KUCHING: Independent adviser Mercury Securities Sdn Bhd has recommended minority shareholders of Kumpulan Powernet Bhd (KPB) to accept the offer by KPB executive deputy chairman Datuk Dr Mohd Abdul Karim Abdullah to acquire the remaining company shares he does not already own at RM1 per share.
Mercury Securities describes the offer as ‘fair and reasonable.’
“We view the offer as ‘fair’ as the offer price of RM1 represents a premium of RM0.60 or 150 percent over the estimated fair value per KPB share of RM0.40,” it added.
According to Mercury Securities, the offer is ‘reasonable’ as it provides an opportunity for minority shareholders, especially for those holding a significant number of KPB shares, to realise their investment in the company.
KPB shares surged to new high of RM1.40 on Monday, which is 40 percent higher than the offer price of RM1.
The offer will remain open for acceptances by minority shareholders until Nov 13.
KPB independent non-executive chairman Datuk Roshidi Hashim said all the company’s non-interested directors, concur with the evaluation and recommendation of Mercury Securities that the offer is ‘fair and reasonable.’
“Accordingly, the non-interested directors recommend that you accept the offer,” he said in the company’s circular to shareholders.
However, he added: “The decision to be made would rest on your individual risk appetite and specific investment requirements.
“If you so wish and if the trading liquidity permits, you may consider disposing your KPB shares in the open market in the event that market prices of KPB shares are higher than the offer price, after taking into consideration the associated transaction cost and assuming that there will not be any revision to the offer price.”
The non-interested directors are Fong Wai @ Foong Kai Ming, Datuk Arivalagan Arujunan, Tan Yee Hou and Pauline Kok.
As at October 22, Mohd Abdul Karim (offeror) owns 28,737,541 KPB shares or 37.77 percent equity interest in the company.
The persons acting in concert (PACs) with Mohd Abdul Karim collectively hold 11,882,900 shares or 15.6 percent in KPB. They are Grand Deal Vision Sdn Bhd, Mustakim Mat Nun, Sarah Azreen Abdul Samat, Rosland Othman and Azhan Azmi.
This means the offeror and the PACs together own an aggregate of 40,646,441 shares or 53.37 percent in the company.
The offeror emerged as a major shareholder and single largest shareholder in KPB when he acquired 20.04 percent stake in the company on June 20. Subsequently on Oct 2, he raised his stake in the company to 36.13 percent, thereby triggering a mandatory offer obligation to acquire all the remaining KPB shares not already held by him.
The offeror intends to maintain the listing status of KPB on the main market of Bursa Securities.
KPB is principally engaged in investment holding and its subsidiaries are involved in the manufacture of warp-knitted fabrics and property development.
According to RHB Investment Bank, who acts for Mohd Abdul Karim, the offeror presently does not have any plan and/or intention to liquidate KPB or any companies within the KPB group, and that he intends to continue with the existing businesses and operations of the KPB group.
“The offeror together with the board and management of KPB are in the midst of reviewing the business and operations of the KPB group to improve the performance and efficiency of the business operations.
“Further, the KPB group is also undertaking an internal restructuring to streamline operations and processes as well as strengthening the workforce to enhance its capabilities and efficiencies,” added RHB Investment Bank in its offer documents to company shareholders recently.
It said the offeror would continue to work with the board and company management to expand into the business development, construction and/or management projects in the energy, utility, infrastructure segments which include areas under renewable energy and sewerage treatment plants as well as logistics segment (potential new business).
“The management of KPB has commenced discussions with certain utility players in connection with construction works relating to, amongst others, development of small hydro-power and sewerage treatment plants within Southeast Asian regions (identified new business).
“However, there is no assurance that such discussions will result in KPB entering into definitive agreements which include entering into service contracts, with the counterparties of the identified new business,” said RHB Investment Bank.
It added: “The offeror may explore possibilities for KPB to collaborate with other companies under his purview, which may include Serba Dinamik, with a view to create synergistic benefits for projects under engineering, procurement, construction and commissioning contracts.
“In addition, KPB may acquire additional funding to acquire and/or implement the potential new business (including the identified new business) as well as the collaboration between the companies under the offeror purview.
“The funding may include bank borrowings, issuance of debt instruments and/or equity fund raising to be determined by the board if and
when required.”
Mohd Abdul Karim is Serba Dinamik’s group managing director and CEO.
