Chen draws attention with takeover deals
PETALING JAYA: Gaming tycoon Tan Sri Dr Chen Lip Keong is back in the news following his proposed privatisation of two of his loss-making listed firms.
On Thursday, the 68-year-old doctor-turned-businessman, known for his pioneering Cambodian casino venture, offered to take both Karambunai Corp Bhd and Petaling Tin Bhd private, which will cost him a total of RM166mil.
Chen has a 68.46% stake in property and tourism outfit Karambunai. He is offering to buy out the remaining shares and warrants of Karambunai at five sen per share and two sen per warrant.
The offer is not conditional upon any minimum level of acceptances of the offer shares since Chen holds more than 50% of the voting shares of Karambunai.
At Petaling Tin, Chen, who helms as president, triggered a mandatory general offer after he bought some 133.24 million shares, or a 38.53% stake.
This increased his stake from 26.45% to 65.07%.
The offer of 24 sen per Petaling Tin share values the company at RM83mil and was at a 7.7% discount to the counter’s five-day volume weighted average market price of 26 sen.
Chen, the founder of Hong Kong-listed NagaCorp Ltd, had emerged as a billionaire in Forbes’ list in 2013 when the company’s share price shot up by more than 500%, making it the stock exchange’s best performer for the period.
NagaCorp was set up in 1995 right after Chen obtained a 70-year gaming licence in Cambodia. He listed the company in 2006 after having failed to list it in Singapore.
Karambunai is involved in the hotel, tourism, property development, construction and travel businesses, to name a few.
According to the company’s 2015 annual report, the group has five huge properties with a book value of RM1.39bil, sitting on a total of 2,825 acres of leasehold land in Sabah and Peninsular Malaysia.
The company did not state when these properties were last revalued.
Apart from a country club in Sepang and the Nexus Resort and Spa in Karambunai, Sabah, two other properties are for resort development, while another is slated for mixed-property development.
Karambunai, though, has been posting losses since 2012. It posted a loss before tax of RM43.5mil for financial year 2015 (FY15) on a revenue of RM50.6mil.
In FY14, Karambunai recorded a loss before tax of RM46.5mil but on a much higher revenue of RM157.36mil. The company has a market capitalisation of RM288.8mil with cash of RM14.28mil and total borrowings of RM17.95mil.
Petaling Tin, in which Chen controls 65%, is involved in property development, investment holding and management services.
For FY14, Petaling Tin’s operating revenue stood at RM17.47mil compared with RM18.73mil in FY13, while loss after taxation was at RM6.07mil in FY14 from FY13’s RM7.03mil. In FY12, it posted a profit after taxation of RM8.53mil.
Shareholders’ funds narrowed from RM365.99mil in FY13 to RM359.92mil in FY15.
The company has a market value of RM84.7mil and has altogether nine properties sitting on about 700 acres of leasehold and freehold land.
It is not indicated as to when these properties were last valued, but they were worth RM394.90mil as of Dec 31, 2014. Among them are 630 hectares in Kota Kinabalu (with a book value of RM270mil), 14.3 hectares in Gombak (with a book value of RM65mil), and the land the company’s headquarters sits on in Section 53 Petaling Jaya (with a book value of RM22mil).
Noteworthy is that Chen has a 26.54% direct interest in Petaling Tin, while his deemed interest is 7.54%. His private vehicle Cartaban Nominees Tempatan holds a 15.49% stake in the company.
The other major shareholder is Emden Investment Ltd, which holds 30.98% of the company.
Notably, his son Chen Yiy Fon is the chief executive officer of both Petaling Tin and the Karambunai group.
In contrast to Karambunai and Petaling Tin, NagaCorp is by far a bigger company with a market capitalisation of RM12.17bil.
For FY15, the casino operator posted a net profit of US$172.6mil (RM673mil) compared with US$136mil earlier.
While it is unclear why Chen is privatising these companies, it is likely that he has sufficient funds coming from his lucrative casino business in Cambodia to do so. What he does next with the land in both companies will be closely watched.
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