This article first appeared in The Edge Financial Daily, on April 29, 2016.

KUALA LUMPUR: Can-One Bhd, whose total debts stood at RM542.6 million as at end of 2015, insists its financial position remains healthy,  but says it is open to options to pare down borrowings

“If you look at our net gearing [ratio], it’s less than one, so it’s actually not considered high borrowings,” group chief financial officer Khoo Kay Leong told reporters after the company’s annual general meeting yesterday.

“At the moment we are quite happy with it,” he said, when asked if the gearing is at a comfortable level.

The tin can manufacturer’s current net gearing level is 73.08% or a ratio of 0.73 times.

As at Dec 31, 2015, Can-One’s total debts stood at RM542.6 million, of which RM270.5 million were short-term borrowings. The company incurred interest expenses of RM20.99 million during the year, compared with an operating profit of RM76.8 million.

“The interest is about RM20 million per year [but] we are still healthy,” said Khoo, adding that the biggest chunk of the company’s borrowings of more than RM500 million occurred when the company bought into Kian Joo Can Factory Bhd. Can-One is the largest shareholder of Kian Joo with a 32.9% stake.

Khoo’s statement is contrary to the concern expressed by some market observers about Can-One’s debts. They feel the company needs to divest its stake in its wholly-owned dairy manufacturing company F&B Nutrition Sdn Bhd to pare down its borrowings.

Can-One earlier informed Bursa Malaysia that several parties, including Kumpulan Wang Persaraan (Diperbadankan) (KWAP), have expressed interest in F&B Nutrition, which manufactures sweetened creamers and condensed filled milk.

While Can-One said no formal offer has been received, KWAP has informed the media that the pension fund is in the final stage of acquiring a 30% stake in F&B Nutrition.

Can-One executive director cum chief operating officer Marc Yeoh said the company is not in a hurry to sell its stake and will only consider offers that come with a good price.

“KWAP has approached us and a few others are [also] interested. [But] nothing has been confirmed. Now things are just on inquiry. Nothing firmed up,” he said.

He declined to say how big a stake the company is willing to sell,  but ruled out disposing of its entire shareholding.

The news of KWAP buying F&B Nutrition came after the cancellation of Aspire Insight Sdn Bhd’s RM1.47 billion offer to buy out the aluminium can manufacturing business owned by Can-One’s associate company, Kian Joo.

Meanwhile, on the business outlook of Can-One, the company said it expects better profits in the year ending Dec 31, 2016, supported by stronger demand for its food products business.

“The demand for condensed milk and evaporated milk is stronger in the first and second quarters. We are positive on the second half [of the financial year],” said Can-One executive director Tan Beng Wah.

For FY16, he said the focus will be on the food products business, supported by the packaging business.

“We are optimistic of the outlook. The demand is there,” added Yeoh.