KUALA LUMPUR (Dec 29): Kuchai Development Bhd is injecting RM275 million worth of assets and liabilities into Sungei Bagan Rubber Co (M) Bhd in a share deal, as part of efforts to consolidate the assets of two sister companies linked to Kluang Rubber Company (M) Bhd (KRCB).

The deal will see Kuchai holding 29.37% in Sg Bagan in exchange for the asset injection, after which the shares will be distributed to Kuchai shareholders for them to have direct exposure to Sg Bagan.

This would be the second time Kuchai distributed its shares in Sg Bagan — it distributed its entire 26.51% stake in Sg Bagan to shareholders back in Sept 2022.

Kuchai is disposing of RM275.47 million in assets and liabilities to Sg Bagan, which will in turn issue 27.52 million shares at RM10.01 apiece, or 29.3% of its enlarged share capital.

The assets include freehold commercial property in Emerald Hill Road, Singapore; freehold agriculture land in Ulu Semenyih; Singapore dollar bonds and US dollar redeemable preference shares; and equity instruments in the Singapore Stock Exchange; as well as other receivables.

The Sg Bagan stake will be distributed to Kuchai shareholders via a proposed capital reduction and repayment, and dividend-in-specie at a date to be determined later.

The proposal is a related party transaction, as KRCB owns 42.2% in Kuchai and 43.5% in Sg Bagan.

The Sg Bagan share distribution by Kuchai will see it distributing a 13.98% stake in the plantation group to its minority shareholders.

The deal will allow entitled shareholders with an opportunity to participate in Sg Bagan’s prospects, being involved in the oil palm plantation sector, as well as long-term portfolio investment in securities, Kuchai said.

“The proposed disposal allows Kuchai and Sg Bagan to consolidate, synergise and merge their investments to Sg Bagan.

“Kuchai and Sg Bagan, both controlled by a common major shareholder, namely KRCB, invest in the same class of assets, i.e. equity instruments listed on the Singapore Stock Exchange, debt instruments (bonds and redeemable preference shares outside Malaysia) and investment properties,” it said.

The exercise will require approval of shareholders of Kuchai and Sg Bagan.

Shares of Kuchai closed down one sen 0.79% to RM1.25, giving it a market capitalisation of RM154.68 million.

Sg Bagan shares were not traded on Friday. It last closed at RM3.25, giving it a market capitalisation of RM215.58 million.