Medical and Dental Clinics - Numbers

The closure of over 600 private general and dental clinics in Malaysia since 2014 is not solely due to lack of business or poor reception from the public, the Health Ministry said.

Deputy Minister Datuk Seri Dr Hilmi Yahaya said only 78 of 9,155 registered clinics and three of 2,435 dental clinics had shut down due to economic reasons.

Between 2014 and June 2017, 643 private general clinics and 139 dental clinics have been deregistered.

However, 1,289 new private general clinics and 527 dental clinics were registered in the same period, so this means there was no issue of too few private clinics.

As per the law, registered private clinics must apply to the Ministry if they wish to deregister, and must also state the reason for the application.

Dr Hilmi said 39.5% of private general clinics and 53.3% of dental clinics which applied for deregistration said they were changing the location of their premises.

/theSTAR 10-08-2017

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CCM: "De-gear" & Demerge

Chemical Company of Malaysia Bhd’s (CCM) defended the company’s demerger exercise as one that will not result in any losses to shareholders.

CCM group managing director Leonard Ariff Abdul Shatar acknowledged that it would take time for the market to digest the recently announced corporate exercise to de-gear and demerge from its profit-making pharmaceutical unit CCM Duopharma Biotech Bhd.

“We believe it will take time for the market to fully comprehend the corporate exercise because it involves a lot of moving parts. But our message is, shareholders will not lose out,” he said.

However, CCM’s shares fell 12 sen, or 7.1%, yesterday to close at RM1.57, effectively wiping out RM54.5mil from the company’s market capitalisation. CCM Duopharma’s shares, on the other hand, closed unchanged at RM2.11 yesterday.

A dealer reckoned that some shareholders did not like the dilutive aspect of the deal, as it involves a placement exercise. Others, the dealer said, could be selling on a knee-jerk reaction to the share consolidation element in the proposal.

Leonard Ariff pointed out that under the demerger exercise, entitled CCM shareholders – institutional and retail – would effectively get CCM Duopharma shares for free. The subsequent exercise to consolidate CCM shares from three to one, on the other hand, would ensure that the value of the company’s share remains intact.

“For investors who buy into CCM before the close of our book-building exercise, they will be getting CCM Duopharma’s shares for free,” he said.

On that note, he pointed out that shareholders who had previously bought into CCM for “cheaper” exposure to CCM Duopharma would now benefit through direct shareholding in the latter. “This means the dividend from CCM Duopharma will flow directly to them post-demerger without dilution through CCM,” Leonard Ariff said.

“The exercise to subsequently consolidate CCM shares from three to one is to ensure that they don’t lose any value, as the shares will effectively be based on the net asset of the reduced size of the company following the demerger exercise,” he added.

At present, Permodalan Nasional Bhd (PNB) owns about 70% of CCM, which, in turn, has a 73.4% stake in CCM Duopharma.

The proposed demerger announced on Wednesday would see CCM distribute its entire 73.4% stake in CCM Duopharma to its shareholders.This exercise would also involve a capital reduction in CCM’s share capital by about RM462.9mil. CCM announced that it would consolidate its shares on the basis of three to one. This exercise is expected to be completed by January 2018.

In addition, CCM also announced a de-gearing initiative, involving a plan to raise up to RM257.6mil through a private placement of up to 10% of its share capital and the disposal of three parcels of land measuring 70.93 acres in Shah Alam, Selangor. The proposed disposal of the Shah Alam land was deemed a divestment from its non-core assets.

According to Leonard Ariff, CCM expects to raise another gross proceeds of around RM65mil from the sale of its two other identified non-core assets, namely, the Nilai Industrial Land and the group’s 8.45% equity stake in Korea-listed PanGen Biotech Inc.

He said the imminent sale of the Nilai Industrial Land, which could raise about RM20mil based on the current book value, would be conducted through a tender process. Further announcements on the sale would be made by year-end.

As for the proposed sale of CCM’s stake in PanGen, which could raise about RM45mil, Leonard Ariff conceded that while the group had yet to identify a potential buyer, a deal could be concluded by next year.

He pointed out that the sale of the company’s non-core assets is part of a continuous de-gearing exercise to strengthen the group’s balance sheet.

“We will continue to divest from our non-core assets, which we define as those that do not give us revenue of income or dividends, until we achieve a healthy gearing... in absolute terms, our target is to reduce our total loans down to around RM100mil from the current level of RM440mil,” he added.

Under the proposed corporate exercise announced on Wednesday, CCM would undertake a private placement of up to 10% of its issued share capital and dispose of its three parcels of leasehold land measuring up to 70.93 acres in Shah Alam, Selangor, as part of a de-gearing exercise.

Leonard Ariff said CCM’s de-gearing exercise would result in substantial savings for the company.

“At present, we pay RM21mil annually in interest costs to service our debts; post de-gearing exercise, our interest costs would only be a quarter of that,” he pointed out.

CCM’s proposed private placement, which is scheduled to complete in October this year, is expected to raise up to RM67.6mil, while the disposal of land in Shah Alam, which is scheduled to complete in March 2018, to an independent third party would be at a cash consideration of RM190mil.The total proceeds from the fund-raising exercise and land sale would mainly be used to repay CCM’s borrowings.

Meanwhile, CCM’s proposal to distribute its entire 73.4% stake in CCM Duopharma to its shareholders - a move that would result in the demerger of the two companies – would allow the group to focus on managing the growth of its chemical products and polymer coating businesses. The exercise would benefit CCM’s shareholders by enabling them to participate directly in the equity of CCM Duopharma at no cost.

“The initiatives are a continuation of our strategic review which commenced in 2015 to house all of our pharmaceutical businesses under the CCM Duopharma umbrella, to exit from non-performing business segments, and strengthen our balance sheet to enable ample agility to pursue our capital expansion and a sustainable growth strategy for the future,” Leonard Ariff said.

“The proposed initiatives will lighten the balance sheet for CCM and give shareholders direct ownership in both CCM and CCM Duopharma, and participate directly in the growth of the two separate entities. It is expected that the restructuring will enable us to utilise our resources more effectively and efficiently, and promote strong growth for our chemicals and polymer businesses. It is part of CCM’s continuous effort to strive towards sustainability and achieve optimum development in moving forward and growing within a competitive business environment,” he added. 

/theSTAR 04-08-2017

Disclaimer: Views or opinions expressed are solely those of the Author and should be used with discretion. The Author shall not be held liable for any acts or omissions arising from the use of the information. The user will be personally liable for any damages or other liability arising hereof.

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