DIVERSIFIED BOUSTEAD HOLDINGS BHD is one step closer towards taking its 56.5%-owned plantation subsidiary, Kuala Sidim Bhd, private following shareholders' approval at its AGM yesterday.
“Once the corporate exercise is successful, the group will be able to fully recognise the earnings potential from Kuala Sidim, which is expected to rise due to higher crude palm oil prices this year,” Boustead group managing director Datuk Lodin Wok Kamaruddin said.
Lodin said Boustead's core plantation business would be further strengthened through turning Kuala Sidim – which has a land bank of 96,670ha, of which 73,016 ha or 76% are under cultivation – into its wholly-owned subsidiary. The exercise is due to be completed by the third quarter of this year.
He pointed out that in the financial year ended Dec 31, 2002, the plantation division was the largest contributor to group profit at 45%, followed by property, manufacturing and financial services.
Kuala Sidim, meanwhile, posted a hefty 70% increase in group pre-tax profit to RM72mil in the 2002 financial year, mainly owing to soaring CPO prices.
Lodin said the rationale for taking Kuala Sidim private was also because it was not able to meet the KLSE listing requirement for a 25% public shareholding spread.
Last month, Boustead surprised the market in announcing a voluntary offer for the remaining Kuala Sidim shares it does not own, amounting to 43.5% or 54.21 million shares at RM6 a share, or for RM 325mil.
“The proposal was made with the intention of privatising Kuala Sidim and allowing shareholders an opportunity to exit at a premium to its market price prior to the proposed voluntary offer,” Lodin said.
He stressed that Boustead's status would be enhanced by the move, thereby removing the current perception among investors that it is largely an investment holding company status whose shares are illiquid and tightly held by one or two major shareholders.
“With Boustead's proposed rights issue, bonus issue, and this corporate exercise of taking Kuala Sidim private, we hope to have more shares available for investors in the near term,” he said.
Asked to comment on the listing status of Kuala Sidim after the exercise, Lodin said: “So far, we have not been approached by any party to acquire its listing status. However, if we get a right offer, we will definitely consider it.”
Although Boustead has one or two companies which are ripe for listing, “we are not looking to list them or use them to assume the listing status (of Kuala Sidim) at the moment,” he said.
“We already have quite a number of listed vehicles in our group. We want to make sure whatever listed companies we are involved in are well managed and fully comply with all the requirements of the various accounting standards and corporate governance,” Lodin said.
Boustead currently has two subsidiaries – Kuala Sidim and SCB Developments –as well as two associate companies, UAC Bhd and AFFIN HOLDINGS BHD, listed on the KLSE main board. The Boustead Group comprises of more than 70 subsidiary companies with substantial interest in various sectors of the economy.
Meanwhile, a minority shareholder of Kuala Sidim, Yeoh Eng Hua, raised a number of objections to the proposed privatisation. He claimed the purchase price of RM6 a share proposed by Boustead was a huge discount to the company's net tangible asset (NTA).
“Based on a conservative calculation, Kuala Sidim's NTA is worth between RM8.50 and RM9 per share. Therefore, the offer price is too low for minority shareholders. More-over, tere should be a valuation on Kuala Sidim's listing status.”
Yeoh also wanted the Boustead board to bring forward the book closure date for the dividend, so that minority shareholders could still be entitled to their 12.50 sen dividend even if they were to take up the voluntary offer by Boustead.
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