On Jan 30, Lafarge Malayan Cement Bhd has proposed the following corporate restructuring:

·      proposed for capital repayment on the basis of 20 sen for every 50 sen share held by reducing the share capital of 50 sen each to 30 sen each. (Based on the paid-up of RM1.41 billion as at Jan 26, the maximum amount to be distributed would be up to RM566.46 million)

·      after the proposed capital repayment and distribution of 20 sen per share, Lafarge would consolidate the resultant share capital of up to 2.83 billion 30 sen shares, on the basis of 10 shares of 30 sen each, into three shares of RM1 each.

·      upon completion of the proposed consolidation, the share capital of Lafarge would be RM849.69 million, comprising 849.69 million shares of RM1 each.

With the aforesaid proposals, it’s able to address its high equity base and low gearing position and also to reward its shareholders for their continuous support for the company. Obviously in the long run with the “improve capital structure” re lower equity base there should also be a corresponding improved in the company’s return on equity which benefits the shareholders.

In my earlier article, it’s not only the financial factors that investors look at, it’s also the quality of top management. Usually such responsible management would constantly and consistently review  their capital management plans so as  to add value to their shareholders for example: too high or too low capital base ( EPS), structured or special dividend policy, unduly high gearing, returning of surplus and idling cash.

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