Why 'According To Sources' Financial News Should Be Stopped

Over the past years, we have seen it over and over and over again. The financial press highlights an extremely juicy piece of financial news based on an unknown source. (Do refer It's a million dollar deal and the stock mentioned then jumps higher upon the publication of the news, only to come crashing down once the parties involved denies the news.

Recent case? No Such Timber Concession!

Easy way out for the publishing newspaper is claiming a bad source or a bad mistake from their financial reporter.
Which makes me wonder. What good is the financial reporter if he/she is incapable of verifying the facts?

But the most damning would be the public questioning if the news was cooked up by the source or syndicates in an attempt to derive profits from creating such news.

It gets messier once the public questions if our financial news has now become a tool for the syndicates to broadcast their cooked up financial news.

Or what if the public asks if the financial news paper is in cahoots with the syndicates?

Whatever the reasoning, once the financial news based on unknown quoted sources, is refuted by all parties involved,  the financial news becomes a laughing stock.

Some might even asks why bother buying the newspaper at all, if the news published is based on such shady sources?

Best solution?
Well, if I may, I believe it's high time for our financial news editor to wake up and clean up this mess. Get the reporters to verify their source.

The public wants and deserves to read credible news and not news cooked up as a means to gain richness.

The authorities needs to look into this shenanigans.

Less we forget that it's also a waste of public money to have our corporate leaders of the corporations  mentioned in the news, take time off from their daily work to address such baselss news reporting.

And today, what do we have?

Business Times has published yet another source based financial news.

Sigh!

Yeah... sigh!

DRB, the stock mentioned, of course is currently moving higher SOARING HIGHER based on the news. Want to guess what happens once the news is denied?

• DRB-HICOM to go private?
  
  Published: 2013/01/10
  
  FIRST QUARTER TARGET: Tycoon Syed Mokhtar may make standalone offer, says source
  
  KUALA LUMPUR: Tan Sri Syed Mokhtar AlBukhary may make a standalone offer to privatise DRB-HICOM Bhd, the country's biggest automotive company, people working on the plan said yesterday.
  
  Business Times understands that the plan is being helmed by privately-held Meridian Solutions Sdn Bhd. Meridian is a unit controlled by Syed Mokhtar's top financial aide, Ooi Teik Huat.
  
  The low-profile 53-year-old Ooi is one of the Syed Mokhtar's top backroom boys, who sits on the board of many companies in which the Kedah-born businessman has a controlling stake.
  
  Ooi currently sits on the board of Malakoff and MMC Corp Bhd.
  It is further understood that Hong Leong Bank Bhd and Public Bank Bhd are the two top banks working with Ooi on the privatisation.
  
  "Hong Leong and Public Bank will help provide the financing for the exercise. It is scheduled to take place in the first quarter of this year," said the source.
  
  Business Times was also told that DRB-HICOM could be taken private for between RM3.50 and RM4 a share, and that the exercise will be solely driven by Syed Mokhtar, who controls some 55 per cent of the company.
  
  Syed Mokhtar, 61, could fork out as much as RM7.73 billion to take DRB-HICOM private.
  
  The exercise comes barely a year after he bought Proton Holdings Bhd at RM5.50 a share or 24 times estimated earnings.
  At RM4 a share, DRB-HICOM is valued at RM7.73 billion.
  
  The stock closed at RM2.63 a share yesterday, giving it a market capitalisation of RM5.08 billion.
  
  "None of the other shareholders are involved. It is a standalone bid as DRB-HICOM is severely undervalued. Its landbank itself has a net worth of RM10 billion," said the source.
  
  Neither Syed Mokthar nor his representatives on the board of DRB-HICOM have briefed the board on the planned exercise.
  
  "When they are ready with the money and the numbers tally, they will file in straight the offer to take DRB-HICOM private to the company secretary," said the source.

 Everything is based on the source.

The source throws in a seductive $4 per share privatisation and with DRB only trading at 2.63, isn't a no brainer the stock currently is flying much higher?

So once the story is denied, let me ask you, is it OK with you that our financial news is used to promote a stock so that certain parties can cook the stock much higher?

No Such Timber Concession!

Monday morning. 7th Jan 2013.

