It will be sitting on a big pile of cash following the disposal of its 37.21% stake in UBG Bhd to PetroSaudi Intl Ltd for RM465 million.
As at Sept 30, 2010, CMS had RM415 million cash in its coffers, against RM485 million in total borrowings. With sale of the UBG stake completed in Sept 30, 2010, CMS could see its cash pile grow to as much as RM881 million in its next quarter results, translating into net cash of RM395 million or RM1.20 per share.
Talk is that CMS’ cashing of UBG is in time for fundraising for the anticipated 10th state election in Sarawak.
After all, Sarawak Chief Minister Ran Sri Taib and his family own more than 42% of CMS.
Hence speculation is rife that CMS may pay a generous special dividend to shareholders.
CMS is considered an election stock which sees a strong upside, in the months leading up to the Sarawak state election.
UBG held some stakes in Putrajaya Perdana and Loh & Loh.
According to reports, out of the RM465 million proceeds, CMS said it planned to use RM353 million to invest in projects in the SCORE. The remaining RM111 million would be used to repay PPES Works’ loans totaling RM88 million.
However, since March 2010, CMS has yet to announce the projects in SCORE that will utilise its cash proceeds from the disposal of the UBG stake. Its latest (Nov 2010) announcements said that it is still in negotiations with NAIM and Bintulu Development for the development of the Samalaju township and industrial park.
There has been much talk about the money being channeled into its smelter project and SCORE but management has not said anything since its announcement in early 2010.
As such it is not surprising that word is spreading in the market that part of the proceeds raised from the sale of UBG could possibly be used to pay dividends, ahead of the state election.
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