Kayin Holdings proposes RM622mil cash repayment
PETALING JAYA: The major shareholder of Selangor Properties Bhd (SPB), Kayin Holdings Sdn Bhd, is looking to privatise SPB at RM5.70 per share through a selective capital reduction and repayment exercise.
The cash repayment will amount to RM622.27mil, which represents a premium of 40.39% to the share’s closing price on the latest practicable date, and a 19.62% premium over the one-year volume-weighted average market price.
Trading in SPB shares was suspended yesterday and will resume today. The stock was last traded at RM4.06.
According to Kayin, which holds a 68.2% stake in SPB, a glut in the property market is expected to limit the group’s development activities over the near to medium term.
Kayin said the decision to privatise the group via the capital reduction and repayment exercise would provide the group with greater flexibility to manage and develop its businesses and undertake corporate exercises which may otherwise require lengthy shareholder and regulatory approvals.
“The number of unsold high-rise residential properties, combined with the oversupply of commercial properties and new developments such as Damansara City and Pavilion Damansara Heights around SPB’s existing properties, would not only drive vacancy rates high and depress effective rental rates of its existing investment properties, but will also limit the group’s development activities, especially in the group’s land bank in Damansara Heights, in the short to medium term.
“The proposed capital reduction and repayment exercise represents an avenue for the entitled shareholders to realise their investment in the company for cash,” said Kayin in a letter to SPB’s board of directors.
The entitled shareholders collectively hold 109.17 million shares or a 31.8% stake in SPB.
Trading liquidity of SPB shares has been low, with an average daily trading volume of about 57,617 shares, which represents only 0.05% of the free float.
The proposed share capital reduction is expected to be funded via the company’s internally generated funds and/or bank facilities to be obtained by SPB.
“We do not intend to maintain the listing status of SPB on the Main Market of Bursa Malaysia and will request SPB to make an application to Bursa to delist SPB and withdraw its listing status,” said Kayin.
SPB’s board of directors, save for Wen Chiu Chi who is deemed interested in the proposed share capital reduction, will deliberate on the proposed share capital reduction and decide on the next course of action.