Wednesday, 19 September 2012

BRDB offer: "not fair but reasonable"

From the website of The Star:

Independent adviser recommends acceptance of Bandar Raya Developments buyout

The independent adviser for Bandar Raya Developments Bhd (BRDB) has recommended that minority shareholders accept the RM2.90 per share general offer by the company's major shareholder, deeming the offer as “not fair but reasonable”.

Major shareholder and chairman, Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, who owns 18.47% of BRDB via his private vehicle Ambang Sehati Sdn Bhd, had earlier made an offer to acquire all the shares and warrants of BRDB at RM2.90 and RM1.80 respectively. Moiz has been BRDB chairman since February 2002

The independent adviser, namely AmInvestment Bank Bhd, said in a circular to shareholders that the offer price for the shares represented a 91 sen or 23.88% discount to the estimated revised net asset value of the shares. “In our view, this 23.88% discount renders the share offer price of RM2.90 to be not fair,” it said.

However, it has recommended that shareholders accept the offer as the offer is considered not detrimental to them since the shares and warrants have consistently been trading below the offer price for the past three years up to July 30, when the offer was made.

Furthermore, AmInvestment Bank said BRDB had not received any other offer for the company's shares or its assets and liabilities.

It said the share offer price represented a premium ranging from 39 sen to 53 sen per share over the five-day, one-month, three-month and six-month volume weighted average market price up to July 30 while the warrant offer price represented a 36 sen to 52 sen premium over the same periods.

It added that the share offer price's 39-sen premium based on the five-day volume weighted average market price “is within the range of successful precedent privatisation transactions in Malaysia of 2.46% to 37.50% since January 2011.”

AmInvestment Bank also reminded holders of the warrants that these securities would expire on Sept 26, after which they would have no value.

It said that based on the share offer price, the annual gross dividend yield for the shares for the past two years was about 2.59%.

Ambang Sehati had proposed the acquisition of The Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall early last September on a fair value basis. The properties had a total value of RM942.37mil.

But the offer to buy the properties at RM914mil fell through several weeks later after questions arose over the price, motives behind the acquisition, the identity of the ultimate shareholders behind a 23.57% block of shares held under a nominee account for Credit Suisse and the company's prospects after losing properties generating recurring income.

It was then decided that the properties would be sold via open tender by the first quarter of this year with Ambang Sehati participating but the tender for the properties was never carried out. This was followed by the general offer by Ambang Sehati to buy out the rest of the shares in BRDB for RM1.17bil cash.

BRDB closed unchanged at RM2.85.

Is the identity of the large block of shares already revealed? If not, why not, should there not be transparency regarding this important matter?

Interestingly, the major shareholder of BRDB was also the same party behind the settlement of the CLOB shares. And sentiment towards the way the CLOB issue was handled is pretty negative (to put it mildly) in Singapore, and might have to do with the luke warm start of the SGX-Bursa trading link. Below is a part of an article is from the Business Times (Singapore):

SGX-Bursa trading link off to a slow start

The trading link between the Singapore Exchange (SGX) and Bursa Malaysia (BM) went "live" yesterday but failed to excite investors - dealers here reported little or no interest among the clients who were said to be more concerned with Europe's debt worries and the US stagnant economy.

"Singapore investors could already trade Malaysian shares for years before this link and vice-versa while clients could also trade through the Internet," said a dealer. "Maybe when the other Asean exchanges come online, interest will pick up."

And from the Straits Times:

"As expected, the first day of the SGX-Bursa link did not have any visible impact on trading activity".

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