PETALING JAYA, 10 March : Sime Darby Bhd has kicked off its planned disposal of industrial property assets in a bid to raise RM1.8 billion to pare down its debt.
AmResearch, citing a local media report in Australia, said that a number of local institutions have viewed the conglomerate’s portfolio.
The report said Sime Darby’s property holdings in Australia are concentrated in Queensland and the Northern Territory.
There are also facilities across Queensland, including in the suburbs of Brisbane, Cairns, Emerald and Mackay, as well as in Mount Isa and Rockhampton.
The report said most of Sime Darby’s industrial property sites have substantial improvements, including offices, workshops and warehouses, adding to the value of the offer that is said to be about A$300 million (RM917.3 million).
AmResearch analyst Thomas Soon said Sime Darby’s management has said that it aims to raise RM1.5 billion net to reduce its debt, from the disposal of three and 13 properties in Singapore and Australia, respectively.
“It is aiming to wrap up the sale and lease-back arrangements by end-FY16. The group intends to maintain a 20% stake in a private vehicle that could be undertaking the acquisition of the industrial properties.”
According to Soon, the group is also aiming to refinance higher costs debts with a RM3 billion perpetual sukuk, and is negotiating with banks to reduce interests on working capital and borrowings.
“This is positive as it targets to cut gross gearing from 61% to 54%,” he added.
Soon noted that Sime Darby’s current share price is also being held up by the upward trending of crude palm oil (CPO) prices, at above RM2,500 a tonne.
However, he said, this has been partly affected by lower CPO prices realised for Indonesia due to the government’s implementation of a US$50 per tonne export levy.
“We maintain a ‘hold’ call on Sime Darby, with an unchanged fair value of RM7.77 per share, based on a 20% discount to a sum-of-parts value of RM9.38 per share,” Soon added.