Bernas eyes relisting in 2020?

Article in The Edge Financial Daily dated March 30, 2017: "Bernas eyes relisting in 2020".

One snippet:

That appears to be in sharp contrast with an earlier announcement to Bursa:


"after due enquiry with our Directors and major shareholders, the Board of Directors of Padiberas Nasional Berhad (“Company”), wishes to inform that as at today, the Company is not aware of any written arrangement on the following:

(i) any corporate restructuring that includes an impending relisting plan"


The authorities should look into this case.

Next to this, there is the very serious issue if all minority shareholders have been treated equally.

Bernas' worrying financials

My attention was drawn to an article in The Edge Malaysia with the above title.

I have written about Bernas in the past (here and here), about the serious (alleged) possibility that Bernas' minority shareholders were not treated fair and equal, which would imply a clear breach of the rules. No news yet from the authorities (Bursa, SC or SSM) regarding this matter, but then again, enforcement against VVIPs has never been their strongest point, to put it mildly.

After it's delisting Bernas was not hindered anymore by those "pesky" minority shareholders, and apparently it used this freedom to forward huge amounts of money to its parent company (something that would have required the approval from minority investors, besides a healthy dose of transparency).

It also hugely increased its dividend policy, money that now does not need to be shared anymore with their previous minority shareholders who were bought out.

From RAM's website: "RAM Ratings downgrades ratings of Bernas’ sukuk, some snippets:


After the delisting of Bernas in April 2014, the Group had channelled large amount of advances to its holding companies and related parties totalling over RM700 million. “Support of this nature and magnitude is not within RAM’s expectation and such a move implies increased influence and explicit control of TWM.

The negative outlook reflects our concerns over additional shareholder-friendly manoeuvres and operational challenges that would further compromise Bernas’ financial profile. Although new advances to shareholders/related parties are unlikely, the Group has committed to future dividend payouts (from fiscal 2015 onwards) that are much higher than the Group’s net earnings.

We had previously expected Bernas to gradually pare down its debts following the collection of delayed subsidy receivables from the Government of Malaysia in 2014. On the contrary, the Group’s debt level had increased 20.0% to nearly RM2 billion (end-December 2013: RM1.64 billion). Besides advances, Bernas had also taken on additional trade lines to fund its heftier working-capital needs. Given the expected erosion of its equity base (from outsized dividend payments) and the absence of any improvement in its profitability, the Group’s gearing ratio could reach 1.8 times by FY Dec 2016 while its FFODC will likely stay below 0.10 times.


Bernas' actions seem puzzling to say the least, is this all really prudent?

What is going to be the end play, a heavily indebted Bernas targeting an IPO on Bursa in the near future, playing the "infamous" listing-delisting-relisting "play" with new shareholders having to pump in fresh money to pay of the debts Bernas is now incurring?

Time will tell .....

Bernas: are all minority shareholders really treated fair and equal? (2)

I wrote before about the privatisation exercise of Bernas,

In a new twist to this story, The Malaysian Insider published the following article:

"Story behind Syed Mokhtar’s ‘RM2.25 billion tax-exempt’ Bernas deal revealed, says PKR MP"

In it is again allegedly confirmed that minority shareholders of Bernas are not treated the same:


"In the letter, Syed Mokhtar gave his personal undertaking that he would guarantee the national interests of rice in Malaysia. In the relisting of Bernas, 10% shares of Bernas IPO will be allotted to Putrajaya for the National Farmers Association (Nafas) and the National Fisherman Association (Nekmat). Syed Mokhtar also pledged annual contributions to the welfare programmes of Nafas and Nekmat for five years or until the relisting exercise of Bernas was completed."


And that is simply not allowed, according to the rules.

Will the authorities (Securities Commission and/or Bursa Malaysia) investigate the above and take any action, if appropriate? I guess we have to wait and see, even if action is taken it can often take a very long while.

The shares of Bernas have been removed from the Official List of Bursa Securities with effect from 9.00 a.m., Friday, 18 April 2014.

Bernas: are all minority shareholders really treated fair and equal?

