IJM needs bond nod to be Scomi's largest shareholder

The proposed RM110 million bond issuance to IJM Corp will have to be approved by the shareholders of Scomi Group first before it can be issued to the construction group, a market observer said.

The proposed bond issuance is part of the corporate restructuring exercise undertaken by Scomi Group, which will see IJM Corp emerging as the single largest shareholder in Scomi, with 25 per cent stake.

IJM Corp currently has nine per cent of Scomi's outstanding shares after it subscribed to a private placement for RM33 million.

To recap, IJM Corp has bought and paid for just under a 10 per cent stake in Scomi Group.

As part of the deal, IJM Corp is to secure an additional 15 per cent by subscribing to RM110 million worth of debt papers to be issued by Scomi Group.

The debt papers can then be converted into shares. A vote by a simple majority of Scomi Group shareholders, excluding IJM's block, is needed for the additional 15 per cent, via the debt papers, to be issued to IJM Corp.

As part of the deal involving IJM Corp acquiring an initial nine per cent in Scomi Group in September, the two parties agreed that Scomi Group will issue an additional RM110 million worth of debt papers to IJM Corp, which can be converted into another 15 per cent of equity in Scomi Group.

"This will put IJM Corp firmly in control of Scomi Group," he told Bernama. The Securities Commission had, via its letter dated Dec 13, 2012, approved the proposed bonds issue.

The observer said Scomi Group Chief Executive Officer Shah Hakim Zain and his related party have emerged as the owners of significant blocks of shares in the group and will have a strong say in the coming extraordinary general meeting. Shah Hakim Group now has 51 per cent of the voting rights to push through the proposed issuance of RM110 million redeemable convertible secured bonds to IJM Corp. Shah Hakim and IJM Corp together owned 15.5 per cent of Scomi's share base. However, IJM Corp is not entitled to vote in the coming extraordinary general meeting as it is an interested party to the deal, he added. Scomi Group has not announced when the meeting will be held.