SINGAPORE (Dec 8): Fu Yu Corporation, the manufacturer of precision plastic components, plans to privatise its subsidiary, LCTH Corporation, through a selective capital repayment exercise (SCR) valued at around RM61.3 million ($20.3 million).

LCTH is listed on Bursa Malaysia and focuses on the precision manufacturing of tools and plastic products in Malaysia. As at 6 Dec, it has a share capital of RM169.9 million comprising 360 million ordinary shares, of which about 254.3 million are owned by Fu Yu to represent an equity interest of 70.64%.

The proposed SCR involves LCTH undertaking a selective capital reduction and a corresponding capital repayment in respect of the LCTH shares held by all shareholders of LCTH other than Fu Yu, who own the remaining 29.36% stake in the subsidiary.

In a Friday filing, Fu Yu says the remaining shareholders will receive a total capital repayment of RM61.3 million, which represents a cash repayment of 58 sen per LCTH Share.

Upon completion of the SCR, these minority-owned shares will be cancelled such that LCTH will become a fully-owned subsidiary of Fu Yu, who does not intend to maintain LCTH’s listing status on the Bursa Malaysia after.

The group intends to fund the exercise via its existing cash balance and internally-generated funds of the LCTH group.

“In view of the low trading liquidity of LCTH Shares over the past 3 years, the proposed SCR offers an attractive opportunity for LCTH’s shareholders to realise their investments in cash and at a premium to the prevailing market price,” says Elson Hew, CEO of Fu Yu.

“This privatisation exercise will allow LCTH’s management and the Group to have greater flexibility in managing and developing the business of LCTH, without the regulatory cost and restrictions associated with its listing status on Bursa Malaysia. Apart from potential cost savings from the proposed delisting of LCTH, we believe that having full ownership of LCTH will also enable Fu Yu to better manage the production and financial resources of the Group’s operations across Asia,” he adds.

Shares in Fu Yu closed flat at 19 cents on Thursday.