“One problem with the pharmaceutical industry is that if we opt to change the name of the company, we also have to change all our packaging and this is an expensive exercise,” he told reporters after the company’s EGM on Tuesday.
He said the company had set up a disentanglement team consisting of people from both CCM and CCM Duopharma Biotech Bhd to work on some details and they were expected to deliver the outcome to the board this November.
At its EGM on Tuesday, CCM secured the shareholders’ approval for the demerger proposal for its pharmaceutical unit to become a group of companies under Permodalan Nasional Bhd (PNB).
This exercise, it said, is part of the plan to improve its capital structure and is expected to increase its earnings per share and net asset value.
“So, post this exercise, Duopharma will be one of the pharmaceutical companies listed on Bursa Malaysia with the largest free float, relative to the other pharmaceutical companies.
“From the perspective of shareholders, they might see interest…obviously, liquidity of the share will actually improve, but from the consumer side, it will be no different,” he explained.
Post-demerger, PNB will remain a major shareholder in both CCM and CCM Duopharma.
To recap, in August this year CCM said it planned to distribute its entire stake of 73.37% in CCM Duopharma, sell three plots of land for RM190mil and privately place out 10% of its share capital mostly to part-repay bank borrowings.
The proposed demerger would also involve a capital reduction in CCM by about RM462.9mil and it would consolidate its shares on the basis of three to one.
The exercise is expected to be completed by early 2018.
On its de-gearing initiative, Leonard Ariff said the group intended to pare down its gearing to 0.7 times by 2018, from 1.51 times expected by year-end via the selling of its assets.
The assets include an industrial land in Nilai, Negri Sembilan, and stake in PanGen Biotech Inc, a public listed company in South Korea.
Asked if he would still be the managing director of CCM, he said: “Most likely. The board is evaluating at the moment. Soon, there will be no link between CCM and CCM Duopharma anymore.
“At the moment, there is overlap at the director and senior management levels in both companies but not at the operation level.” – Bernama