Announcement Details : 1. INTRODUCTION
On behalf of the Board of Directors of Tamco (“Board”), Aseambankers Malaysia Berhad (“Aseambankers”) wishes to announce that the Company proposes to distribute RM0.98 for every one (1) existing ordinary share of RM0.50 each in Tamco (“Tamco Share”) to its shareholders by way of the following:
(i) a proposed capital repayment to the shareholders of the Company of RM0.30 cash for every one (1) existing Tamco Share via a reduction of the share capital of Tamco (“Proposed Capital Repayment”) in accordance with Section 64 of the Companies Act, 1965 (“Act”); and
(ii) a special dividend payment of RM0.68 for every one (1) existing Tamco Share held (“Special Dividend”) comprising the following:
(a) Gross dividend of RM0.30 per Tamco Share less 26% income tax; and
(b) Single tier tax-exempt dividend of RM0.38 per Tamco Share.
To facilitate the implementation of the Proposed Capital Repayment, the Company is also proposing to amend its Memorandum of Association (“Proposed Amendment”).
The Proposed Capital Repayment and Proposed Amendment are collectively referred to as “the Proposals”.
2. DETAILS OF THE PROPOSED DISTRIBUTION
2.1 Proposed Capital Repayment
The Proposed Capital Repayment involves a capital repayment by Tamco by way of a cash distribution of RM0.30 for every one (1) existing Tamco Share held to entitled shareholders at a date to be determined later. The Proposed Capital Repayment is to be implemented by cancelling the par value of Tamco Shares by RM0.30 in accordance with Section 64 of the Act. Upon the completion of the Proposed Capital Repayment, the par value of the ordinary shares in the Company will be reduced from RM0.50 to RM0.20 each.
Following the Proposed Capital Repayment, the share capital of Tamco will be reduced by approximately RM77.846 million.
The amount of cash to be distributed to entitled shareholders under the Proposed Capital Repayment is approximately RM77.846 million based on the number of issued and paid-up share capital of Tamco as at 24 April 2008 of 259,487,720 Tamco Shares.
The Proposed Capital Repayment will be funded entirely by the net proceeds received from the disposal of the switchgear business of Tamco (“Disposal of the Switchgear Business”). The Disposal of the Switchgear Business was completed on 23 April 2008.
2.2 Special DividendThe Board has on 28 April 2008 approved a special dividend in respect of the financial year ending 31 May 2008 of RM0.68 per Tamco Share to the entitled shareholders of Tamco. The Special Dividend will be paid out of the Company’s retained profits via the net proceeds received from the Disposal of the Switchgear Business.
3. PROPOSED AMENDMENT
In order to facilitate the implementation of the Proposed Capital Repayment, it is proposed that amendment to the Memorandum of Association of the Company be made to reflect the change in the par value of the ordinary shares in the Company from RM0.50 to RM0.20 each pursuant to the Proposed Capital Repayment.
4. RATIONALE FOR THE SPECIAL DIVIDEND AND THE PROPOSALS The Special Dividend and Proposals are undertaken for the purpose of returning the proceeds received from the Disposal of the Switchgear Business to the shareholders of Tamco.
After taking into consideration the current financial standing, future financial obligations and operational requirements of Tamco, the Board is recommending to undertake the Proposals as part of the Company’s initiative to return capital in excess to its requirements as well as to reward the shareholders of Tamco for their continuous support for the Company.
5. EFFECTS OF THE PROPOSALS
The Proposed Amendment will not have any effect on the share capital, substantial shareholders’ shareholding and dividend of Tamco and net assets (“NA”) per share, gearing and earning per share (“EPS”) of the Company and its subsidiary companies (“Group”).
The effects of the Proposed Capital Repayment are as follows:
5.1 Issued and Paid-up Share Capital
The effects of the Proposed Capital Repayment on the issued and paid-up share capital of the Company are set out in Table 1.
