MPlant moves closer towards a sale to Temasek


  • Business
  • Saturday, 10 Apr 2004

BY C.S. TAN

Analysis 

JUST a month ago, it seemed the sale of a controlling interest in Malaysian Plantations Bhd (MPlant) was imminent. Its shares surged. Shareholders were elated. 

A couple of complications have since emerged. Tan Sri Amin Shah Omar Shah suddenly surfaced as a substantial shareholder in MPlant. 

Then, earlier this week, three shareholders of MPlant filed a requisition for the removal of six directors of the company. The trio include Chua Ma Yu, a former partner in the RHB group.  

How does this affect the hoped-for sale to Temasek Holdings, the investment arm of the Singapore Government? Investors hope the bid by Chua and friends to gain influence on MPlant's board may lead to a renewed momentum for a deal with Temasek. 

As Chua and friends attempt to replace six MPlant directors, Mohd Nasir Ali, another director in the company, is conspicuously not among those targeted for removal. This suggests that Nasir is considered friendly to Chua.  

Nasir is a director of Utusan Melayu Bhd, a newspaper publishing group owned by Umno. This also suggests Chua is aligned with government-linked parties.  

It lends weight to the view that Chua will have the support of two major shareholders of MPlant – Langkah Bahagia Sdn Bhd, which owns 15.4% of MPlant, and Paradigm Capital Sdn Bhd, which has a stake of 9.8%. Both are known to be keen to sell their stakes for a reasonable price. Other parties, however, may be holding out for a higher price.  

Langkah and Paradigm together hold 25.2% equity interest in MPlant. Together with the 10.2% disclosed by the requisitionists, they command an interest of 35.4% in MPlant.  

Ranged against that is Bolton Bhd's shareholding in MPlant, now controlled by Amin Shah. He has announced a direct interest of 1.1% and an indirect interest of 7.9% in the company. That is a total of 9%.  

The mathematics suggest that Chua and company will be able to prevail at the EGM.  

They are likely to receive much support from the smaller minority shareholders as Chua has a reputation as a savvy investor.  

The minority shareholders will support the party that is more likely to lend positive sentiment to the stock.  

This is obvious and it is all the more important when there will not be a general offer (GO) for all the shares in MPlant.  

Temasek reportedly has the Malaysian Government's agreement to acquire a stake of up to 30% in Alliance Bank. As MPlant owns 100% of the bank, a stake of 30% in the company is equal to a similar stake in the bank. Temasek, therefore, cannot make a GO that could give it a higher shareholding in the bank.  

Further, the acquisition would not cross the 33% threshold at which level a GO becomes mandatory. If Temasek appoints just one or two representatives to the boards of MPlant and the bank, it would also not trigger a GO over a change of board control.  

This means minority shareholders will not enjoy the price that Temasek will offer, reportedly around RM2.75 a share for MPlant. The stock closed 6 sen higher at RM2.21 yesterday.  

Even without a GO, the valuation for MPlant would be re-rated higher if it has stability with a long-term institutional shareholder. 

The bank employees also look forward to Alliance, the smallest anchor bank in the country, joining one of the biggest banking groups in Asean if ownership is eventually transferred to DBS Bank, which is controlled by Temasek. For the time being, however, DBS is not involved in the acquisition.  

Given the requisition to MPlant, an EGM must be held. And if the resolutions are carried out, the sale of the bank may take effect soon. 

 Stock Watch On MPLANT

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