That Unfair Offer On M3Nergy

I was asked why I did not write on the M3Nergy privatisation saga.

Well...it's a long saga. :D

Let's see where should I start?

Hmmm... it was 29th November 2002.

There was this company called MMM or Malaysian Merchant Marine Bhd. On that day, MMM made the following announcements: Changes in Director's Interest (S135) - Shahrazi bin Sha'ari and Changes in Director's Interest (S135) - Shahrazi bin Sha'ari

The first announcement showed that Shahrazi bin Sha'ari purchased some 2,057,000 shares of MMM at a price of rm 1.00 and the second announcement showed that Shahrazi bin Sha'ari purchased some 13,393,000 shares of MMM at a price of rm 1.00 also.

Now perhaps that would sound like someone who is making a long term investment into the company.

A few days later or exactly 5 days later, the incredible happened. Shahrazi announced he was longer a shareholder! Notice of Person Ceasing (29C) - Shahrazi bin Sha'ari

Maruchi Malaysia Steel Tube Bhd announced that it was buying a 32.5% stake in MMM.

• The Board of Directors of Maruichi Malaysia Steel Tube Berhad (“Maruichi” or “the Company”) had at the Board of Directors’ Meeting held on 4 December 2002 agreed for the Company to enter into a Share Sale Agreement (“the Agreement”) with Shahrazi bin Sha’ari (“the Vendor”) in respect of the acquisition by the Company of 32.5 Million ordinary shares of RM1.00 each which is equivalent to 32.5% of the total issued and paid-up capital of Malaysian Merchant Marine Berhad (“MMM”) for a total cash consideration of RM99.9 Million (“the Proposed Acquisition”).

Well that worked to a price per share worth rm 3.07!!!!

Holy cow!

Huhu! Bought at 1.00 and within 5 days, sell it off at rm 3.07?

WOW! A 300% gain!

Good or what! :P

Who said the share market sucks?

But Maruichi shareholders were not happy.

Oh NO!!!!!!!!!!!!!!!!

• Maruichi aborts MMM deal.
  (From The Star (Malaysia))
  
  MARUICHI Malaysia Steel Tube Bhd, bowing to tremendous pressure from the authorities and minority shareholders, has aborted its plan to buy a 32.5% stake in Malaysian Merchant Marine Bhd (MMM) from Shahrazi Shaari at RM3.07 per share.
  
  In a statement to the KLSE, Maruichi said its board, at its meeting yesterday, decided to rescind the share sale and purchase agreement with Shahrazi, who is MMM chief executive officer and managing director.
  
  In a second statement later, it said that the RM99.9mil that had been paid to Shahrazi - RM35mil on Dec 4, RM64.8mil on Dec 10 and RM100,000 on Dec 11 - would be fully repaid to the … ( source: here ) ( Bursa announcement Share Sale Agreement dated 4th December 2002 pertaining to the Proposed Acquisition of 32.5 million Shares in Malaysian Merchant Marine Berhad ("MMM") )

On 17th December 2002: Changes in Director's Interest (S135) - Shahrazi bin Sha'ari

• Shahrazi acquired back the 32,500,000 shares via Snap Captal

August 2003.

• Trenergy to pay RM61 mln cash for MMM stake
  By Thomas Soon, 9.16pm
  
  Trenergy (Malaysia) Bhd is taking up a 75 per cent stake in the controlling block of 32.5 per cent in Malaysian Merchant Marine Bhd (MMM) for RM61 million cash, valuing the latter at RM2.50 per share.
  
  Under the deal, Trenergy will subscribe for a 75 per cent stake comprising 61 million new shares in SNAP Capital Sdn Bhd, which holds the 32.5 per cent stake in MMM.
  
  In a statement on Aug 28, Trenergy said the company and SNAP entered into a conditional subscription of shares agreement on the same day for the proposed subscription.
  
  MMM managing director Shahrazi Sha'ari and one Tan Sook Yen respectively hold 99.99 per cent and 0.01 per cent stakes in SNAP. Pursuant to this, SNAP will increase its paid-up capital to RM81.25 million from RM20.25 million now.
  
  This confirms theedgedaily.com report on the same day that Shahrazi had struck a deal with Trenergy for the latter to acquire a 75 per cent stake in SNAP for RM61 million.
  
  Trenergy said the acquisition price valued MMM at RM2.50 per share as SNAP's sole investment was its 32.5 per cent comprising 32.5 million shares in MMM.... (see Bursa announcement here ).

