Thursday, March 31, 2011

Perisai: Life Is Too Damn Good!

The following is taken from Star Biz: Perisai acquisition draws interest

  • On Tuesday, Perisai said it was acquiring Garuda Energy (L) Ltd from Nagendran Nadarajah for a total of RM212mil, to be paid for in cash and shares. Nagendran will end up with 11% in Perisai, having just sold his 19% stake in Perisai to Singapore-listed Ezra Holdings Ltd a year ago at 48.5 sen a share for a total of RM64mil. It isn't clear why he is coming back into a company that he left not long ago. Nagendran declined to comment. More significantly, at the time of Nagendran's exit from Perisai last year, he had acquired Garuda from Perisai at only US$5mil. “On the face of it, the transaction does raise eyebrows over whether the valuation is fair and whether it is a related party transaction,” said an analyst....

So let me get this straight up.

Nagendran Nadarajah had sold his stake in Perisai for 64 million.

He bought Garuda from Perisai for US$5 million.

Apparently that was a year ago.

And now Perisai is buying back Garuda from Nagendran for a nice tidy price of US$70 million!!!

Ok, apparently Garuda is now slightly different.

From the edge, Nagendran returns to Perisai

  • Garuda Energy owns a jack-up rig, namely Rubicone, which is being converted into a mobile offshore production unit (MOPU) and the makeover works are expected to be completed by May.

So it's gonna be a jac-up rig but... hey... makeover works are not even completed yet!

And yet Perisai is buying back Garuda for US$70 million!!!

In a news flash yesterday morning from the Edge (strange I can't find the url of the article but that article can be viewed here: )

  • RHB Research said on Wednesday, March 30 that this was an unusual transaction which brings the former CEO back into the company, and more so given Perisai had sold Garuda to him in mid-2010 for just US$5 million cash. In early-2010, Garuda had acquired a jack-up rig for US$5m cash, which Perisai now appears to be targeting in this acquisition. Other than a change in name (from Hercules 191 to Rubicone) the rig is currently being converted into a MOPU. The rig has also been chartered out to Gryphon on a 2+1 year bareboat charter basis for US$25 million per annum. “We are concerned about the transaction and the new issue of shares, which will give Nagendran a 13.5% stake at a 20% discount to the current share price of 81 sen. “This will dilute current major shareholder Ezra Holdings' 19% stake to 17%. Moreover, we believe there is a corporate governance issue relating to the effective purchase of the asset at 14x premium to the original disposal price of the same asset,” it said.
WOW! A 20% discount!

Anyway... apparently ... the market is loving Perisai way too much! Let's fly up, up and awayyyyyyyyyyyyyy!


  • The Board of Directors of Perisai wishes to announce that Mr. Nagendran C. Nadarajah, the Managing Director/Substantial Shareholder of the Company has entered into a Share Purchase Agreement dated 9 April 2010 with HCM Logistics Limited, a wholly-owned subsidiary of Ezra Holdings Limited, Singapore, for the sale of his entire direct and indirect shareholdings in the Company representing approximately 19% of the capital of the Company ("the Disposal"). The Disposal is expected to be completed on or before 7 May 2010. Save for above, none of the other directors and persons connected to them have any interest in aforesaid disposal. This announcement is dated 9 April 2010 .
Sold 9th April 2010....

And in regarding Garuda... a few months earlier, back in Dec 2009. From the Star Biz Perisai acquires jackup drilling rigs for rm34mil

  • PETALING JAYA: Perisai Petroleum Teknologi Bhd has acquired two jackup drilling rigs for US$10mil (about RM34mil). In a filing with Bursa Malaysia, Perisai said its units Garuda Energy (L) Inc and Hummingbird Energy (L) Inc entered into a purchase and sale agreement with Cliffs Drilling Co and The Offshore Drilling Co for the acquisition. It said the acquisition would provide a platform to convert the rigs into mobile offshore production and storage units and to generate robust earnings by hiring them to oil and gas field owners. “The acquisition is synergistic to the evolved activities of Perisai to serve as a one-stop centre for its planned marginal field development and deepwater activities,” it said.

Garuda bought 2 jackup drilling rigs for US$10 million.

And that was Dec 2009.

And in 2010... how much did Perisai sold Garuda to Nagendran for? Answer? US$5 million!

ps: Life is simply too damn good and I think I am in the wrong freaking business!!!!!


Do see update on this posting: RHB Clarifies Its Statement On Perisai


snowball said...

LOL...I think everyone will think that they are in the wrong field too. Interested in starting a JV with me to buy up old oil rigs and sell it back at 14x? I think can get quite a lot of person on board with such an impressive return.

From the same starbiz article:
“CIMB Research said Garuda would contribute RM40mil yearly to Perisai's net profit effective the fourth quarter of this year and that the acquisition's price-to-earnings ratio (P/E) is cheap, at 5.3 times.”

If it is so good ,why sell it back to Perisai so cheaply? Why go through Perisai? They have already secure a contract right? It seems that there is no need to sell it back to Perisai but why they still sell it back? Analyst did not ask any question on that?

I have a sneaky feeling that the whole deal is structure such a way that it did not require any shareholder approval or to allow Nagendren proxy to vote the deal through. Ezra may be part of this thing as well. Their accounting in Singapore is very suspicious. Scum tends to attract scum. By Bursa listing rule, Nagendren is considered to be a major shareholder if he had not sold his stake. So, this clever financial engineering more or less allow the transaction to pass through during the EGM seeking for shareholders approval.

So, why don’t our research houses says that? Everyone sees it, everyone knows it, but, why they still come up with this sort of research that says the deal is good for Perisai? Don’t they know that a lot of small time investor actually rely on the stuff they churn out?

K C said...

Good on you to expose this type of scam. Sigh, analyst who is a CFA is supposed to be a professional. A professional should adhere to certain ethics and professionalism because like Snowball said, small time investors rely on their analysis and recommendations. Instead, CIMB is collaborating with those scumbags to cheat the retail investors. Who is protecting the retail investors, the media, their brokers, SC, the elected Yang Berhormat? Non! An investor must use his own best judgement, all the information available (bearing in mind that publicly available information is never equivalent to insider information).

Kris said...

Damn..i need to change job?!!!!

snowball said...

Hi Moolah,

Added something on top of the points you have raise on this post on my blog :