Bernas (Padiberas National Berhad) has been in the news lately. The first attempt by companies linked to Syed Mokhtar AlBukhari to takeover and thus delist the company failed, but a second attempt succeeded (at least regarding the latter part). Rather surprisingly, since the offer was exactly the same.

Regarding the offer price, it seems to be rather low for such a cash cow, an opinion that MSWG agrees with, according to this article in The Ant Daily:


According to the Minority Shareholder Watchdog Group (MSWG), a prudent estimate of Bernas’ intrinsic value is RM3.2 bil or RM6.13 per share. At a conservative 8.5-11.5% discount with at least a 2% perpetual growth rate, the indicative value of Bernas is estimated at between RM4.18 and RM6.13.


Then why did some of the minority shareholders change their mind and accept the low offer? Is it possible that some received a better offer than others?

Comments made by Agriculture and Agro-Based Industries Minister Ismail Sabri Yaakob clearly seem to indicate that. In an article "Bernas delisting ‘good’ for farmers, fishermen" at KiniBiz website, the Minister allegedly said (emphasis mine):


.... Bernas has agreed to his request to pay Nafas and Nekmat RM2 million each annually even though they are no longer shareholders and are not entitled to a dividend.

“(This is so) that Nafas and Nekmat will still have consistent financial (support) … So it’s a good deal for them. They are well taken care of,” he said.

Ismail Sabri said he had received a “personal undertaking” from Syed Mokhtar that Nafas and Nekmat will be offered 5% each of the shares, should the company be re-listed in the future.


Similar articles can be found here and here reinforcing that the Minister really said this.

That is all very nice for Nafas and Nekmat, I have zero problems with them being treated generously and receiving more than the low one-off payment of RM 3.70 per share.

But there are many other minority shareholders of Bernas, and according to the rules, they should be treated the same, they should receive the same offer. Thus they also deserve a yearly payment and an offer a percentage of shares when Bernas is relisted again.

The Capital Markets and Services Act, paragraph 217, clearly states this:

Lee Won Chen of Shearn Delamore & Co writes it in a very clear manner:

So why have the other minority shareholder not received a similar offer?

Nafas and Nekmat have in the mean time accepted the offer, according to the same article:


The National Farmers Organisation (Nafas) and National Fishermen’s Association (Nekmat) had respectively held 3.7 and 3.2 percent of Bernas shares previously.

However, Bernas, now owned by companies related to tycoon Syed Mokhtar AlBukhari, has since bought the shares.

Because of this the public shareholding has fallen below 10% and the shares of Bernas have been suspended since March 21, 2014.


This of course will put even more pressure on the remaining shareholders, holding shares in an unlisted company is not a very attractive proposition for many.

In an interesting twist, Bursa Malaysia asked the company to clarify an article in The Edge Malaysia dated February 10, 2014, and Bernas answered:


In response to your query, after due enquiry with our Directors and major shareholders, the Board of Directors of Padiberas Nasional Berhad (“Company”), wishes to inform that as at today, the Company is not aware of any written arrangement on the following:

(i) any corporate restructuring that includes an impending relisting plan; and
(ii) where the National Farmers Association (“Nafas”) and the National Fishermen’s Association (“Nekmat”) will eventually hold a 5% stake each in the newly listed entity.


The statements of the Minister on one side and Bernas on the other side seem to contradict each other. The behaviour of Nafas and Nekmat (accepting the same offer offer that they refused earlier) seems to put more weight on the statement of the Minister.

Bursa Malaysia and the Securities Commission should urgently investigate this matter and show that they really practice what they preach:

"to promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the overall development of an innovative and competitive capital market."


On a side note, regular readers of this blog will know that I don't like these "listing-delisting-relisting games" at all, they are "played" mostly by the tycoons, at the expense of the minority investors, who hardly stand a chance. I have yet to read a good and proper reason why a company needs to be delisted and relisted, arguments given are often vague along the lines of "the need to restructure the company". The authorities really should do something about this abuse of the rules and the continued disadvantaging of minority investors.