Multi-Purpose Holdings Berhad (MPHB) is to dispose of its 10 per cent equity stake in state-controlled Sarawak Enterprise Corporation Berhad (SECB) to Cahya Mata Sarawak Berhad (CMS), according to market sources in Kuala Lumpur.

The sources said that the deal, expected to be finalised within the next few months, will be on 'willing buyer willing seller' basis.

MPHB is said to have been on a look-out for buyers for its stake in SECB, which is presently 52 per cent Sarawak Government-owned with its core business in power generation, transmission and distribution.

Its investments in SECB (which holds a big stake in Kuching-based wafer fab 1st Silicon (Malaysia) Sdn Bhd) and anchor bank Alliance Bank through indirect shareholdings of 25 per cent are reported to have dragged its share value down.

SECB owns 45 per cent of Sarawak Electricity Supply Corporation (Sesco).

It has a 30 per cent investment in Kuching-based 1 st Silicon (Malaysia) Sdn Bhd through the subscription of loan stocks of about RM600 million.

Within the past two years SECB has in its books accumulative provision for diminution investment in the wafer fab of nearly RM200 million.

Earlier this week, malaysiakini reported , based on reliable sources, that SECB is anxious to sell its stake in 1 st Silicon to the state government, possibly at a loss.

1 st Silicon's financial performance has never been made public, although state investment in it has been reported at RM3 billion.

Profits still a long way off

Its top officials have gone public recently to indicate that sales have improved with production expected at 20,000 wafers per month by year-end, that should help it to cover operational costs.

"Profits is still a long way off," the sources said.

In May this year , SECB signed a memorandum of understanding (MoU) with the State Financial Secretary to take over the remaining 57 per cent of Sesco.

It is not known when this will be finalised.

A new company, likely to be a wholly-owned subsidiary of SECB, will own all the assets, rights and liabilities of Sesco which is to be dissolved, following the passage of a bill in the state legislative assembly last week.

This in turn is expected to increase the state government's equity to 70 per cent or, if a waiver is obtained from the relevant authorities, to hold a higher percentage for a specific period of time before putting the required minimum into the market.

The market source said the anticipated MPHB-CMS deal and the sell-back to the state government is expected to take place almost simultaneously.

The sources added that merchant bankers are ironing out the details and it is possible that the MPHB-CMS deal will be completed after the sell-back of 1st Silicon shares to the state government.'