KUALA LUMPUR (Aug 24): Sime Darby Bhd, which has launched a takeover bid for UMW Holdings Bhd, intends to pare down UMW's borrowings by selling its stake in Ramsay Sime Darby Health Care Sdn Bhd as well as a parcel of land in Labu, Seremban, said its group chief financial officer Mustamir Mohamad.
Speaking at the group’s media briefing, Mustamir said Sime Darby will absorb UMW's debts, plus perpetual sukuk totalling RM2.7 billion.
He noted that the group also plans to bring down UMW's current debt level, and this will be funded by proceeds from the disposal of its healthcare joint venture, in which Sime Darby holds a 50% stake.
“Certainly, in terms of funding, the plan is basically to fund [the takeover exercise] via borrowings for about 90% and the remaining 10% will be funded by...internal cash.
“In terms of bringing down [UMW's] debt position in the future, we have our Ramsay Hospital disposal. So the proceeds will help to bring down the debt, as well as the land [disposal] in Labu which is within the development area of Malaysia Vision Valley 2.0,” Mustamir explained.
As at June 30, Sime Darby's total debt stood at RM8.5 billion, with bank balances and cash totalling RM3.1 billion. It has net gearing of 0.31 times.
Sime Darby's share price rose one sen to close at RM2.11, with a market capitalisation of RM14.38 billion. UMW's shares were last traded at RM4.62. The stock has climbed 23% since the beginning of July.
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* An earlier version of this article has been edited regarding Sime Darby's absorption of UMW's debts for accuracy.