Published on Business Times:

• Giant timber concession for Permaju
  
  By Francis Fernandez Published: 2013/01/07
  
  KUALA LUMPUR: Permaju Holdings Bhd, which is controlled by Tan Sri Chai Kin Kong, is close to securing some 809.37 hectares of timber concession land in Sabah and Sarawak.
  
  Business Times was told that an announcement on the matter will be made by as early as this month.
  
  "The bulk of the land is in Sabah, near the Keningau area," said a source close to Yayasan Sabah.
  
  State-controlled Yayasan Sabah is the one awarding the concession.
  
  The potential concession will make Permaju the single largest land concession owner in the "Land Below the Wind".
  
  Permaju, at its peak, had some 129ha of state-given land concession in Sabah.
  
  Some of the said land has now been converted for development projects, while the rest has been surrendered to the state.
  
  Business Times was told that the new award will eclipse Permaju's previous record holdings.
  
  The impending award will be for a period of between 30 years and 60 years.
  
  Under the terms of the contract, Permaju will help clear the land, said to be a virgin jungle area, and then plant oil palm.
  
  The virgin jungle is filled with valuable timber, and proceeds from timber will go directly to Permaju.
  
  It will, however, share with Yayasan Sabah any proceeds from the planned oil palm estate.
  
  "Gross proceeds from the timber is easily more than RM1 billion," said the source.

Here's the chart of Permaju on Monday morning before trading opened.

As can be seen on the chart, Permaju ended 2012 at 42 sen and started the new year strongly on very active volume. With such a news that Permaju 'may' win a 'giant' timber concession, the stock soared on Monday morning. The Edgemalaysia carried the following news in the morning..

•  Permaju shares ride on news it may win timber concession Business & Markets 2013
  Written by Shalini Kumar of theedgemalaysia.com 
  Monday, 07 January 2013 11:22
  
  KUALA LUMPUR (Jan 7): Permaju Holdings Bhd shares rose in active trades today after news that it may be awarded about 809 hectares of timber concession land in Sabah and Sarawak.
  
  “It’s speculative play that is driven by the news. People could have known about this earlier and bought shares and now that the news has broken, they are selling, while others continue to buy,” said Goh Kay Chong, a senior dealer from SJ Securities.
  
  “This could also be cyclical play, or even pre-election play….[Permaju] is the darling of the speculators.” he added.
  
  At 10:30am, Permaju was trading at 50 sen, up 1 sen or 2%, on volume of 14.36 million. Hitting a high of 52 sen earlier, it was the third most active counter on the exchange.
  According to a news report in a local paper, the outcome of the land concession award will be made known by this month.
  
  The potential concession will make Permaju the single largest land concession owner in Sabah, said the report.
  
  Under the terms of the contract, Permaju will clear the virgin jungle and then plant oil palm. Proceeds from the timber extracted will go directly to Permaju.
  
  Gross proceeds from the timber is expected to be more than RM1 billion, the news report.

But the stock turned sharply lower later in the day to close at 44.5 sen!

 

 

News soon filtered through in late afternoon that Permaju directors are denying any knowledge of such a concession.

• Permaju directors deny knowledge of timber concession Business & Markets 2013
  Written by Shalini Kumar of theedgemalaysia.com 
  Monday, 07 January 2013 18:02
  
  KUALA LUMPUR (Jan 7): PERMAJU INDUSTRIES BHD []'s board of directors said they were not aware of the timber concession the company was supposed to receive, as reported by a local newspaper not linked to The Edge group.
  
  The article stated that Permaju was close to securing huge timber concessions in Sabah and Sarawak, with the gross proceeds from the timber potentially totalling more than RM1 billion.
  
  The company's share price rose in active trade early on Monday, but fell before the market closed.

This morning, Business Times carried the following news.

• Sabah Forestry: No timber concession issued
  
  Published: 2013/01/09
  
  KUALA LUMPUR: The Sabah Forestry Department has denied reports that Permaju Industries Bhd was close to securing a 80,937-hectare timber concession in the state.
  
