KUCHING: Sarawak Consolidated Industries Bhd (SCIB)’s non-interested directors have recommended the company’s holders of offer shares in relation to the unconditional mandatory take-over offer of the company by Datuk Dr Mohd Abdul Karim Abdullah (offeror) to reject the offer.
Under the take-over offer, the offeror will pay RM1.10 per offer share to the accepting holders. The offer closes on Sept 26.
According to independent non-executive director Datuk Soedirman Aini, the non-interested directors, after careful assessment of the terms and conditions of the offer as well as the evaluation and recommendation by independent adviser —KAF Investment Bank Bhd (KAF IB) — have concurred with the recommendation of KAF IB that the offer is “not fair and not reasonable.”
Therefore, the non-interested directors recommend that you reject the offer, he said in a circular to SCIB holders.
KAF IB, in its advice letter, said the offer price of RM1.10 is lower than the estimated fair value per SCIB share of RM1.14 to RM1.23, which represents a discount of 4 sen or 3.51 percent to 13 sen or 10.57 percent respectively.
“Notwithstanding the offer price represents a marginal discount to our lower range of fair value, we are of the view that the estimated fair value is closer to the high range of the fair value, taking into account the followings:
• growth potential of SCIB in light of the prospect of the Sarawak economy;
• the magnitude of the existing infrastructure projects being undertaken in Sarawak;
• the position of SCIB as one of the main suppliers of precast concrete products in Sarawak, and
• the background, experience and business acumen of the
offeror and his intention to diversify and drive the SCIB group,” added the independent adviser.
Furthermore, KAF IB said the offer price represents a discount of 0.27 percent and 3.17 percent over the 5-day and 1-month volume weighted average price (VWAP) of SCIB shares respectively up to the latest practicable date (LPD) of the independent advice circular (IAC).
“Premised on the above and overall assessment of the offer price, we are of the opinion that the offer is not fair,” it said.
KAF IB said the offer is also “not reasonable” after considering the offeror’s intention to maintain the listing status of SCIB on Bursa Securities Main Board.
“Holders who choose not to accept the offer may continue to hold their offer shares and enjoy any potential capital gains or yield accretion in the future, in the event of better financial performance of the group under the direction of the offeror.”
KAF IB said although SCIB shares are relatively illiquid, holders with small blocks of SCIB shares may still have the opportunity to dispose their shares in the open market subsequent to the closing date as the offeror intends to maintain the listing status.
Soedirman said “The non-interested directors wish to advise the holders to take note of the market prices of SCIB shares before arriving at a decision on whether to accept or reject the office.
“If the market prices of SCIB shares are above the offer price, it would be beneficial for a holder to dispose of his/her SCIB shares in the open market, if the liquidity permits, rather than accepting the offer.
“However, it is important for the holders to keep in mind of the transaction cost involved should they decide to sell their SCIB shares through the open market.”
The offeror currently owns 44.27 percent stake in SCIB.
