Daya Materials Berhad (Daya) has announced a proposed Share Sale Agreement (SSA) with Perfect Propel Sdn. Bhd. to dispose 2,400,000 ordinary shares of Daya CMT Sdn. Bhd. (DCMT) (Daya’s wholly-owned subsidiary) for a cash consideration of RM18m. Representing a 30% of the issued and paid-up share capital of DCMT, upon the completion of the proposed disposal, DCMT will become a 70%-owned subsidiary of Daya. Unsurprised by the exercise as it has been discussed as part of the Group’s executive strategic initiative for DCMT, we believe this exercise is in line with Daya’s overall objective of focusing its resources in the oil and gas segment.

DCMT. Provides industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.

Disposal consideration. Factors include i) including a premium of RM4.4m, ii) PE of <6x, iii) agreement by Daya to guarantee that DCMT would achieve guaranteed PAT of RM10m for FYE14 and RM12m for FYE15, iv) strategic nature of Perfect Propel and its future consideration to the construction business of DCMT.

Utilisation of proceeds. Daya will be using the RM18m cash proceeds for its working capital within 6 months from receiving the proceeds. The Group’s general working capital requirements include operating expenses, which include purchase of raw materials as well as repayment of trade and other payables.