So bought at 1.00.. finally sold at 2.50. Nice eh? :D

But amazingly despite the initial attempt to hive off the shares for a 3x gain, Shahrazi Sha'ari, remained as Managing Director and CEO of MMM until May 2006 ( see Change in Boardroom ) and stayed on as a director until November 2006. ( see Change in Boardroom )

And Shahrazi Sha'ari was featured on a Star Business article on Jan 2005.

• Monday January 24, 2005
  Interest in marine lands Shahrazi into shipping
  
  BY LEE KAR YEAN
  SHAHRAZI Sha'ari was only 37 years old when he was offered the arduous task of taking over the management of Malaysian Merchant Marine Bhd (MMM) on his return from his studies and working stint in the United States in 2001.
  
  His venture into the shipping industry was purely by choice as he was into it for the challenge and keen interest in the marine business.
  
  “I came back to Malaysia after the Sept 11 terrorists' attack on the US and I was soon offered the management post in MMM.
  
  “Many people were puzzled by my decision to join the company at that time because of the uncertainties in the world economy and the shipping business was no exception. But I took up the challenge because of my interest in the marine business, I have many friends and contacts in the shipping industry from ship captains, engineers to cooks,” he said.
  
  Shahrazi graduated with a bachelor of arts from Macalester College In Minnesota. He worked in the US for five years in a senior managerial position with a civil engineering company before his return to Malaysia.
  
  Looking back, MMM has done very well indeed under his leadership, chalking up an increase in turnover from RM38mil in the financial year ended Aug 31, 2001 to RM120mil last year. The group's after-tax profit was also up from RM8.7mil in the financial year 2001 to RM11mil in the same corresponding period last year.
  
  Shahrazi said his experience in turning around several companies came in handy. He was previously involved in the restructuring of several companies in the manufacturing, communication, engineering and construction sectors before taking the bold step to go into the shipping industry.
  
  His various senior positions included executive director of the Wira Security group of companies and chief executive officer of the Pacific Asia Consolidated group of companies.
  
  Shahrazi came on board MMM and assumed the position of chief executive officer on Aug 8, 2002.
  
  He was appointed to the board of directors of Trenergy (Malaysia) Bhd as group managing director and chief executive officer on Sept 6, 2004.
  
  “I will give myself three years to build up Trenergy,” he said. “As a CEO, it is my duty to give direction and have a vision for the company. It is my job to restore certainty to the company.”
  
  Trenergy became the largest shareholder in MMM via its acquisition of SNAP Capital Sdn Bhd. Trenergy currently holds 100% interest in SNAP Capital, which in turn owns a 28.7% stake in MMM.
  
  On the steel pipe maker Melewar Industrial Group (MIG) Bhd's decision to purchase a substantial stake in Trenergy via its wholly-owned subsidiary Melewar Steel Services Sdn Bhd, Shahrazi said the latest development would not affect the direction and agenda of the Trenergy group.
  
  “There will be no change in our direction and agenda. The Trenergy board of directors will remain,” he told StarBiz.
  
  MIG had acquired 12 million shares representing 16% in Trenergy for RM38.4mil or RM3.20 per share, making it the single largest shareholder in Trenergy.
  
  MIG said the acquisition would provide an opportunity for the group to venture into the “burgeoning” oil and gas industry and its supporting ancillary and shipping activities at a low entry cost.
  
  The move was also in line with MIG's board decision to diversify into other industries to broaden MIG's earnings base.
  
  MIG managing director Tunku Datuk Yaacob Tunku Abdullah said Trenergy was a well-managed, vibrant and profitable oil and gas player with a lot of potential.
  
  He describes oil and gas as the sunrise industry in Malaysia and MIG will see much growth in this sector in the coming years.
  
  According to analysts, the purchase by MIG is appropriate as the group's steel products will complement Trenergy's floating, production, storage and offloading operations.

Trenergy since had changed its name to M3Nergy....

Then come 2007.

• 28-08-2007: M3nergy to exit M’sian Merchant Marine
  by Lee Yu Tang
  
  KUALA LUMPUR: M3nergy Bhd is exiting Malaysian Merchant Marine Bhd (MMM) by disposing of its entire 28.67% stake and also Islamic preference shares (IPS) in the shipping company for RM33.5 million cash.
  
  It said yesterday Core Attributes (M) Sdn Bhd (CASB) had approached it to acquire the MMM stake comprising 50.37 million shares and 470,000 IPS.
  
  M3nergy’s existing investment in MMM for the 50.37 million shares and 470,000 IPS of RM1 each was RM97.89 million.
  
  “The proposed disposal would enable M3nergy group to exit from its non-core activities and re-focus on its core activity which is in the oil and gas (O&G) industry,” it said.
  
  M3nergy said the cash derived from the proposed disposal would be used in its core activities, which was the O&G industry.
  
  CASB’s core activities are investment holding, property development, provision of general and telecommunication advisory services, food and beverage services and general trading.
  
  CASB’s issued and paid-up share capital is RM500,000 and the principal directors and shareholders are Shahid Islam, Sharlini Marnickam and Suresh Rajaratnam.
  
  “The carrying value of the ordinary shares and IPS under the proposed disposal as at June 30, 2007 is equivalent to the market value on that date amounting to RM15.7 million.
  
  “Based on this carrying value, the group would realise a gain of about RM17.8 million upon completion of the proposed sale of shares,” it said. The proposed disposal is expected to be completed on or before Sept 30.

Trenergy paid 61 million.. now sold at 33.5 million? :P

But the MMM story did not end!

But the sale involved put options and it got messy. The deal was not completed! Here's an announcement in 2009.

• M3NERGY BERHAD ("M3nergy" or "the Company") - FURTHER ANNOUNCEMENT ON THE NOTICE OF PUT OPTION IN RESPECT OF THE REMAINING 20,933,884 ORDINARY SHARES OF RM1.00 EACH IN MALAYSIAN MERCHANT MARINE BERHAD (“MMM”) (“OPTION SHARES”) TO CORE ATTRIBUTES (M) SDN BHD, DATO’ RAMESH RAJARATNAM AND DATIN SL SHARLINI MANIKAM.

Come April 2009, it got even worse!

• M3nergy to sue firm over put option
  
  Published: 2009/04/28
  
  M3NERGY Bhd said it would sue Core Attributes (M) Sdn Bhd (CASB) for breaching a put option to buy more shares in Malaysian Merchant Marine Bhd.
  
  It will also continue to find buyers for its 20.93 million shares of MMM, which was meant to be sold to CASB under the option.
  
  M3nergy’s board will meet again in two weeks to decide what to do next if it fails to find a buyer.

In the midst of all that, in 2008, Melewar offered to buy M3Nergy. Which was rejected...

• Saturday October 18, 2008
  
  M3nergy shareholders advised to reject offer
  
  Melewar’s takeover bid at RM1.20 per share deemed too low
  
  PETALING JAYA: The Melewar group’s move to take over M3nergy Bhd suffered a setback when the independent adviser for the minority shareholders recommended that they reject the offer.
  
  The independent adviser, Kenanga Investment Bank Bhd (KIBB), recommended that M3nergy’s independent directors and non-interested shareholders reject the offer as the RM1.20 per offer share was too low....And recently M3Nergy is being offered to be taken private by Adamus Avenue.

And here is the latest news on M3Nergy: M3nergy: Adamus offer unfair and unreasonable‎

• Saturday July 24, 2010
  M3nergy: Adamus offer unfair and unreasonable
  By EDY SARIF
  
  PETALING JAYA: M3nergy Bhd believes the conditional takeover offer from Adamus Avenue Sdn Bhd was unfair, unreasonable and therefore, not compelling.
  
  It told Bursa Malaysia yesterday that the offer did not seem to reflect the underlying value of the company as well as the prospects of the company’s business.
  
  It added that the board had concurred with the opinion of its financial advisor HwangDBS Investment Bank Bhd (HDBS) on the offer and received similar view from TA Securities Holdings Bhd, which was the independent adviser. Both parties stated that the offer was unfair and unreasonable.
  
  However, it said the board’s decision not to pursue other offers was independent of the appointment of HDBS and it was primarily driven by the fact that there were no other offers being presented to the board at the material time.
  
  To recap, in May, Adamus Avenue Sdn Bhd had launched a conditional takeover of M3nergy Bhd, offering RM1.85 per share.
  
  Adamus is a privately owned by M3nergy Bhd managing director and chief executive officer Datuk Shahrazi Sha’ari.
  
  The RM1.85 offer price was at a premium of 16 sen or 9.47% over the last closing price of RM1.69 on May 14.
  
  Shahrazi’s wife Datin Tinawati Nordin is the other shareholder in Adamus Avenue.
  
  The corporate exercise is to acquire all existing 126.65 million shares of RM1 each in M3nergy not yet owned or held by the offeror.

How?

Me? I am glad I am not a minority shareholder in M3nergy but if I was, I be asking why is the offer so much lower than M3Nergy's assets value.