KUALA LUMPUR (Jan 4): Comintel Corp Bhd's proposed disposal of BCM Electronics Corp Sdn Bhd is fair and reasonable, and not detrimental to the interest of non-interested shareholders, said independent adviser KAF Investment Bank Bhd.

In a circular to the shareholders filed with Bursa Malaysia, KAF recommended that they vote in favour of the proposal at the extraordinary general meeting soon.

Last October, Comintel announced plans to hive off its electronics manufacturing services (EMS) unit BCM Electronics for RM123.8 million to a company partly owned by its executive director Loh Hock Chiang.

BCM Electronics provides turnkey manufacturing services and Comintel had said the sale would give the group an opportunity to unlock and realise the value of its investment in the unit.

The proposed disposal to Aurelius Holdings Sdn Bhd is expected to realise a one-off gain of about RM76.3 million, said Comintel.

The group explained that the decision to sell the unit was due to the highly competitive and specialised nature of the EMS industry where there is limited leverage to further raise the competitive edge of Comintel in EMS and EMS-related industries.

BCM Electronics is involved in printed circuit board assembly, sub-system assembly and box build manufacturing services to original equipment manufacturers of telecommunication equipment, network equipment, tracking and monitoring devices, power solutions and telemetric products.

KAF noted that the Kuang independent power production (IPP) would be fully commissioned with revenue generation in the fourth quarter for the financial year ending Jan 31, 2018 (FY18).

Comintel is also venturing into green waste management business and hopes to use part of the disposal proceeds to develop the unit and waste-to-energy business after being limited by financial resources previously.

As such, KAF noted that the proposed disposal is reasonable as it would help to kick-start the businesses.

However, it urged the shareholders to give due and careful regard to the risk factors of Comintel upon completion of the disposal as might be classified as a cash company and affected listed issuer.

"In such an event, the company is required to submit a regularisation plan within 12 months from the day it becomes a cash company or an affected listed issuer to Bursa Securities Malaysia Bhd.

"There is no assurance that the relevant authorities will approve the regularisation plan or that Comintel will be able to implement the plan within the timeframe stipulated by the relevant authorities.

"Failure to regularise its condition could result in its shares being suspended and the company being subsequently de-listed from the official list," KAF added.

Comintel's share price was up two sen or 2.7% at 76 sen in early afternoon trade, giving the group a market capitalisation of RM106.4 million.