MAA Group board could propose revised offer price

Scomi Group Bhd surprised investors when it proposed to revise its current issued share capital reduction from RM224.96mil to RM3mil from the earlier RM40mil.

KUALA LUMPUR: MAA Group Bhd has issued a clarification that the rules under the Takeover Code issued by the Securities Commission does not impose any restriction on revisions to the offer price under the proposed selective capital repayment (SCR). 

“As such, the joint offerors may, at their discretion, propose a revised offer price,” it said in a statement to Bursa Malaysia on Tuesday.

However, a revised offer price was provided that all parties involved, including the independent adviser and the shareholders, were given sufficient time to consider the revised offer price prior to the EGM or any adjournment thereof.

It issued the statement following an article in StarBizWeek on May 18 that  “Obstacles ahead for MAA’s privatisation plan”.

A business weekly also published an article entitled “MAA minorities want more from privatisation offer”.

StarBizWeek reported that ever since MAA announced on Feb 27, 2019, that its major shareholder, the Melewar group, was proposing that the company undertake the SCR with a repayment of RM1.10 a share, questions have been raised about whether the price is fair.

This is because the company’s net asset per share stands at RM1.94 – which is 84 sen higher than the SCR price. MAA is a cash-rich company, which also has no borrowings. 

According to its recent financial report, the group had RM251.1mil in cash as at Dec 31, 2018. Just based on this figure, without taking into account all other assets, MAA’s cash per share already amounts to 90.8 sen.

 Aside from this, MAA has receivables from Zurich Insurance that are due by end-June of RM93.8mil and RM48.4mil in quoted and unquoted financial assets.
Based on MAA’s issued shares of 273.5mil, this translates to more than RM1.40 per share.

This is from the group’s disposal of its 75% stake in MAA Takaful Bhd (now known as Zurich Takaful Malaysia Bhd) in June 2016. 

“The cash, receivables and financial assets represent the liquid assets. The company still has some property assets and an interest in a insurance business outside Malaysia,” says a shareholder. Based on these figures, one can understand why Laxey claims that the SCR price undervalues the company.

However, MAA has been a Practice Note 17 (PN17) company since 2011, and is loss-making and does not have a core business.

In the fourth quarter ended Dec 31, 2018, MAA posted a net loss of RM11mil, and for the full year period, a net loss of RM27.5mil. Hence, investors reacted with optimism when the privatisation plan was first announced.

The company’s share price surged, hitting limit-up before closing at a multi-year high of 90 sen on the very next day. 

This was also due to the SCR price of RM1.10 per share being at a notable 83.3% or 50 sen higher than its closing share price on the last trading day prior to the announcement.

The EGM will be held on May 29.