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Saturday, December 1, 2007

WCT Engineering to take unit private for RM504m

WCT Engineering Bhd will take its property arm WCT Land Bhd private for RM504 million to speed up growth and boost its earnings.

The group can now streamline and rationalise resources to realise cost-savings and improve operational efficiencies.

WCT Engineering executive director Loh Siew Choh said that although it was the holding company (at 65 per cent), it was unable to exercise direct management control over its subsidiary due to corporate governance.

"With it being privatised, the management can have a direct influence on day-to-day operations. We need to restructure and focus because the group is growing very dynamically, and we hope WCT Land can experience similar growth," he told Business Times yesterday.

"Once under WCT Engineering, we can participate in bigger ventures," he said, but declined to elaborate.

With WCT Engineering having construction projects in the Middle East and Vietnam, Loh said he hopes the property arm will now be able to operate in similar locations.

"When you go overseas, you find that you need a bigger and stronger balance sheet because these deals are quite big," he added.

The group plans to bid for more construction and property development projects internationally.

For now, WCT Land, which contributes 20 per cent to the group's profit, does not have any deals in the Middle East, but has started to look at the Vietnamese market.

"We haven't received any investment certificate for property projects in Vietnam," Loh said.

Overseas construction projects make up 60 per cent of WCT Engineering's earnings.

On the privatisation, WCT Engineering is offering 0.524 of a new subdivided WCT Engineering share for every WCT Land share it does not own.

WCT Engineering said the offer values WCT Land at RM2.09 per share, a four per cent premium to WCT Land's last traded price of RM2.01.

It is also offering 1.049 new shares for every WCT Land convertible debt securities it does not hold at RM4.18 each.

"It is a fair deal for shareholders of both companies with this share exchange. We are providing WCT Land shareholders a direct participation in the group's business, which contributes 80 per cent to overall profits," said Loh.

Earlier this month, WCT Engineering announced plans to split each of its shares into two. Loh said the privatisation could be done within four to six months depending on regulatory approvals.

The Employees Provident Fund is a major shareholder in WCT Engineering with 12.44 per cent stake and 4.84 per cent in WCT Land as at October 31.

By New Straits Times (by Jeeva Arulampalam)

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