Shares of MMC Corp Bhd surged as the new trading session opened this morning when it rose 30% to RM1.69, thus recording its highest level since March 2018.
The increase was driven by the announcement by tycoon Tan Sri Syed Mokhtar Albukhary who offered to make the company a private company through the selective capital reduction (SCR) method at RM2.94 billion or RM2 per share per ordinary share as well as repayment measures.
In a statement to Bursa Malaysia yesterday, MMC explained that it had received a letter from Seaport Terminal (Johore) Sdn Bhd (STJSB) asking it to implement SCR and refund measures based on Section 116 of the Companies Act 2016.
Bernama reported that STJSB holds a 51.76% stake or 1.58 billion shares in MMC.
MMC added, the proposal includes SCR and capital repayment corresponding to the proposed cash amount of RM2 for each ordinary share in MMC held by all MMC shareholders other than STJSB and those with the same purpose whose names are listed in MMC's Record of Depositors so far closure of business on a qualifying date to be determined and announced later by the board of directors.
MMC also included the letter in an announcement it made to Bursa Malaysia yesterday.
The SCR offer letter from STJSB dated June 3 explained that Syed Mokhtar was the sole holder of the equity interest in STJSB indirectly through Indra Cita Sdn Bhd.
The offer is for the remaining 1.46 billion shares or 48.24% interest not owned by STJSB.
Therefore, the firm will have to pay RM2.94 billion or RM2 per share for the purpose.
The offer letter also informed that after the approval and successful implementation of the SCR proposal, MMC's share capital will be reduced by RM2.93 billion through the cancellation of MMC shares worth RM1.46 billion held by shareholders entitled to the SCR offer price.
The letter further clarified, however, that as the capital reduction from the proposed SCR was higher than MMC's existing issued share capital of RM2.34 billion comprising 3.04 billion ordinary shares, to facilitate the transaction, a bonus issue was proposed by MMC.
The move was made with the aim of increasing MMC's share capital to a level sufficient to implement the proposed SCR.
STJSB will continue to hold the remaining 1.58 billion MMC shares which is the total of MMC's issued share capital and this will make MMC a wholly -owned subsidiary of STJSB upon completion of the proposed SCR.
In the letter, STJSB also explained that it did not intend to maintain MMC's listing on the Main Market, Bursa Securities and asked MMC to submit an application for delisting as well as remove the listing status from the Official List of Bursa Securities when the proposal is completed.
The rationale for the SCR proposal is that the move will provide great flexibility to MMC in managing and developing its existing business as well as exploring opportunities without regulatory constraints and compliance aspects related to its listing status.
According to the letter, this is because the method is considered appropriate to enhance MMC Group’s resource utilization, prospects, and future growth to remain competitive.
