KUALA LUMPUR (May 3): Kulim (Malaysia) Bhd has received the greenlight from its shareholders for the delisting of the company from the Main Market of Bursa Malaysia.

In a statement, Kulim said 99.59% of its shareholders had at an extraordinary general meeting (EGM) today, voted in favour of Johor Corp’s proposed selective capital reduction and repayment exercise to facilitate the privatisation of the company.

The delisting exercise is expected to be completed by the third quarter of 2016.

“RM4.10 is a reasonable offer, providing Kulim shareholders the opportunity to realise their investment with a good return,” said Kulim chairman Datuk Kamaruzzaman Abu Kassim.

Over the past year, the counter has been trading between RM2.46 to RM3.49 prior to the offer.

“Moving forward, with a moderate economic growth rate as indicated by Bank Negara Malaysia, we are cognizant of the external factors that will continue to adversely impact our business performance, posing a challenge to the Group to maintain its growth momentum.

“As a public-listed entity, substantial capital required to grow both our existing and new businesses may potentially strain the cash flow position and could impair the group. This privatisation will give the group flexibility to decide and act as it recalibrates its business transformation,” said Kamaruzzaman.

He said the divestment of New Britain Palm Oil Ltd (NBPOL) had significantly decreased its hectarage of plantation landbanks, adding that NBPOL contributed to about 60% of the group’s revenue over the past two years.

“While the group had expanded into Indonesia plantations, it would take a long time before this operation is able to contribute to the group’s revenue, as the initial phase will incur additional capital expenditure and operating expenses in developing the landbanks,” he said.

He added that the outlook for Malaysian plantations remain challenging going forward, as margins declined to 11% in 2015, compared to 29% in 2011, in line with the fluctuations in global crude palm oil (CPO) prices.

Meanwhile, Kulim’s venture into the oil exploration business may take a while before turning into a major revenue contributor, amid the challenging oil and gas (O&G) industry.

Kulim rose 1 sen or 0.25% to close at RM3.97 today, giving it a market capitalisation of RM5.09 billion.