Wah Seong ... Apr10

Troubled Italian pipe coating company Socotherm SpA has requested for a second round of bid submissions for its prospective buyers, including Wah Seong Corp Bhd, following the availability of additional information on its finances.

It is estimated that Wah Seong may be prepared to buy assets worth up to Rm500
million, without stretching its balance sheets. Its cash reserves stood at RM471 million as at Dec 2009.

Wah Song’s financial standing is healthy. It has manageable net debt and net gearing of RM280 million and 0.3 times respectively as at Dec 2009. Its total funding facilities are up to RM1.7 billion.

Other than the funds needed for the acquisition of Socotherm, Wah Seong will not need to continuously inject huge capital expenditure to sustain the business.

As the combined business of Wah Seong and Socotherm is expected to have significant pipe coating capacity, very little capital expenditure is expected in the near future. It needs to only ensure that there is sufficient working capital for the pipe coasting business of Scoctherm.