Scomi Group Bhd said it has received approval from the Securities Commission to issue up to RM630 million nominal value Murabahah notes via its subsidiary KMCOB Capital Bhd (KCB).

In a statement to Bursa Malaysia, Scomi - which is controlled by Prime Minister Abdullah Ahmad Badawi's son Kamaluddin - said the proposed Murabahah notes were intended to help the group refinance its current borrowings.

According to news reports, the refinancing exercise will enable Scomi to, among others, raise new funding to meet future operational requirements, realign some of the terms of its existing borrowings, as well as settle some of the inter-company balances within the group.

Of the RM630 million, Scomi said RM250 million would be used to settle inter-company advances between KMCOB and Scomi.

The notes would be placed with the holders of Scomi's existing RM500 million nominal medium-term notes issued in 2005 and 2006.

As for the remaining RM380 million, Scomi said up to RM195 million would be advanced to KMCOB and KMC Olitools (M) Ltd to enable them to pay their borrowings.

It also said up to RM50 million would be used to settle inter-company advances within the Scomi Group. The remainder would be for KMCOB's working capital and future capital expenditure.

Scomi said the proposed Islamic notes are not expected to have any material effect on its earnings for the financial year ending Dec 31, 2006.

However, the proposed Murabahah notes was conditional upon the approval of the holders of Scomi's existing RM500 million nominal value of medium-term notes.

As of its second quarter ended June 30, 2006, Scomi's borrowings totalled RM167.74 million in short-term borrowings and RM885.45 million in long-term borrowings.