  The reports, quoting sources, alluded that state-controlled Yayasan Sabah was the one awarding the 30 to 60 years concession. Part of the terms of the deal will involve Permaju to help clear the land, said to be a virgin jungle area, and then plant oil palm.
  
  "There is no such concession issued or going to be issued. Yayasan Sabah has not awarded such a concession and also has no authority to issue concessions, which is strictly the purview of the Forestry Department and state government of Sabah," the department's director Datuk Sam Mannan said in a statement yesterday.
  Mannan said Sabah does not allow the conversion of virgin jungle forests into oil palm plantation, particularly in a forest reserve. Any virgin forests, if found in the state, will be turned into TPAs (totally protected areas) and protected against any form of development, including logging.
  
  He added that apart from pockets of virgin forests that may be found in scattered localities of insignificant sizes (50-100ha), all virgin forests in Sabah have been reserved for TPAs.
  
  Mannan's statement came a day after Permaju's board of directors, via a filing to Bursa Malaysia, did not confirm the news report.
  
  "The board of directors of the company, after having made due inquiries, wishes to advise that to the best of their knowledge and belief, they are not aware of such matter stated in the said article," the company noted in the filing.
  
  Mannan said the report and speculation had done "untold damage to Sabah's and Malaysia's conservation efforts painstakingly built up over the years".
  
  "Sabah's Deramakot Forest Reserve is the first and longest certified rainforest in the tropical world that obtained the gold standard of the FSC (Forest Stewardship Council), the most important certifying body in the world. This reserve is now a model for the world.
  
  "... Also, the state has phased out short-term logging licences and our commercial forest reserves are managed on the basis of sustainability, with a duration of 50-100 years for security of tenure, along the Deramakot model.
  
  "Logging under strict control (Reduced Impact Logging), is only a small part of the management," he explained.
  
  Mannan also said that the state has more orang utans (13,000) than the whole island of Sumatra, which is at least seven times bigger.
  
  "Sabah is the first in the world to embark on the GRASP (Great Apes Survival Project), recognised by Unesco as a world leader, at Ulu Segama-Malua Forest Reserves, an FSC-certified forest.
  
  "In 2007, logging over 300,000ha was completely stopped in the interest of conserving orang utans and other wildlife, despite the opportunity cost of billions in foregone revenue," he said.
  
  On Bursa Malaysia yesterday, Permaju shares closed one per cent or 0.5 sen, higher at 45 sen, with over five million units traded.

And there we have it once again.

Our local FINANCIAL news report, elected to publish a financial news based on 'sources'. Did the reporter bother even checking with the facts? Here we have the Sabah Foresty Department and Permaju Industries denying the possibility of such a 'GIANT' timber concession (as boldy headlined by Business Times on Monday morning).

Now given the possibility that such a news would have a massive impact on the stock price, why didn't Business Times check the validity of its sources?

Now with the denials, what's the implications?

Was the GIANT timber concession news cooked up by the source to drive the stock price higher?

And SAAG Defers Its Borrowings Repayment

Posted several times before:

• SAAG Wants Your Money Again! * recommended*
• SAAG's Earnings
• Quick Look At SAAG's Earnings
• SAAG Private Placement Priced At 10 Sen!

On Friday: PRACTICE NOTE 1 / GUIDANCE NOTE 5:NEW DEFAULT            

• Pursuant to PN 1 of MMLR of Bursa Securities the Board of Directors of SAAG Consolidated (M) Bhd (“SAAG”) wishes to announce that SAAG, SAAG Oil And Gas Sdn Bhd (“SOG”), SAAG Drilling And Well Services Sdn Bhd (“SDWS”), SAAG RR Infra Ltd (“SAAG RR”), Jelang Fajar Sdn. Bhd.(“JFSB”) and SAAG Shipping Sdn. Bhd. (“SSSB”) (collectively “SAAG Group” or “Group”) have pending the finalisation of an acceptable debt restructure, deferred the repayment of principal and interest of the respective banking facilities listed as per Annexure 1.
  
  The SAAG Group of companies has also suspended payments to creditors in the ordinary course of business with immediate effect. Any decision on the course of action to liquidate or restructure the Group will depend on the decision following meeting with the Group’s Loan Creditors namely Arab Malaysian Bank Berhad, Export-Import Bank of Malaysia Berhad and Idaman Capital Berhad (CLO Holders) and meetings to be held with Malayan Banking Berhad and State Bank of India.

