha in Johor, 16ha in Mutiara Damansara and about 1ha in Jalan Ampang, Kuala Lumpur.

As for its shipyard business, Lodin said it would deliver the remaining three offshore patrol vessels (OPVs) ordered by the government early next year. “We hope to get more contracts from the government as we have the capacity to take on new jobs once the current orders are completed.”

Its subsidiary, Boustead Naval Shipyard, has the rights to build a total of 27 OPVs for the government.


This article appeared in The Edge Financial Daily, July 30, 2009.
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