DRB-Hicom sells subsidiaries to Pos Malaysia

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PETALING JAYA: DRB-Hicom Bhd is selling its wholly owned subsidiary KL Airport Services Sdn Bhd to Pos Malaysia for RM749.35 million.

It also plans to dispose of an indirectly wholly owned subsidiary, Hicom Indungan Sdn Bhd, part of a freehold industrial land situated in Section 28, Shah Alam, Selangor, to Pos Malaysia for RM69 million.

It said this in a filing with Bursa Malaysia yesterday.

However, effectively the ownership does not change as tycoon Syed Mokhtar Albukhary owns a majority stake in both companies.

According to Star Online, these disposals were first announced on Dec 10 last year. The report said some shareholders were not happy at that time.

In a circular to shareholders DRB-Hicom said the disposals to Pos Malaysia would be satisfied via the issuance of 245.74 million new shares of 50 sen each in Pos Malaysia to Hicom Holdings at an issue price of RM3.33 per Pos Malaysia share.

These disposals represent a consolidation of Syed Mokhtar Albukhary’s land logistics businesses into Pos Malaysia.

Syed Mokhtar has a 55.92 per cent stake in DRB-Hicom. The company, in turn, owns a 32.21 per cent stake in Pos Malaysia, said the report.

Star Online said the proposed KLAS acquisition would allow Pos Malaysia and its subsidiaries to expand their services, while the proposed land acquisition is to be developed into a warehouse as part of the future integrated logistics value chain of Pos Malaysia.

Upon the completion of the proposed disposals, DRB-Hicom’s equity interest in Pos Malaysia will increase to 53.5 per cent, comprising its direct interest in Pos Malaysia and indirect equity interest via Hicom Holdings in Pos Malaysia of 22.1 per cent and 31.4 per cent, respectively.

For the fourth quarter to March 31, 2016, Pos Malaysia’s earnings dropped 38.68 per cent to RM14.35 million, while its revenue was up 9.63 per cent to RM433.64 million. The increase in revenue was mainly driven by strong growth in its international and courier business. The drop in profits was due to higher staff and transportation costs, said the report.