Investors to discuss MMC’s proposed takeover of SATS

INSTITUTIONAL and retail investors of MMC Corp will meet tomorrow to discuss MMC’s proposed acquisition of the entire stake in Senai Airport Terminal Services Sdn Bhd (SATS).

The meetings, to be conducted separately, are scheduled to take place at the office of the Minority Shareholders Watchdog Group (MSWG). Among institutional shareholders that have been invited are Permodalan Nasional Bhd (PNB), the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (KWAP) and other nominees shareholders.

The MSWG sent out its letter two weeks ago, calling for a meeting of institutional and retail shareholders to discuss critical issues and to enable them to take collective action during the EGM when it is called by the company.

This is given that the shareholders will only have 14 days to analyse the proposed acquisition once the notice of the EGM is issued by the company together with the circular and independent adviser’s letter to shareholders.

In its column in StarBizWeek earlier this month, MSWG had said MMC’s proposed acquisition of SATS was a related party transaction involving a common major shareholder and parties related to Tan Sri Syed Mokhtar Al-Bukhary.

“Major institutional investors and other major minority shareholders such as Skim Amanah Saham Bumiputra (SASB), PNB and EPF which have direct interests of 16.92%, 5.34% and 5.51% respectively in MMC’s equity, would need to evaluate the deal and to decide on whether the proposed acquisition is in their best interests,’’ MSWG CEO Rita Benoy Bushon wrote in the column.

According to MSWG, investors and stakeholders are raising concerns over the deal, among which are:

“SATS is currently loss-making and is not in a position to make any positive contribution to the consolidated earnings of MMC Group in the near to medium term.

“Given the financial circumstances of SATS, MMC would be required to increase further its borrowings for the proposed development of the Senai Airport City while its substantial bank and cash balances would be used up for the payment of the proposed acquisition,’’ said MSWG;

The proposed acquisition is likely to further increase the intangible assets and goodwill upon consolidation which would further negatively impact on MMC’s net worth, said MSWG.

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