Weekly roundup: MISC, growers scheme, RBTR

Wishing all readers happy holidays.

Petronas & MISC
More and more pressure is mounted on Petronas to increase their offer price and on EPF to reject the current offer on the table.

P Gunasegaram wrote about the issue in Malaysiakini, the article can be found here for free. The article is very good, I strongly recommend it to the readers, nothing more to add.

MSWG has also entered the battle, in "The Observer" dated February 7, 2013 they write (emphasis mine):

"As the offeror already held 62.67% of total MISC shares, it requires another 27.33% to reach not less than 90% to have MISC delisted. However to compulsorily acquire MISC the threshold level must reach 96.3%. And to ensure the privatisation is successful and accepted by the minorities a better price should be offered.

In addition, the points to note for readers are as follows:

1. Shipping is mired with many challenges and low freight rates. More importantly we need to understand the long term contracts at good rates versus that of spot transactions which are subjected to competitive rates.
2. MISC disposed the loss-making liner business, thus the situation should look more promising for the company.
3. Last but not least MISC had issued rights issue at RM7.00 in 2010 for every 5 shares held. Based on this the average cost per share was about RM8.25 and with the offer price of RM5.30 per share, investors who had subscribed would suffer a significant loss.

We will look at it again the fairness of the offer upon the issuance of the offer document."

As usual, I have nothing against a General Offer, in the contrary, but I hate those accompanied by a "delisting and compulsory acquisition threat", against which minority shareholders have hardly any chance. In this particular case, should minority shareholders who decided not to sell when the MISC shares were going for around RM 8 (between 2005 and 2011) be pressured to sell at a much lower price?

EPF claimed it is actively fighting for its rights, this case might be good to prove it means business.


Country Heights Grower Scheme
"All's well that ends well."

Many questions are still not answered, like:

• Were the investors properly informed about the marketing expenses?
• Were the investors timely informed about the situation of the low yields at the plantation?
• Was the independent report of sufficient quality, highlighting all important issues?
• Why the hurry, with all being scrambled just before CNY?

But the result (with the improved offer and the faster handling of all money within six months) looks pretty good for the investors. At the end of the day, it is the result that counts. A good day for shareholder activism in Malaysia.

Still a good moment for the authorities to relook at the whole saga, if things can be improved regarding these alternative investment schemes.

For a long list of related articles, please visit MSWG's website on this subject.


RBTR

The Securities Commission has filed a suit against RBTR and seven other defendants:

RBTR ASSET MANAGEMENT BERHAD
AL ALIM BIN MOHD IBRAHIM
VALENTINE KHOO
LOCKE GUARANTY TRUST (NZ) LIMITED
LOCKE CAPITAL INVESTMENTS (BVI) LTD (British Virgin Islands)
ISAAC PAUL RATNAM
NICHOLAS CHAN WENG SUNG
JOSEPH LEE CHE HOCK

The details can be found on the website of the SC. I have written about this case before.

“We are concerned that no further action was taken because the case involves Bank Rakyat chairman Tan Sri Dr Syed Jalaludin Syed Salim and Bank Rakyat managing director Datuk Kamaruzaman Che Mat,” he added. Bank Rakyat had once held a 20 per cent stake in RBTR and lent its “Rakyat” name and logo to RBTR, then called Rakyat BTR Capital Partners Sdn Bhd, when RBTR had solicited funds from the public from mid-2007 till mid-2008. Syed Jalaludin and Kamaruzaman were directors of RBTR before Bank Rakyat sold its stake in 2008.


Searching for "Rakyat" in the statement of claim gives the following three hits:

26. In early 2007, Isaac was introduced to Al Alim by one Tan Sri Dato’ Dr. Syed Jalaludin Syed Salim, the then Chairman of Bank Rakyat Berhad and Director of RBTR, to explore new business opportunities.

43. At all material times during the marketing and/or promotion of the EDI Scheme to Malaysian investors , RBTR described it self as “Rakyat BTR”, an “associate of Bank Rakyat Group’. SC contends that RBTR therefore deliberately gave the impression to the Malaysian investing public that its products were in fact associated with and/or were endorsed by Bank Rakyat, which representation was in fact untrue. SC further contends that this representation was critical towards inducing the Malaysian investing public to invest in the EDI Scheme.

107. Particulars of Breach: (d) (i)
using the “Bank Rakyat” logo and describing itself as an “Associate of Bank Rakyat” in the EDI Scheme Promotional Material without the knowledge or acquiescence of Bank Rakyat knowing that this was likely to be material in inducing investors to participate in the EDI Scheme;


We need to wait for details from the civil suit to find out more details regarding this case and Bank Rakyat and its directors, enough questions remain. For instance:

• Bank Rakyat must have noticed that RBTR was promoting the EDI Scheme with the Bank Rakyat logo on it, did it take immediate and decisive action?
• Did Bank Rakyat have a 20% stake in RBTR, if so when did it dispose of it?
• Who were the directors of RBTR from mid-2007 until now, are they all included in the civil suit, if not why?