Good News for Tamco Shareholders

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Tamco may sell switchgear business
By Sharen Kaur and Francis Fernandez

bt@nstp.com.my

TAMCO Corporate Holdings Bhd is selling its switchgear business for some RM400 million to a foreign company, executives advising the company on the sale said.There may also be a capital repayment following the sale. ECM Libra Avenue Securities Sdn Bhd is advising Tamco on the sale. The buyer may be a Japanese, European or an Indian firm.

A source said that Larsen & Toubro Ltd, India's largest engineering firm, has made a bid. "The buyer should be able to substantially enhance the operations of Tamco and bring in international management and money to expand," said the source. Tamco, which owns the largest low and medium voltage switchgear factory in South-East Asia, is expected to make an announcement soon on the disposal.

In June, The Edge Weekly reported that Tamco will sell its business for RM388 million and return as much as RM1.50 a share to shareholders. Subsequently, Tamco informed Bursa Malaysia that it is looking to sell its switchgear business and that it has appointed Credit Suisse (Singapore) Pte Ltd and ECM Libra as advisers.

Tamco also said it could not comment on the RM1.50 capital repayment. For the year ended May 2007, Tamco posted a net profit of RM16.69 million versus RM6.05 million in the year before. Tamco has manufacturing plants in China, Australia, Indonesia and United Arab Emirates.

My comment: This has been the long awaited news. RM1.50 looks a fair target. Based on today's closing at 1.18 there is still an upside around 30 cent per share. Care to punt?