Masterskill's Siva Kumar gets offer for his block

PETALING JAYA:The major shareholder of Masterskill Education Group Bhd (MEGB), Siva Kumar M. Jeyapalan, has entered into a put-and-call option with an individual from Hong Kong to dispose of his entire stake in the education group for RM1.10 per share, which is a premium of 172% from its closing price of 40.5 sen yesterday.

Under the agreement, the individual, Gary How Soong Khong, has a call option to purchase the shares, which forms 29.76% of Masterskill, and it is valid for six months from the date of the agreement that was entered into on Wednesday.

Siva Kumar, a former investment banker, granted the call option to How and according to the statement, once the notice has been issued it cannot be withdrawn.

In return for granting the call option, How has granted Siva Kumar a put option for the shares at the same price of RM1.10 and it is valid for nine months.

The company said the call option might be exercised by How by serving Siva Kumar, at any time within the period of six months from the date of the agreement.

It also said that the put option mighty be exercised by Siva Kumarby serving How at any time in the period commencing on the date falling nine months from the date of the agreement.

If the deal materialises, Siva Kumar will receive proceeds of some RM134mil from the sale of his 122 million odd shares in the company. It is unclear what Siva Kumar’s average cost of entry into Masterskill is but it is presumed to be higher than the current price of Masterskill.

Siva Kumar first surfaced as a substantial shareholder in MEGB in early October, 2011 with a 10% stake. MEGB’s price was then around RM1.10 per share.

MEGB shares closed up two sen at 40.5 sen yesterday with 20.90 million shares done.

Very little is known about How, a Malaysian who is based in Hong Kong, and why he is offering to buy the shares at a steep premium to the market price. With the latest development, How is expected to be appointed to the board of Masterskill.

Siva Kumar when contacted described the offer by How as reasonable and that was why he entered into the put and call option agreement.

“To me, I felt the offer was reasonable and so I felt it is right for me to dispose of the block,” he said.

When asked if he would continue to play an active role in the company, Siva Kumar said it was a matter that had to be decided by shareholders. 

“It depends on whether the shareholders want me to stay on,” he stressed.

For the financial year ended Dec 31, 2013, MEGB’s net loss widened to RM166.97mil from RM28.19mil in the previous corresponding period.

However, the education group has taken consolidation measures and had stated its intention to dispose campuses that were not utilised. The campuses are in Ipoh, Pasir Gudang and Kota Baru.

“We are not downsizing. We are consolidating,” said Siva Kumar, adding that the company was “disposing off what it does not need.”