Public Bank Bhd's (PBB) 61.4%-owned Hong Kong subsidiary JCG Holdings Ltd has proposed buying out minority shareholders for HK$1.26bil (about RM630mil), or HK$4.61 (RM2.25) per share, and go private.
The proposed scheme would improve the net earnings of the PBB group as the share of net profits of the minority shareholders would accrue to PBB,'' the bank told the KLSE in a statement yesterday.
The offer made to the minority shareholders was close to JCGs book value of HK$4.68 as at June 30, 2003, but about 20% higher than the stock's pre-suspension price of HK$3.85.
Trading in JCG shares on the Hong Kong Stock Exchange resumed yesterday after being suspended since July 21. The counter ended the day at HK$4.55 for an 18% rise on its pre-suspension price.
In a statement to the Hong Kong Stock Exchange yesterday, JCG said that it would finance the proposed share buyback exercise with internal resources.
At June 30, JCGs cash and short-term placements stood at approximately HK$1.4bil.
The directors believe the proposal presents a good opportunity for minority shareholders to realise their investment at a cash price substantially above levels the stock has been trading in the past 12 months, the company said.
The JCG announcement followed a PBB statement to the KLSE on July 21, which said the bank planned to privatise its Hong Kong-based finance unit.
JCG is a profitable and well-managed finance company. The move to take the company private will enhance PBBs earnings in the longer term, MIDF Sisma Securities banking analyst Winston Ng said.
Yesterdays development, however, had a mixed impact on PBB's performance on the KLSE. PBB's local shares closed one sen higher at RM2.18 but its foreign tranche ended the day nine sen lower at RM2.50.
JCG has remained profitable despite challenging times in Hong Kong.
The company posted net earnings of HK$101.8mil (RM51mil) for the JanuaryJune period this year, and analysts said although the figure was down 20% from a year ago, it was still a commendable result in light of the depressed Hong Kong economy and the impact of the Severe Acute Respiratory Syndrome outbreak.
JCG is mainly engaged in deposit taking, personal and commercial lending, mortgage financing, stockbroking, and the letting of investment properties.
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