5.2 NA Per Share and Gearing
The proforma effects of the Proposed Capital Repayment on the NA and gearing of the Group, based on the audited consolidated balance sheet of Tamco as at 31 May 2007 are set out in Table 2.
5.3 EPS
There will be no effect on the earnings of Tamco arising from the Proposed Capital Repayment for the financial year ending 31 May 2008 as the Proposed Capital Repayment is expected to be completed by the last quarter of 2008. However the future earnings of the Group will be reduced due to the distribution of the proceeds from the Disposal of the Switchgear Business via the Special Dividend and Proposed Capital Repayment.
5.4 Substantial Shareholders’ Shareholdings The Proposed Capital Repayment will not have any effect on the percentage of shareholdings of the substantial shareholders of Tamco as the reduction of Tamco’s share capital will be effected via a proportionate reduction of the par value of all ordinary shares of Tamco from RM0.50 each to RM0.20 each.
The Company had paid an interim dividend of RM0.015 per Tamco Share less 26% income tax on 8 January 2008.
The level of dividend to be declared for current and future financial years, if any, will be determined by the Board after taking into account, inter alia, the performance of the Group, cashflow position, as well as the prevailing economic conditions.
6. APPROVALS REQUIRED
The Proposals are subject to the following:-
(i) the SC, for the variation in the utilisation of proceeds in relation to the Disposal of the Switchgear Business;
(ii) the approval of the shareholders of Tamco at an extraordinary general meeting to be convened;
(iii) the sanction of the High Court of Malaya for the reduction of the Company’s share capital pursuant to Section 64 of the Act for the Proposed Capital Repayment; and
(iv) the approval/consent of any other relevant authorities and/or creditors, if required.
The Proposed Capital Repayment and Proposed Amendment are inter-conditional with each other.
7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST None of the Directors or substantial shareholders of the Company and/or persons connected to them as defined in the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market has any interests, direct or indirect, in the Proposals save for their respective entitlements as shareholders pursuant to the Proposed Capital Repayment which are also available to all other shareholders of the Company.
8. DIRECTORS’ RECOMMENDATION
After taking into consideration the rationale for the Proposals, the Directors of Tamco are of the opinion that the Proposals is in the best interest of the Company and its shareholders.
9. ADVISER The Board has appointed Aseambankers as the Adviser to Tamco for the Proposals.
10. ESTIMATED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, the Proposals are expected to be completed by the last quarter of the year 2008.
This announcement is dated 28 April 2008.Table 1: Issued and Paid-up Share Capital
 | No. of
Tamco Shares | Par value | Share Capital | | ‘000 | RM | RM’000 | | | | | | Issued and paid-up share capital as at 24 April 2008 | 259,488 | 0.50 | 129,744 | | Reduction in the issued and paid-up share capital resulting from the Proposed Capital Repayment | - | (0.30) | (77,846) | | Issued and paid-up share capital after the Proposed Capital Repayment | 259,488 | 0.20 | 51,898 | | | | | Table 2: NA Per Share and Gearing
| Audited as at
31 May 2007 | After Disposal of the Switchgear Business and repayment of Bonds | After Special Dividend and Proposed Capital Repayment | | RM’000 | RM’000 | RM’000 | | | | | | Share capital | 129,744 | 129,744 | 51,898 | | Retained profits | 24,883 | (1)174,342 | (2)17,880 | | Shareholders funds / NA | 154,627 | 304,086 | 69,778 | | | | | | Number of Tamco Shares | 259,488 | 259,488 | 259,488 | | Net asset per share (RM) | 0.60 | 1.17 | 0.27 | | Total borrowings | 134,489 | 15,424 | 15,424 | | Gearing (times) | 0.87 | 0.05 | 0.22 |
Notes:-
(1) After taking into account the one-time gross group gain on disposal of approximately RM149.459 million from the Disposals of the Switchgear Business.
(2) After deducting estimated expenses of approximately RM250,000. | |
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