PFCE mandatory general offer may not succeed

KUALA LUMPUR: PFCE Bhd is confident that the take-up of the mandatory general offer (MGO), issued by DAT Group Sdn Bhd (DAT) to acquire the remaining shares that DAT does not already own, will be limited as its shareholders believe in the prospects of the company.

In its filing to Bursa Malaysia on June 20, 2012, PFCE had announced that DAT would extend an MGO to acquire the remaining shares it did not already hold in PFCE. The MGO will give PFCE's shareholders the option to sell their shareholdings in the company for 60 sen per share.

The MGO will only take place after the reverse takeover (RTO) exercise, involving PFC Engineering Sdn Bhd, is complete.

Earlier in March, PFCE had proposed to acquire the 100% equity interest in PFC Engineering Sdn Bhd via an RTO exercise, which will see PFC Engineering's main operations in offering engineering services, and facilities and maintenance services to the oil and gas industry, injected into PFCE.

PFC Engineering group executive chairman Datuk Abu Talib Mohamed and his son, group business development director Muammar Gadaffi Abu Talib, own an 80% and 20% stake in PFC respectively.

Through PFC Engineering, both Abu Talib and Muammar Gadaffi own about 40% stake in PFCE.

The RTO will see PFC Engineering and its business injected into PFCE for RM300mil, satisfied by the issuance of 500 million new PFCE shares at 60 sen per share.

Both Abu Talib and his son will then transfer their collective shareholding in PFCE to a new company, which is DAT via dividend-in-specie for approximately RM15.8mil.

PFC Engineering will then declare up to RM24mil in cash dividend to DAT.

After that, DAT will extend an MGO for all the remaining PFCE shares not already held by them. The MGO is an action that is required by Securities Commission (SC) for PFCE to go through with the RTO exercise.

Abu Talib said PFCE still planned to maintain its listing status despite undertaking the MGO.

The company underwent an MGO in 2011, which did not see its shareholders taking up the offer.

Therefore, it is expected that the outcome of this MGO will not follow through since the company is set to be one of the leading oil and gas players upon completion of the RTO exercise.

Under the exercise, DAT would also place out up to 90 million PFCE shares and proposed restricted offer for sale of up to 52.838 million PFCE shares at an offer price that has yet to be determined.

PFCE was previously known as APP Industries Bhd, a loss-making company that currently deals in the manufacturing of ceramics.

Losses from the ceramic business were attributed mainly to lower exports, as majority of the products were exported.

Abu Talib said once the RTO exercise was complete, PFCE's operations would largely focus on its operations in oil and gas services.

However, it is the intention of PFCE to keep its ceramic manufacturing business as it is seen as a viable business.

“We still see a market and a future for the ceramic business,” he said. Abu Talib intends to expand the domestic market for the ceramic business.