PETALING JAYA: Garment maker MWE Holdings Bhd surged by 33 sen or 25.38% to RM1.63 as trade closed yesterday, largely on the back of a privatisation offer from tycoon Tan Sri Surin Upatkoon (pic).
The Main Market-listed counter resumed trading at 2.30 pm, following its temporary suspension from 9 am yesterday to facilitate the announcement.
In a filing with Bursa Malaysia, MWE said that Surin, via Pinjaya Sdn Bhd, has requested the company to undertake a selective capital reduction (SCR) and capital repayment exercise.
The corporate exercise involved the the SCR and a corresponding capital repayment of a proposed cash amount of RM1.75 per share to entitled shareholders.
This amounts to a capital repayment of up to RM276.73mil.
At RM1.75, this is 45 sen or 34.6% above the closing price of RM1.30 on March 15.
Pinjaya Sdn Bhd holds a 30.8% stake in MWE, while parties acting in concert (PAC) are Magnum Bhd (1.3%) and Puan Sri Suwini Bingei (0.37%) and Casi Management Sdn Bhd (0.15%).
Surin, a Thai national who is a long-time Malaysian resident, is the ultimate offeror in the privatisation bid.
Pinjaya said that the proposed SCR will be funded via MWE’s internally generated funds and bank borrowings.
“We do not intend to maintain the listing status of MWE on the Main Market of Bursa Malaysia Securities Bhd.
“Privatisation of MWE will allow Pinjaya and PACs to better manage the capital structure and cash management policies of MWE as a whole.
“This will provide greater flexibility to execute long-term strategy of MWE in order to maintain its competitiveness,” said Pinjaya.
Under the SCR, MWE’s share capital would be reduced by up to RM276.73mil.
As the capital reduction is higher than the current share capital, a proposed bonus issue is proposed to increase the share capital so that it would be sufficient undertake the capital reduction and proposed SCR.
Pinjaya said in terms of MWE prospects, its profitability of its existing core business of manufacturing and sale of garments had suffered in the current year.
Its operating profit fell by more than half from RM213.70mil in the nine months ended Dec 31, 2016 to RM11.10mil in the nine months ended Dec 31, 2017.
“The huge drop is due to lower garment sales as a result of the recent slowdown of US consumer markets as well as higher maintenance and labour costs in Malaysia and Vietnam,” Pinjaya said.
Pinjaya also expected the textile sector to remain challenging in the near future due to the fast changing nature of the fashion industry in terms of choice and trend, cost inflationary pressure, weak consumer sentiment and currency fluctuations.
In December 2015, Surin, via Pinjaya, had attempted to privatise MWE but the takeover bid fell through.
The non-interested directors of MWE then had requested for a one month extension from the deadline determined by Pinjaya to deliberate on the offer.
However, Pinjaya declined the request, rendering the takeover offer void.