Last Friday Saag closed at 0.05.

Right now, SAAG is trading at 1 sen.

Amen.

SC Makes Stance On "Not Fair But Resonable" Advice

Thank you for listening SC!

Posted the other day: Independent adviser claims BRDB OFFER NOT FAIR BUT...

I ranted like mad because I thought the advice was rubbish. I wrote.

• What kind of recommendation is that?
  
  The offer is deemed not fair but reasonable and because it is reasonable the minority shareholder should accept the offer???
  
  WTH?!!!
  
  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?
  
  Utter bullocks!

On today's Edge.

• SC imposes new demands on advisors for takeover offers Written by Ho Wah Foon of theedgemalaysia.com 
  Tuesday, 25 September 2012 18:25
  
  KUALA LUMPUR (Sept 25): The Securities Commission Malaysia (SC) has issued an expanded Practice Note, imposing more requirements on independent advisors for take-over offers.
  
  In a statement Tueday, the capital market regulator said the enhancements -- to  take effect on Nov 1, 2012 -- will provide shareholders to a take-over offer with “clearer and more comprehensive advice to enable them to make informed decisions”.
  
  Under the expanded Practice, advisers are required to consider ‘fair and reasonable’ as two discrete terms in making a recommendation. For an offer to be ‘fair’, the offer price must be at least equal to or more than the value of the securities of the take-over offer.
  To decide whether an offer is ‘reasonable’, advisors have to evaluate the ability of the offeror to pass special resolutions, liquidity of the offeree securities and other qualitative considerations, the SC said.
  
  “The decoupling of the terms will further ensure that independent advice circulars are more easily understood, transparent and provide clear bases to justify a recommendation,” it said.
  
  The Practice Note also requires advisers to select the most appropriate valuation methodology for the securities and provides guidance on various types of valuation methodologies.
  
  Advisers are also needed to base their opinion on reasonable assumptions, to disclose all material assumptions and to ensure they have a reasonable basis to rely on information used in forming an opinion on the offer.
  
  The introduction of these new requirements appears to come in response to public criticism that the securities watchdog has failed to act on complaints by minority shareholders in some recent events.
  For example in the privatisation of Glenealy PLANTATION []s Bhd, the company’s major shareholder did not provide minority shareholders with an independent valuation of the company’s assets. It merely used an outdated valuation price, which disgruntled shareholders said were grossly undervalued.

Minority shareholders should vote with all the facts

On Star Business: Minority shareholders should vote with all the facts

• Thursday September 20, 2012
  Minority shareholders should vote with all the facts
  Raison D'etre - Risen Jayaseelan
  
  MINORITY shareholders should not hesitate to vote for their rights in corporate deals that involve their companies.
  
  They should even bandy together to strengthen their voting power in order to protect their rights. But they should also vote with all the facts in hand. Consider the case of Bandar Raya Developments Bhd (BRDB). The major shareholder is offering RM2.90 per share. That's a price that the stock has never traded at before so it does seem attractive.
  
  However, valuation wise, there are those who opine that the assets of the company are worth more. So, should minority shareholders hold out for more? Perhaps.
  
  But before doing so, they need to consider two things.
  
  One, that there has been no competing bid coming in, so far at least. Do note that for the major shareholder, Ambang Sehati Sdn Bhd, which owns 18.5% of BRDB, to buy out the rest of the shareholders, it is going to fork out a whopping RM1.17bil in cash.
  
  That's a lot of money. Is there really anyone else out there willing to pay so much for BRDB in cash? If you are convinced there is, and that such a party will make a counter offer, then hold onto that BRDB stock.
  
  You will be happy if that counter bid came through. But what if no one were to make a higher offer?
  
  And this leads us to the second thing minority shareholders should think about: that if this deal falls through and there's no other competing bidder coming into the picture, BRDB stock is very likely going to slide down to the levels it traded at before all this takeover hoopla came about. That's around under the RM2.40 per share mark.
  And that's gonna wipe off a good 50 sen per share of your holding.
  
