KUALA LUMPUR (Dec 21): Automotive interior furnishing and components supplier SMIS Corp Bhd is selling a 35% stake in its Indonesian subsidiary PT Grand Surya Techno Tbk (PTGST), reducing its stake to 60%, to Japan-based Sugihara Co Ltd in a deal worth US$1.37 million (RM6.4 million).
SMIS said it has decided to sell the 35% stake to Sugihara as the latter intends to extend its relationship with SMIS and to have strategic participation in the operations of PTGST in Indonesia via the proposed disposal.
"The proposed disposal will create a synergy between the business of PTGST in the local market and the technical expertise from Sugihara, via a separate technical support agreement, to enable the further development and expansion of PTGST business operation in Indonesia," it added.
In a filing with Bursa Malaysia on Thursday, SMIS said it has entered into an agreement with Sugihara for the proposed disposal of 1.52 million shares, equivalent to a 35% stake, in PTGST. PTGST is principally engaged in manufacturing and selling of automotive floor carpet assembly, trunk trims and luggage mats.
SMIS added that it expects a net gain of RM192,841 from the proposed disposal, after taking into account the average investment cost of the 1.52 million shares of RM6.21 million.
It plans to use the proceeds from the transaction for working capital such as payment to trade and other creditors, salaries and other operating expenses.
SMIS currently holds a 95% equity interest in PTGST, while Sugihara owns 5%. Post-disposal, SMIS will hold 60% and Sugihara 40%. Sugihara currently also holds a direct stake of 40% in Sugihara Grand Industries Sdn Bhd, a subsidiary of SMIS.
"The proposed disposal is not expected to pose any risk factors which could materially and/or adversely affect the business operations and financial performance of SMIS," said SMIS.
The proposed disposal is subject to the approval from Indonesia's Ministry of Law and Human Rights. Barring any unforeseen circumstances, it is expected to be completed within 60 days.
SMIS shares closed unchanged at 83 sen on Thursday, giving it a market capitalisation of RM37.18 million.