Case study

The Leveraged Buy-Out of ICI Malaysia

by Professor Ian H. Giddy
New York University

On July 7, 1994 discussions were initiated for the proposed sale of 50.1% equity interest in CCM by ICI (Malaysia) to three executive directors of CCM for RM 206.00 million. 

On November 18, 1994 the management buy-out was completed. 

The buy-out was financed primarily by bank loans that served as bridge financing. The bridge financing was repaid out of the proceeds of divestitures of non-core businesses, and from a RM 150 million bond issue in 1995.

Background 

The Company (CCM) was incorporated to manufacture chlor-alkali products and high grade compound fertilizers. A restructuring of the Company was substantially and successfully completed in June 1987, resulting in the Company becoming an investment holding and management company with its subsidiaries engaged in the manufacture and marketing of agrochemicals, fertilizers, chlor-alkali products and paints, and in the marketing of a wide range of industrial chemicals and pharmaceuticals.

At the end of September 1994, the Company had divested its entire paints business and the three executive directors of the Company entered into an agreement with the then majority shareholder, ICI (Malaysia) Holdings for a Management Buy-Out. In 1995, the Company ventured into the pharmaceutical business in a big way via the acquisitions of the UPHA group of companies and CCM Pharma. It has since succeeded in forming JVs with overseas partners to set up and operate healthcare facilities and set up retail pharmaceutical outlets in the country.

In 1997, the Company disposed of a 9% stake in CCM Bioscience Bhd in conjunction with the offer for sale and public listing of that company on the Second Board of KLSE. The Company now holds a 42.9% interest in CCM Bioscience.

The Company has also ventured into the hospital business with the construction of two hospitals, one in Shah Alam and the other in Seremban. 

<>Principal Activities  Company - management and investment holding. Subsidiaries -manufacture and marketing of agrochemicals, fertilizers, chlor-alkali products, pharmaceutical and healthcare products; marketing of a wide range of industrial chemicals; operating healthcare facilities.

Financial Results

09 August 1999

Unaudited half year results
RM’million

 

Grp

30/6/99
30/6/98
Turnover
267.3
250.7
Profit B/tax
37.5
32.4
Profit after tax & MI
31.7
21.0
EPS 
17.8
11.8

All businesses are expected to perform at current levels.

The Board of Directors of the Company has declared a tax exempt dividend of 6 sen per share.

Announcements

22 September 1999

Shares buy-back on 22/9/1999
 
Total number of shares purchased 
6,000
Highest price paid per share
RM4.90
Lowest price paid per share
RM4.82
Number of shares purchased retained in treasury
6,000
Cumulative net outstanding treasury shares as at to-date
880,000

21 September 1999

Shares buy-back on 21/9/1999
 
Total number of shares purchased  9,000
Highest price paid per share RM4.90
Lowest price paid per share RM4.88
Total amount paid RM44,019.99
Number of shares purchased retained in treasury 9,000

17 September 1999

Shares buy-back on 17/9/99 
 
Total number of shares purchased 
13,000
Highest price paid per share
RM4.90 
Lowest price paid per share
RM4.78
Total amount
RM62,900.50
Adjusted issued capital after cancellation
179,129,382

The shares purchased will be retained as treasury shares.

15 September 1999

Shares buy-back on 15/9/1999 
 
Total number of shares purchased  6,000
Highest price paid per share RM4.90
Lowest price paid per share RM4.82
Total amount paid for shares purchased  RM29,260.20
Shares retained in treasury (units) 6,000

14 September 1999

Shares buy-back on 14/9/99 
 
Total number of shares purchased 
8,000
Highest price paid per share
RM4.92
Lowest price paid per share
RM4.86
Total amount paid for shares purchased
RM39,160.00

The shares purchased will be retained as treasury shares.

Shares buy-back on 13/9/1999 
 
Total number of shares purchased 
4,000
Highest price paid per share
RM4.94
Lowest price paid per share
RM4.92
Total amount paid for shares purchased
RM19,700.00

The shares purchased will be retained as treasury shares.

 Articles in the press:

                               FROM FERTILISER PRODUCER TO INVESTMENT FIRM
                               Business Times (Malaysia), 30-Apr-1998 277 words. 
                               CHEMICAL Company of Malaysia Bhd (CCM) was originally a
                               manufacturer of granular compound fertilisers, chlorine and
                               chlor-alkali products, herbicide "Gramoxone" and animal feed
                               suppplement, "Tasmix". In 1994, the company underwent a
                               management buyout, where the then majority shareholder, ICI
                               (Malaysia) Holdings Sdn Bhd, sold 50.1 per cent of CCM to
                               two companies - Tekun Sepadu Sdn Bhd and Lanjut Padu
                               Sdn Bhd - controlled by three CCM executive directors
                               namely Lim Say Chong, Oh Kim Sun and ...

                               BUSINESS TIMES (MALAYSIA): FIRM LISTED ON KLSE IN
                               1997
                               Business Times (Malaysia), 09-Jul-1999 257 words. 
                               CCM Bioscience Bhd (CCMB) was incorporated on December
                               24 1965 as ICI Chemical Distributors (M) Ltd, and has
                               remained dormant until a restructuring scheme. Under the
                               restructuring scheme, Chemical Co of Malaysia Bhd (CCM)
                               transferred its agrochemical division to CCMB and the name
                               ICI Agrochemical (Malaysia) Sdn Bhd was adopted in 1987.
                               ICI, through ICI Malaysia Sdn Bhd and subsequently through
                               ICI (Malaysia) Holdings Sdn Bhd, held 50.1 per cent interest
                               in CCM since CCM's incorporation in ...
 

                               CHEMICAL CO OF MALAYSIA BHD
                               Business Times (Malaysia), 10-May-1998 102 words. 
                               RATING Agency Malaysia (RAM) has reaffirmed the long-term
                               AAA rating of Chemical Co of Malaysia Bhd (CCM)'s RM150
                               million redeemable unsecured bonds. The reaffirmation
                               reflects the cash flow generating ability of the group's core
                               business and CCM's strong balance sheet, RAM said.
                               Abstracted from Business Times (Malaysia) in English. 
 
 


CCM Web Site
CCM Chronology



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