Thursday, 7 March 2013

Hong Leong Capital to be delisted: many questions

I received the following anonymous comment:

"I saw this news and thought it was disgusting. I must say the adventurous shareholders who do not sell got a pretty good deal but not to those who sold at the news of takeover."

And a link to the article in The Star:

"Trading in Hong Leong Capital Bhd's shares will be suspended on April 15 as it does not meet the public shareholding spread. Its last trading day will be on April 12.

Bursa Malaysia Securities said the suspension is under the Main Market Listing Requirements.

At the close of trade on Wednesday, Hong Leong Capital's share price was up 40 sen to RM3.40, which was nearly double the RM1.71 takeover offer price by Hong Leong Financial Group Bhd (HLFG).

On March 1, Hong Leong Capital said following the close of the unconditional voluntary take-over offer by HLFG to acquire all the remaining Hong Leong Capital shares not already held by HLFG for RM1.71 per offer share, the public shareholding spread was 9.66% as at Feb 28.

Hong Leong Capital said it was not in compliance with Rule 8.02(1) of the Listing Requirements. It also said the public shareholding spread was also lower than the 20.42% level of public shareholding spread accepted by Bursa Securities.

Bursa Securities then said it would suspend the trading of Hong Leong Capital shares immediately upon the expiry of 30 market days from March 1.

The suspension would take effect on April 15, which was the market day immediately following the expiry of 30 market days from the March 1 announcement.

This meant the suspension would only be uplifted by Bursa Securities when it fully complied with the required public shareholding spread or as may be determined by Bursa Securities.

However, Hong Leong Capital had then stated it did not have any plan to address the non-compliance with the public shareholding spread requirement."

Although the take-over offer had hardly any acceptance, the company will still be de-listed.

The authorities have been very quiet on this case, while many rumours have been flying for quite some time. I think it is very much needed that they at least announce they are investigating this case.

At the very least the case is puzzling, but some will say it is "disgusting", as the anonymous commenter wrote. Most likely relating to the feeling that the small investors have hardly any power at all on the Bursa, where the big boys are perceived to rule.

Bursa Malaysia and the Securities Commission really should level the playing field more.

What exactly has been going on here in this case, will we ever know?

The only good part is that courageous minority investors who held out, can currently sell in the market at a nice price. But the ones that have sold at a more early stage, how are they feeling?


  1. The price of HLCap has doubled from the Offer price. Wondering how the price will move towards the suspension of trading? Minority shareholders will be in limbo as HLCap doesn't intend to comply with the requirement. It will be suspended from trading indefinitely and eventually delist from the Bursa.

  2. Agree, it is anybody's guess, I suppose.

  3. One question. The sterling performance of HLCap share price recently is due to the buying activities of one Datuk Yu Kuan Chon. Isn't this tantamount to manipulation of stock price?