In The Edge, August 29, 2011 appeared the article “An EPIC lack of transparency”:
“Last week EPIC Bhd. Announced that Lembaga Tabung Amanah Warisan Negeri Terengganu (LTAW) and parties acting in concert had made a general offer (GO) for the shares they did not own at RM 3.10 apiece.
Apart from the GO to existing shareholders, LTAW plan to compensate those who had sold their shares at below RM 3.10 between Dec 10, 2010 and Aug 23, 2011. The cash payment will be the difference between RM 3.10 and the price at which investors sold their shares in this period.
So, why is EPIC so generous?
The trigger for the GO was the completion of the purchase of a 21.6% stake in EPIC from Ahmad Zaki Resources Bhd (AZRB) by LTAW on Aug 23. EPIC’s announcement says the purchase has lifted the equity interest of LTAW and parties acting in concert to 67.24% from 45.67%.
However, the acquisition process had started way back in on Nov 24 last year when LTAW signed a share sale agreement (SSA) with AZRB to buy its stake in EPIC at RM 3.10. The SSA became unconditional on Dec 10, triggering a GO, the latest announcement says.
The fact is, EPIC’s shareholders were not told that the controlling shareholder was obliged to make a GO. It is baffling why the offer was not made as soon as it appeared that the state, acting via LTAW, had triggered a mandatory GO.
In a takeover exercise such as this, transparency and adherence to the rules of corporate governance are of utmost importance. How can we expect compliance from the corporate sector when state authorities do not play by the same rules?”
Oh my, somebody has been sleeping on the job. And that was not the first time as it was already apparent in the 2010 year report:
On page 222 (page 132 of the PDF-file) TISB (Terengganu Incorporated Sdn Bhd) owns 40.59% directly and indirectly. This is wrong since TIS’ ATA’ Ashar Sdn Bhd owned 3.89% of the shares and LTAW 0.98% of the shares, so the percentage of indirect controlled shares should have been 45.46%.
Unbelievable as it is, it seems to be an honest mistake, and the good news is that it is rectified, people who sold their shares in the past after Dec 10, 2010 will also receive RM 3.10. I wonder though what they would do if somebody was actively trading in EPIC shares, would he receive the full RM 3.10 every time he sold his shares and bought some back later on again?
"Increase transparency by providing a Malaysian database similar to the one David Webb has provided on his website. This will be a useful tool for all serious investors and bring back their attention. Secondly, this will be a very useful tool for the enforcers themselves. Thirdly, journalists can tap from this source for their stories."
On the bad side, this is another GO with “delisting and compulsory acquisition threat”. Again, a GO is good, but I hate the "delisting" threat since Minority Shareholders don't stand a chance to fight it.
The “independent” advisor will most likely follow the wish of the majority shareholders (they do in about 99% of the cases in
), so Minority Shareholders will not stand a chance. On a side note: I hope that “independent” advices will be abolished soon, but if the Securities Commission decides not to do, then at least I hope they will rename them to “dependent” advices. Malaysia
The public shareholding spread of EPIC is only 32.7%, since unit trust funds (there are quite a few funds from Public and Great Eastern invested in EPIC) will most likely not be allowed to hold shares in unlisted companies they will be forced to sell. The 25% barrier will be quickly breached, the 10% will most likely follow. Pity, since EPIC is a clearly better than average company: