UMW shareholders to benefit from capital distribution of 138.4 million shares

Shah Alam, 28 February 2008: UMW today announced the proposed listing of its Oil and Gas Division on the Main Board of Bursa Malaysia Securities Berhad via a newly incorporated investment holding company, UMW Oil & Gas Berhad (“UMW O&G”), upon the completion of an internal restructuring.   This re-structuring involves the proposed acquisition by UMW O&G of selected oil and gas companies held by the UMW Group and other vendors and also a proposed renounceable rights issue.

UMW’s shareholders will benefit from a Capital Distribution exercise of 138,385,167 UMW O&G shares which will be distributed on the basis of one UMW O&G share for every eight existing ordinary shares of 50 sen each in UMW. 

Upon completion of the Internal Restructuring, UMW O&G proposes to undertake a public issue of 250 million new UMW O&G shares at an issue price to be determined later.  The enlarged issued and paid-up share capital of UMW O&G will be 1.2 billion shares, with an expected market capitalisation of more than RM1.5 billion.

UMW Group Managing Director & Chief Executive Officer, Dato’ Abdul Halim Harun said, “Our Proposed Public and Renounceable Rights Issues are expected to raise approximately RM425 million in gross proceeds which shall accrue entirely to UMW O&G.  The proceeds will be utilised for the settlement of inter-company balances, repayment of bank borrowings, working capital purposes as well as to defray the listing expenses.  From the total proceeds raised, UMW is expected to receive RM99.4 million arising from the settlement of the inter-company balances by the UMW O&G Group. ”

Most of the companies in UMW’s Oil & Gas Division are currently held under two of the Group’s wholly-owned subsidiaries, UMW Corporation Sdn Bhd and UMW Petropipe (L) Ltd.  The Oil and Division was established in 2002 to diversify the Group’s earnings reliance on motor related and industrial equipment activities. 

Dato’ Abdul Halim said, “Since its inception, our Oil and Gas Division has forged ahead with a number of exciting new ventures, and has become an important contributor to the UMW Group’s earnings.   Revenue from the Oil and Gas Division has experienced a robust growth, from RM42.1 million in 2004 to RM1.5 billion in 2006.”

He added, “The Proposed Listing is expected to raise the profile of UMW O&G in the oil and gas industry and hence, further strengthen its global position.  This will enhance UMW O&G’s reputation as a leading provider of supporting specialised products and services regionally and globally with its enhanced capabilities.  Moreover, the Proposed Listing is timely so as to provide direct access to the capital market for funds to finance UMW O&G’s future expansions and continued growth.”