- Wednesday September 19, 2012
Independent adviser recommends acceptance of Bandar Raya Developments buyout
PETALING JAYA: The independent adviser for Bandar Raya Developments Bhd (BRDB) has recommended that minority shareholders accept the RM2.90 per share general offer by the company's major shareholder, deeming the offer as “not fair but reasonable”.
Major shareholder and chairman, Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, who owns 18.47% of BRDB via his private vehicle Ambang Sehati Sdn Bhd, had earlier made an offer to acquire all the shares and warrants of BRDB at RM2.90 and RM1.80 respectively. Moiz has been BRDB chairman since February 2002
The independent adviser, namely AmInvestment Bank Bhd, said in a circular to shareholders that the offer price for the shares represented a 91 sen or 23.88% discount to the estimated revised net asset value of the shares. “In our view, this 23.88% discount renders the share offer price of RM2.90 to be not fair,” it said.
However, it has recommended that shareholders accept the offer as the offer is considered not detrimental to them since the shares and warrants have consistently been trading below the offer price for the past three years up to July 30, when the offer was made.
Furthermore, AmInvestment Bank said BRDB had not received any other offer for the company's shares or its assets and liabilities.
It said the share offer price represented a premium ranging from 39 sen to 53 sen per share over the five-day, one-month, three-month and six-month volume weighted average market price up to July 30 while the warrant offer price represented a 36 sen to 52 sen premium over the same periods.
It added that the share offer price's 39-sen premium based on the five-day volume weighted average market price “is within the range of successful precedent privatisation transactions in Malaysia of 2.46% to 37.50% since January 2011.”
AmInvestment Bank also reminded holders of the warrants that these securities would expire on Sept 26, after which they would have no value.
It said that based on the share offer price, the annual gross dividend yield for the shares for the past two years was about 2.59%.
Ambang Sehati had proposed the acquisition of The Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall early last September on a fair value basis. The properties had a total value of RM942.37mil.
But the offer to buy the properties at RM914mil fell through several weeks later after questions arose over the price, motives behind the acquisition, the identity of the ultimate shareholders behind a 23.57% block of shares held under a nominee account for Credit Suisse and the company's prospects after losing properties generating recurring income.
It was then decided that the properties would be sold via open tender by the first quarter of this year with Ambang Sehati participating but the tender for the properties was never carried out. This was followed by the general offer by Ambang Sehati to buy out the rest of the shares in BRDB for RM1.17bil cash.
BRDB closed unchanged at RM2.85.
The offer is deemed not fair but reasonable and because it is reasonable the minority shareholder should accept the offer???
Look if it is not fair, it is not fair.
Simple as that.
Why use the share price versus the offer price as yardstick to determine if it is reasonable for the minority shareholder to accept the offer?
The offer should always be gauged against the fair value of the company and NOT AGAINST THE STOCK PRICE!
The independent advisor should have known this better!
Look they admitted already that the offer is not fair.
So why should the minority shareholder short change themselves by accepting any offer less than fair?
Don't ask the investor to accept peanuts for their bar of gold!
Also on Star Business: BRDB buyout in sight.
The article is well written except for the first two lines!
- Wednesday September 19, 2012
BRDB buyout in sight
Minority shareholders offered unprecedented cash price for their stock
THE buyout of Bandar Raya Developments Bhd (BRDB) is one of the more publicised merger and acquisition exercises of the year for a variety of reasons. For one thing, it started off a year ago as a move by major shareholder Ambang Sehati Sdn Bhd to buy over BRDB's prized assets namely the Bangsar Shopping Centre (BSC), Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall for RM914mil.
The deal quickly drew attention, as not only was it a related-party transaction but also because one of the properties targeted by Ambang Sehati was the iconic BSC, a neighbourhood mall which at one time was not doing very well. Following a multi-million ringgit makeover several years back, it became a magnet for the who's who, not only of the corporate world but also Kuala Lumpur's elite.
