KUALA LUMPUR (June 14): Cahya Mata Sarawak Bhd (CMS) is disposing of its entire 25% stakes in OM Material (Sarawak) Sdn Bhd and OM Materials (Samalaju) Sdn Bhd to OM Materials (S) Pte Ltd (OMS) for US$120 million cash (RM526.62 million).

A conditional share sale agreement (SSA) has been signed between CMS and OMS, according to CMS’ filing with Bursa Malaysia.

OMS — a wholly-owned subsidiary of Australian Securities Exchange and Bursa Malaysia-listed OM Holdings Ltd (OMH) — owns the remaining 75% stakes in both OM Sarawak and OM Samalaju.

“Pursuant to the SSA, the disposal consideration includes a full and final settlement and full discharge of all shareholders’ loans, including interest, extended by SISB to [OM Sarawak and OM Samalaju] as of the closing date,” CMS said, noting that the total loans would amount to US$10.77 million (RM47.25 million) as at an assumed closing date of Nov 15, 2022.

Of the disposal proceeds, CMS said it has earmarked RM131.66 million for future acquisitions and investments, RM105.68 million for capital expenditure, RM263.31 million for working capital, and RM25.98 million for estimated expenses of the proposed disposal.  

According to CMS, OM Sarawak operates a ferrosilicon and manganese alloy smelter in Sarawak with an annual production capacity of about 200,000 to 210,000 tonnes of ferrosilicon and 250,000 to 300,000 tonnes of manganese alloy. It also has a design capacity to produce 250,000 tonnes of sinter ore per annum.

OM Samalaju is involved in project development and project management services, where it develops and manages selected capital projects for OM Sarawak.

Shares in CMS closed one sen or 0.93% lower at RM1.07 on Tuesday (June 14), giving the group a market capitalisation of RM1.15 billion.

Meanwhile, OMH shares finished nine sen or 3.56% down at RM2.44, giving it a market capitalisation of RM1.8 billion.