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Kossan’s Lim brothers each get RM100mil windfall in shares

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Largest shareholder distributes 73.22 million shares to each of the four siblings who founded the glove maker.

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Kossan Rubber group managing director and CEO Lim Kuang Sia and his four brothers founded the rubber glove manufacturer in 1979. (Kossan web pic)

PETALING JAYA:
The founding family members of Kossan Rubber Industries Bhd have received a huge windfall after the largest shareholder of the glove maker distributed company shares to the Lim brothers.

Kossan Holdings (M) Sdn Bhd (KHSB) allocated 14.35% or 366.1 million Kossan Rubber shares to the four siblings and an unidentified recipient. The five received 73.22 million shares each.

In a Bursa filing, the group said KHSB distributed the shares as a dividend in specie to Kossan Rubber group managing director and CEO Lim Kuang Sia, and his siblings Lim Leng Bung, Lim Kuang Wang, and Lim Kuang Yong on Sept 29.

However, a fifth block of 73.22 million shares remains shrouded in mystery as the bourse filing did not reveal the name of the recipient.

Dividend in specie typically refers to a dividend that is declared in cash but satisfied by a transfer of assets, which in this case is in the form of Kossan Rubber shares.

The glove manufacturer was founded in 1979 by Kuang Sia, 70, and his four brothers including the late Lim Kwan Hwa, who passed away in 2021. The group has an installed annual capacity of 33.5 billion pieces of gloves, and exports to over 90 countries.

Based on today’s closing price, the 14.35% stake translates to RM498 million, giving the siblings a cool RM99.58 million each.

KHSB, the Lim family’s private vehicle, is now left with a 35% stake or 893.07 million shares after the distribution. The siblings each hold a 20% stake in KHSB.

Following the distribution of shares, Kuang Sia’s direct stake in the listed entity stands at 3.15%, (80.23 million shares), Kuang Wang (2.94% or 75.22 million shares), Leng Bung (2.96% or 75.53 million shares), and Kuang Yong (2.9% or 74.14 million shares).

Riding the waves of the pandemic

Like its industry peers, Kossan Rubber’s stock price has been on a rollercoaster ride, soaring during the pandemic rally of 2020 and then hitting the dumps over the past two years.

It hit a high of RM7.59 in August 2020, and has since tumbled to RM1.36 as of today, valuing the glove manufacturer at RM3.4 billion.

For the six-month period ended June 30 (H1 2023), Kossan Rubber posted a net loss of RM27.53 million from a net profit of RM136.09 million a year earlier.

Revenue contracted to RM782.25 million from RM1.27 billion a year earlier due to market competition, higher energy and labour costs and lower plant utilisation.

Despite some signs of stabilisation, the glove industry remains affected by a supply-demand imbalance which is anticipated to persist throughout the latter half of FY2023.

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