Kulim has entered into a share sale agreement with Wilmar’s unit PGEO Group to dispose of its entire 91.38 per cent stake in Natural Oleochemicals.

Kulim (Malaysia) Bhd (2003) will sell its entire stake in its oleochemical products manufacturing unit to Singapore’s Wilmar International Ltd for RM450 million.

Kulim told Bursa Malaysia that it entered into a share sale agreement yesterday with Wilmar’s unit PGEO Group Sdn Bhd to dispose of its entire 91.38 per cent stake, or 186.6 million shares, in Natural Oleochemicals Sdn Bhd (NatOleo).

The remaining 8.62 per cent stake in NatOleo is held by National Land Finance Co-operative Society Ltd.

The principal activities of NatOleo are the manufacture and export of oleochemical products such as fatty acids, its fractions and glycerine.

Meanwhile, its subsidiaries manufacture soap noodles, palm wax as a feedstock for manufacturing of candles and process esters.

For its financial year ended December 31 2009, NatOleo posted a net loss of RM22.97 million against a revenue of RM1.104 billion.

Kulim said the proposed disposal gives it an exit strategy to unlock its investment value in NatOleo.

“It allows us to focus more attention on the more profitable businesses like oil palm plantation operations and quick service restaurants,” the company said.

Kulim plans to fully utilise the proceeds from the disposal by the end of next year for future investment and working capital purposes.

It is expected to record a gain of RM168.3 million from the disposal, which is a gain of 54 sen per share based on the pro forma effects of the disposal.

A restriction placed on Kulim and its affiliates under this deal is that neither of the units can enter an agreement or own any oleochemicals company or companies engaged in any business currently run by the NatOleo group.

Source: Business Times