Wednesday, 4 May 2016
Tuesday, 3 May 2016
PETALING JAYA: If Sime Darby Bhd’s purported deal to sell majority interest in three of its Singapore properties to Blackstone Group goes through, the group would have achieved close to 50% of its RM1.8bil asset monetisation plan to pare down debt.
A report by Singapore’s The Business Times said that the conglomerate was planning a S$300mil (RM870mil) deal with the United States-based private equity fund for the three properties.
Earlier in February, Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh had said that the company was planning to raise RM1.8bil by selling or leasing back its assets in Singapore and Australia.
He said the company had identified 13 assets in Australia and three in Singapore for the planned asset monetisation.
Sime Darby is targeting to reduce its gearing level to 0.54 times by the end of the financial year ending June 30 (FY16) from 0.61 times as at end-2015 through asset monetisation and its RM3bil perpetual sukuk programme.
In its second quarter ended Dec 31, 2015, the group reported that its total borrowings stood at RM19.58bil.
Alliance DBS Research said if the deal were to go through, the most significant impact would be the resulting positive cash flow.
The research house said it would also result in the reduction of the company’s net debt-to-equity position, possibly below its forecast 0.4 times for end-FY16.
“While Sime has yet to divulge further details on this news piece, the details brought up indicate that there may yet be further talks on the other property assets it intends to spin off.
“The group could also opt for a full disposal vis-a-vis a stake divestment,” it said in a report.
Alliance DBS said the net book value for the three properties amounted to RM220.8mil, based on its annual report for FY15.
“Pending further development on the matter and details from management, we maintain our forecasts and rating,” it said.
The research house has a “hold” rating on the group.
According to the Singapore Business Times report, the latest deal to sell the Singaporean properties involves the Sime Darby Centre at 896 Dunearn Road, the Sime Darby Enterprise Centre, an industrial building along Jalan Kilang, and the Sime Darby Business Centre at 315 Alexandra Road.
It says Blackstone plans to buy 75% of the properties, and Sime Darby entities located there may lease back the space once the deal is completed.
It said the highest value would be for the Sime Darby Centre, which is an office and retail development on freehold and 999-year leasehold land parcels with an 1.8 plot ratio.
The other two properties sit on Business 1-zoned sites with 2.5 plot ratios, with a remaining lease of about 40 years.
The report added that these three properties, combined with another two properties owned by the company in Singapore, could be worth over S$500mil (RM1.5bil).
Sime Darby has been under pressure to reduce its gearing following the acquisition of debt-funded New Britain Palm Oil Ltd for RM6bil in March 2015.
The acquisition caused the group’s gearing ratio to balloon to 60% at the time.
The company raised over RM5bil cash from banks and topped up RM1bil from internal funds for the asset.
Later, in August last year, StarBiz reported that Sime Darby was looking at an RM6bil rights issue to raise funds.
However, the proposal reportedly did not have the blessings of Sime Darby’s controlling shareholder, Permodalan Nasional Bhd.
In March this year, Sime Darby issued RM2.2bil in Islamic debt papers at a final yield of 5.65%.
The plantation heavyweight issued the sukuk wakalah offering with a 10-year perpetual non-call tenure, which was oversubscribed by 1.8 times.
In early April, Standard & Poor’s Ratings Services (S&P) withdrew all of Sime Darby’s ratings upon the company’s request.
This was after S&P had lowered its long-term corporate credit rating on the conglomerate in February, downgrading it to BBB+ from A- with a negative outlook.
Moody’s Investors Service and Fitch Ratings had also previously downgraded Sime Darby’s debt ratings.