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Tuesday, 31 May 2005 |
 IJM Corporation Bhd’s first task after acquiring a 25% stake in Kumpulan Europlus Bhd will be to clean up the latter’s debt-laden 49% associated company Talam Corporation Bhd.
IJM managing director Datuk Krishnan Tan said its first move would be to revive and “stabilise Talam”, which faces “cashflow mismatch” problems as well as debts of about RM1.8 billion.
“Talam’s problems are more immediate, and can be addressed with attention, and indulgence from banks,” he told a media briefing in Petaling Jaya on May 31 on its proposed acquisition of the stake in Kumpulan Europlus for RM33 million.
“We already have banks calling us up (to extend financing facilities),” he added.
IJM has an option to acquire an additional 5% of Kumpulan Europlus after a year from the respective vendors. IJM had on Monday announced that it was acquiring the 25% stake at 28 sen per share. It is also subscribing for a stake in the 48km Kajang-Seremban highway concession, now held under KASEH Lebuhraya Sdn Bhd, a unit of Antah Holdings Bhd.
“It will be a long gestation period,” said Tan, in response to a question on Kumpulan Europlus’ contribution to IJM’s bottom line. Talam has a landbank of over 4,032ha.
He said the initial focus would be on keeping and adding value to Talam’s existing projects, including the 2,016ha Canal City. Tan added that attention would be paid on “branding and quality issues” in Talam.
On Kumpulan Europlus’ share price that has been hovering at over 30 sen, Tan said it was “not reflective” of the company’s true potential.
Meanwhile, analysts said Kumpulan Europlus and Talam would benefit from IJM’s infusion of professionalism in management and credibility.
As it is now, an analyst said investors had been affected by forced selling in Kumpulan Europlus on margin calls and poor market sentiment.
“With a cash-rich company like IJM, joining forces with an asset-rich company like KEuro (Kumpulan Europlus), the synergy has the potential to be considerably favourable, but it will take time,” said an analyst.
The analyst said it was a bargain for IJM with the purchase of two asset-rich companies in one deal and for a price far below Kumpulan Europlus’ net tangible assets. He said Kumpulan Europlus was “financially trapped” and with the entry of IJM, it could look forward to a more stable and encouraging future, as banks would be “more willing” to extend financing facilities.
source: The Edge Daily 31-05-2005
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