Wednesday, September 07, 2011

Bandar Raya Asset Sale: Yet Another Ludicrous RPT Transaction

I have always been against

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.
Arrrrghhhhh!!!!

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?

Comeon....

And yeah.. it's a
































  • Questions over Bandar Raya property offer

    By Shahriman Johari
    Published: 2011/09/07

    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.
And that's another shocker!!!!

Less than two weeks for the board of BRDB to decide???????

What the......

2 weeks to decide?????

Comeon..... are we talking about lobsters here?????

Holy cow!!!!

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 ........

Sigh!

20 comments:

M.A. Wind said...

The boss, you are aware he is linked both to Mieco (you wrote many times about that one) and CLOB (another black page in Malaysia's CG book, forcing out investors at the very worst moment in time, the 1997 crisis). He made a killing in commissions with the CLOB and alienated many Singaporean investors, who (I am sure) are still angry and not going to invest one cent in Malaysia. Large long time damage for Malaysia, but who cares?

"Dato’ Mohamed Moiz Bin J M Ali Moiz has been Non-Independent Non-Executive Chairman of the Board of Mieco Chipboard Bhd since May 19, 2010. He graduated with a Bachelor of Science degree in Business Administration and International Finance in 1985. He joined Timbco Sdn Bhd, a company involved in timber trading, processing and forestry management, as Project Manager from 1985 to 1986. In 1987, he was appointed as Chief Executive Officer of the Tradium group of companies, which has interests in property development, fashion retailing, manufacturing, F & B and equity investments. In 1999, he was appointed as Chief Executive Officer of Effective Capital Sdn Bhd, a company which undertook the migration of the CLOB securities from the Central Depository (Pte) Limited in June 2000. Currently, he also sits on the boards of Bandar Raya Developments Berhad (Chairman) and several other private limited companies. He is Member of the Executive Committee of the Company."

bonny b said...

Dear All,
The manner of migration of CLOB was at best a scandal that only shameless politicians can allow. It was daylight robbery, and had contributed to today's sorry state of the local bourse. So, in this context, how can we expect the same bunch of felons to hold any respect for some remote ideal called Corporate Governance? Maybe in another time and place, but certainly not in today's Malaysia. The authorities here now are simply of a lower mentality.

Moolah said...

Mic: Just remembered the MMC/Senai Airport RPT thingee.

Moolah said...

LOL! And if the message is private, how am I gonna reply back?

:P

Mr ICICI said...

incredibly scandalous.
daylight robbery.
absolutely shameless.

i can't imagine the price being fair if the chairman is buying the assets.

shopping malls typically have a few years of gestation period before they start being profitable on a sustainable level. i believe these malls are taken away from bdrb just when they are beginning to reap good returns for the shareholders.
in essence, good assets in their prime are being taken away from bdrb cheaply, leaving all the rotten eggs in there.

good that you pointed out the 2 weeks for the board to decide...
the corporate governance is just appalling.

Moolah said...

Mr ICICI: And we are also talking about the Bangsar Shopping Center wor.

If BRDB wants to sell... I am sure many foreign buyers would be VERY, VERY interested!

Prime asset... need to dispose via a RPT meh?

random said...

walao liddat also can ah? u can be sure the boss will sell to the highest bidder himself

solomon said...

A plain thinking - major shareholder might eventually get the properties in 20% discount if BRDB decide to payback 100% of sale proceed to shareholders.

Wei Moo, I am Non Independent Chairman....did I told you in Annual report??

Tell me how a minority can block such deal, if there is no current law and the enforcement we are seeing suggest a lot of improvement required?

Moolah said...

Well, yes, it's not goin to be easy for minority shareholders to block the case but all the minority shareholders needs is some help.

For example, the takeover bid to take MBF Holdings private. It was not a clear cut case but with some strong hands backing against the deal, the minority shareholders won.

As it is, the minorities can 'attempt' to vote against the deal. All the minorities needs is some backing from funds holding the stock.

And the meanwhile, the minority shareholders should quickly write to the SC and MSWG and Bursa complaining the utter nonsense of the deal.

And voice their opinion in the press too!

Comeon... they should at least fight to the very end to stop this crappy deal.

And maybe 'if possible', get a court injunction to stop the deal.

Seriously, the minorities shareholders should at least try!

Never give up!

And if all these fail, the minorities should VOTE with their feet.

Yes... avoid such stocks like plague in the future. Remember who they are!

And hey that's an extremely important advice to remember. Remember the current PMI issue? Remember the crappy privatisation of Metro Jaya?

Think about it.. if investors/minority shareholders had learned from the past and understand the crappy dealings of the past, then they should not have been caught in the current privatisation attempt on PMI.

Moolah said...

Exactly Random!

The wonderful corporate governance from our corporate leaders.

Sigh!

I do hope the minority shareholders understand that they are going to get short changed in this ludicrous RPT transaction!

solomon said...

CG issues aside, for PMI, I love to see Vincent Tan vs Khoo again on the court....one last corporate duel.

As for BRDB, what is the difference of berhad and sendirian berhad now?? It look more like lobster buffet, take want u like and empty the tray...

Moolah said...

The thing is SC and Bursa can easily do something about this.

Look at the issues.

1. No price mentioned.
2. Offer valid for one week. ( What? )
3. Why the need for RPT for such prime assets?

SC and Bursa had been promoting Corporate Governance but when issues like this crop out, what are they going to do about it?

bill said...

did u know that bangsar shopping complex was recently refurbished with bdrb money ?
rpt after refurbishment, smart eh :D

Moolah said...

well, i believe that currently Capsquare is also being renovated too!

Moolah said...

And the WORST part of the deal is that there are chatter that Bandar Raya would give a nice dividend back to all shareholders after this deal.

Think about it.

The Chairman buys the assets and then he gets a chunk of the money back from these 'rumoured' dividends!

Arrrrghhhhhhh!

Moolah said...

Ok. Will do it the next time I have a reply.

Ah Wai said...

Quote : Bandar Raya Asset Sale: Yet Another Ludicrous RPT "Transaction"

Moo,

May I suggest to you that based on the commonly accepted definition of RPT, the ensuing word "Transaction" is not required. :)

P/S: You are given a choice whether to "privatise" this :P

Moolah said...

Nah.... :P

Ah Wai said...

Mooooooooooo, I caution you not to scold me in the public, ok :/

Yeah, too many links have been made to this post.

You got any new post today?

Moolah said...

LOL!

Today? It's a rainy day... and what else better to do on a rainy day?