Over the weeks that ensued, attention was drawn to the deal as some commentators reckoned that the properties might be worth more than the offer price.
The Minority Shareholder Watchdog Group also drew attention to a 23.57% stake in the company, whose voting rights would have impacted the deal one way or another. The ultimate owner of that stake could not be determined despite queries made by BRDB and the regulators.
There was also some grumbling over BRDB's prospects without those prized assets. To be sure though, it isn't clear if there were competing bids for the assets.
Possibly due to the negative press that surfaced after that proposal, and faced with questions over whether BRDB was getting a fair deal for the assets, the company and Ambang Sehati decided to call off the deal. That move was seen by some as a credible move by BRDB in the best interest of shareholders.
BRDB later said it would conduct an open tender for the assets but that did not materialise.
News trickled in over the remainder of 2011 and well into this year of the company's interest and intention to dispose of the assets. At the end of July, Ambang Sehati made a conditional take-over offer to take BRDB private.
With this offer, all the criticisms and questions of the earlier deal become academic. With this deal, minority shareholders were being offered a cash price for their stock in the company at a level never traded before.
A major reason why Ambang Sehati and many other major shareholders who seek to privatise their listed assets for that matter was making the offer was because the shares and warrants were trading at deflated values.
The shares and warrants of BRDB have been trading below the offer price (of RM2.90 and RM1.80 respectively) for the past three years up to July 30, when the offer was made.
AmInvestment Bank Bhd, the independent adviser for the deal, which deemed the offer of RM2.90 per share and RM1.80 per warrant as “not fair but reasonable”, had also advised minority shareholders to accept the offer.
Year-to-date, the share price has not moved by much, trading in the RM2.30 to RM2.40 range in the past few months before surging above that band following the offer.
Besides this, AmInvestment pointed out that the company's shares also suffered from being “fairly illiquid”. It said that from September last year to this August, the average monthly trading volume of 4.42 million shares represented 1.09% of the free float of 406.74 million shares.
Should the offer be accepted by shareholders, management would have the breathing space needed to review the operations of the company and make plans for growth.
Ambang Sehati has said it would review the operations of BRDB, which might include expansion, disposal and/or redeployment of assets and/or organisational changes.
It added that while BRDB would continue to focus on residential projects as well as pockets of commercial development, particularly in the Klang Valley and Johor, there were also plans to expand on the company's presence abroad, especially in the United Kingdom and the Middle East.
Furthermore, the asset sale which was aborted last year may come through as Ambang Sehati noted that as part of plans to concentrate on property development, BRDB might divest its investment in certain assets at an opportune time.
What does Star Business mean by saying 'Minority shareholders offered unprecedented cash price for their stock'. What's the meaning of unprecedented cash? All the minority shareholder received is an offer which is not fair at all.
For BRDB minority shareholders. Think about it. First thing about this statement.
- A major reason why Ambang Sehati and many other major shareholders who seek to privatise their listed assets for that matter was making the offer was because the shares and warrants were trading at deflated values
Now think about the initial attempt to buyout BRDB's prime assets in the scandalous related party transaction.
There's MASSIVE value in those properties.
That's why the initial attempt to buy those properties.
Have you been to BSC lately?
That place is hot! So hot!
Prime Bangsar land too!
How about Capsquare? That sits right near prime Jalan Ampang land.
How about Menare BRDB?
And how about the bustling Permas Jusco Mall?
These are all hot properties!
And they were supposed to do an open tender for these properties. Why didn't they? Were they afraid that the true value of these prime assets will be discovered via an open tender?
Think about it.
Here's another article: http://biz.thestar.com.my/news/story.asp?file=/2011/9/7/business/9437508
I do pray and hope that the minority shareholders know and understand the true value of these prime assets. Don't be fooled by the offer price. Understand that this offer is grossly unfair and please fight for what yours by rejecting this offer.