Anchorscape emerges as new substantial shareholder after exercising call option
AFTER boosting financial year 2016 (FY16) profits by disposing of non-core assets, more changes could be in store for asset-rich KUB Malaysia Bhd .
The first major change came about this week, when a new party surfaced as the controlling shareholder of KUB.
A company called Anchorscape Sdn Bhd emerged as a substantial shareholder in KUB with a 22.55% stake, after exercising a call option to buy out the Ministry of Finance Inc (MoF) from KUB.
Anchorscape will also take over the KUB shares held by Gaya Edisi Sdn Bhd, which has a 29.62% stake in KUB.
Anchorscape is a wholly-owned unit of Gaya Edisi.
Following the completion of these exercises, Anchorscape will have a combined stake of 52.17% in KUB.
As a result of these moves, Anchorscape had triggered an unconditional mandatory general offer (MGO) for KUB this week, but the trigger price of 35 sen a share was lower than the market price of the stock which was around 57 sen then.
Anchorscape and the MoF had entered into a call option agreement on June 7, 2015, which gave the former the right to buy a 22.55% stake in KUB from MoF for a cash consideration of 35 sen a share.
The call option agreement, which had a two-year tenure, was exercised on Monday.
Following the MGO announcement, KUB’s shares have fallen slightly to around 50 sen at present from around 57 sen prior to the announcement.
So the question is, who is behind Anchorscape and what will be the new direction of KUB be under this new owner?
Anchorscape, which intends to maintain the listing status of KUB, is an investment holding company linked to Darhim Dali Hashim and Datuk Abdul Rahman Mohd Redza.
Darhim is an independent non-executive director of Prasarana Malaysia Bhd and group chief executive officer of shipyard, engineering and trading company Radimax Group Sdn Bhd, while Abdul Rahman is a Linggi state assemblyman.
In the midst of this shareholder change, speculation has arisen that the group is looking to divest one of its key assets, namely the A&W (Malaysia) Sdn Bhd chain of quick service restaurants.
However, rumours of KUB exploring a sale of A&W have gone on for years with no deal materialising.
It is also unclear how much the restaurant chain could be valued at, although such assets tend to be sought after by many investors including private equity firms and other food and beverage (F&B) owners.
In 2012, talks about the sale of A&W were at their peak.
The then loss-making KUB had plans to dispose of its entire stake in A&W Malaysia and A&W Restaurants (Thailand) Co Ltd to return to the black.
Former group managing director Datuk Wan Mohd Nor Wan Ahmad said the group was planning a complete exit from the fast food chain business as a move to dispose of its loss-making entities.
Eventually, in 2015, KUB sold its 88.29% stake in A&W Restaurants (Thailand) to Thai national Kulpavee Chalermmeateewong for RM3.69mil.
To date, KUB owns a total of 32 A&W outlets in Peninsular Malaysia.
According to KUB’s 2016 annual report, the group intends to open an additional 25 outlets within the next three years.
KUB’s food sector, of which A&W is the main asset, delivered a net profit of RM2.9mil on a revenue of RM46.9mil for FY2016.
The company said this division actually delivered lower operational earnings due to the overall weaker market demand.
However, this was mitigated by the recognition of deferred tax assets amounting to RM1.4mil.
KUB is involved in businesses within the energy, information and communications technology (ICT), agriculture, food, property and power sectors.
Of the six, the energy sector is the largest contributor of revenue and net profit to the group, followed by ICT and food.
KUB’s energy business operates under the brand name of Solar Gas, through wholly-owned subsidiary KUB Gaz Sdn Bhd, which imports, bottles, markets and distributes liquified petroleum gas.
Meanwhile, the group’s ICT sector, under wholly-owned subsidiary KUB Telekomunikasi Sdn Bhd was involved in two main projects in FY16, namely the automatic fare collection system for 53 KTM Bhd commuter stations as well as the construction of 21 telecommunication towers awarded by the Malaysian Communications and Multimedia Commission.
In the agriculture sector, KUB owns four plantation estates in Johor and Sarawak, making up 7,388.36 ha and producing about 77,120 tonnes of fresh fruit branches (FFB).
KUB has proposed to acquire a brownfield oil palm plantation land measuring 1,534 ha in Sungai Kinabatangan, Sabah, for an estimated RM100mil this year.
As part of the group’s cost optimisation and value unlocking strategy, KUB will be disposing of its bottling and storage facility in the northern region, which is expected to be completed in the second quarter of FY17.
For FY16 ended Dec 31, 2016, KUB registered a net profit of RM21.54mil, which represents a 137% growth from the previous year’s net profit.
This was on the back of an improved operational performance, particularly in the energy business, coupled with the absence of losses incurred by two loss-making subsidiaries which the group disposed of in late FY15 and August FY16, namely KUB Builders Sdn Bhd and KUB Precast Sdn Bhd.
KUB will be closely watched for the possible changes that its new owners would implement in the company, which are likely to begin with hiving off its A&W chain.