I have always been against Related Party Transactions (RPT).
And on Monday, Bandar Raya decided to do one SMALL little related party transaction.
- KUALA LUMPUR: Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, chairman of Bandar Raya Developments Bhd (BRDB), has proposed to buy three properties from the group for a yet to be determined cash amount.
Moiz, through Ambang Sehati Sdn Bhd, plans to buy The Bangsar Shopping Centre and Menara BRDB, CapSquare Retail Centre, and Permas Jusco Mall. The properties are valued at RM942.37 million based on BRDB's latest annual report.
Ambang, which holds 18.88 per cent of BRDB, will buy the assets based on fair value as determined by an independent valuer to be mutually agreed.
"Ambang Sehati believes that this would enable the group to monetise these assets and achieve a more efficient utilisation of its capital," BRDB said in its statement to Bursa Malaysia yesterday.
Incredibly unreal. ( Those statements were taken from Business Times article yesterday.)
Think about it.
Chairman's own company... plans to buy Bandar Raya's 3 prime assets ... and says that this purchase would enable Bandar Raya to monetise these assets and achieve a more efficient utilisation of its capital.
Errrr... correct me if I am wrong or STUPID here but isn't the Chairman saying that currently Bandar Raya is badly managed since the need to monetise these assets means that Bandar Raya has a bad management of its cash and Bandar Raya needs a better utilisation of its capital!
Do you agree? Or I am wrong here?
But then... my problem is...... he's the Chairman for crying out loud!
And the Chairman's idea to solve this problem is to have Bandar Raya dispose of these prime assets to his own company?????
What? What? What?
Is this a joke or what?
And yeah.. it's a Related Party Transactions (RPT)
Well, if Bandar Raya really needs the cash... why sell in a related party transaction?
Comeon... any Ali or Lee would be asking why isn't it?
How would the minority shareholders know if Bandar Raya would get the best price for these 3 prime assets!!!
Is Bandar Raya just gonna sell at the fair price provided by an 'independent' valuer?
But property market is so hot and shopping malls are much hotter!
Capsquare is located at a very prime location, at Jalan Ampang. Why should Bandar Raya even sell at a fair price?
Yes... a fair price is never gonna be justified.
Think about it.
Bandar Raya should sell these assets at a premium!!!
Yes... for goodness sake... Bandar Raya is a property developer and given current hot property market, Bandar Raya should be looking to sell these assets at a premium!
Why short change itself?
And with this deal involving the corporate's own chairman.... what are chances that Bandar Raya and its shareholders get a good deal from this tranasction???
Related party transactions!
On Business Times:
- Questions over Bandar Raya property offer
By Shahriman Johari
Should Bandar Raya Developments Bhd (BRDB) sell choice assets to its major shareholders?
Ambang Sehati Sdn Bhd, which holds 18.88 per cent of BRDB, has offered to buy selected properties from the group.
These are arguably the best of the lot within BRDB's stable of assets, with The Bangsar Shopping Centre and Menara BRDB top of the list. The rest are CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor.
The assets are worth close to RM1 billion with BSC and Menara BRDB making up 70 per cent of the total value, according to its 2010 annual report.
Does BRDB need the money? It probably does. As at June 30 this year it has total debt of some RM769 million. It paid about RM35 million in interest last year, which is more than a quarter of its net profit in the same period.
Analysts also agree that it needs cash for further property development. It only has some RM73 million in cash and short term deposits.
But should the board of BRDB restrict the buyer to just Ambang, owned by four investors led by BRDB chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz?
It shouldn't. If the objective is to raise as much money from an asset sale, it should invite other bidders. Indeed, rumour has it that a lot of parties have approached BRDB about buying just the BSC. Having other bidders would probably help BRDB to get more money which would also benefit its shareholders.
Industry executives also say that shopping malls are currently in demand by local and foreign investors. In May, Hong Kong's Cheung Kong Group bought three Malaysian malls for more than RM400 million.
Another important question is why would BRDB want to offload assets that provide steady income to the group. It is now a common theme for developers to have that recurring base to offset lean years.
BRDB's property business made a pre-tax profit of more than RM146 million in 2010, its biggest contributor. Its manufacturing and construction business made pre-tax profits of less than RM3 million last year.
This means that Ambang or any other interested party must fork out quite a sum to compensate BRDB for lost future earnings.
In less than two weeks, the board of BRDB will have to decide on Ambang's offer. Although the promise of quick cash is tempting, ultimately, minority shareholders will have to decide since the offer is a related party deal.
Less than two weeks for the board of BRDB to decide???????
2 weeks to decide?????
Comeon..... are we talking about lobsters here?????
And best of all, the price is yet to be determined!!!!!!!!!!!!!!!!!
How can la!
Come on Bursa.... what kind of stock exchange is this???
2 weeks to decide this deal and no pricing?????
If I am on the BRDB board, I would tell the board where to stick this proposal ........