  It is most likely not going to trade at the estimated revised net asset value price of RM3.81, a valuation given by the independent advisor.
  
  Sadly, most property-related stocks trade at discounts to their net asset values.
  
  Sure, one may think that if the major shareholder is willing to pay RM2.90 for the company, he knows something that we don't. And worse, what if he flips the company or its assets for a higher price soon after the privatisation?
  
  If Ambang Sehati does that, it would not a leave a good taste among minorities. (Recall that one other tycoon did something similar and suffered albeit a short-lived opprobrium for it?)
  
  But minority shareholders have no way of knowing what the owner's going to do if and when he privatises the company. All that you know is that there's a RM2.90 cash offer on the table. You could take it and run or you could seek to fight. But if you want to hang on and fight, know all the facts and risks.
  
  News editor Risen Jayaseelan is still puzzled that despite all the letters written and phone calls made by minority shareholders asking for a higher buyout price in the Glenealy Plantations (Malaya) Bhd, that these shareholders were only able to count for a mere 4.23% of votes.

Hmmm.... interesting.

Accept the offer juest because there might not be another better offer?

Seriously?

Ok, shall I call up my property agent and tell her that BSC is for sale and ask what kind of price that prime asset could fetch?

All I know is if the offer is not fair, why should I accept the offer price?

And in another interesting article: Shareholders should voice dissent more strongly

•  Thursday September 20, 2012
  Shareholders should voice dissent more strongly
  Comment by Rita Benoy Bushon
  
  THE case of the recent privatisation of Glenealy Plantations (M) Bhd is highlighted for the broader interest of the capital market. Thus, I would like to recap this privatisation exercise.
  
  Samling Strategic Corp Sdn Bhd has proposed to privatise Hong Kong-listed unit Samling Global, in turn triggering a need to privatise Glenealy and its associate company Lingui Developments Bhd.
  
  Samling Global subsequently proposed a privatisation offer for the remaining shares in Glenealy at RM7.50 per share. A dividend of 52.75 sen was subsequently given a day before the court-convened meeting.
  
  We argued that when a company's value is inextricably linked to its land, not undertaking to revalue its most prized asset in making an offer to privatise is unacceptable. Especially so in this case where the valuations were based on book value of the assets in 1998, some 14 years ago.
  Though the law is silent on revaluations of assets in privatisation exercises, we urge the company directors to embrace best practices and undertake such exercises before the deal is tabled at the company meeting.
  
  In the absence of such voluntary revaluations, the regulators must then compel companies to undertake the revaluations. At the very least, doing so would have introduced an element of price discovery always an important element when a particular stock is as illiquid as Glenealy.
  
  What about the other gatekeepers? Current practice requires independent advisers to be hired (and be paid for) by the target companies. They are obliged to advise the disinterested shareholders on the offer in a transparent manner and to disclose to them the salient and material information so that an informed decision can be made.
  
  As such, on what basis did the independent adviser state it was fair when the current land value was not even known?
  
  The independent advisers in the same breath also stated that the palm oil industry remained “positive with strong demand and firm prices,” and that “between 2007 and 2011, Glenealy had been returning uninterrupted profits.” More so, that would mean there is intrinsic value in the company which is not reflected in the share price currently.
  
  In addition, Glenealy has previously been a thinly-traded stock and thus the market price does not mirror its true value. In this instance, a revaluation is even more important to make apparent the current value.
  
  Despite all this, minorities voted for the resolution.
  
  Glenealy's 54% owner Samling Group had proposed a resolution that needed 75% approval from the shareholders who are present and voting at the CCM. It also requires not more than 10% of the disinterested shareholders that vote against this resolution for the deal to go through.
  
  The offer was voted through by 331 shareholders in the privatisation bid, a number that represented 85.31% of the total number of shareholders present in person or by proxy at the meeting.
  
  Minority shareholders owning 4.23% of the shares opposed the deal but this was not sufficient as it did not reach the 10% required level.
  
  I can only rationalise this mom-and-pop retail investors trait who usually think that they are at the losing end, giving in to sweeteners and consequently choosing the path of least resistance when accepting the offer with reliance on independent advice.
  
  Lastly, we urge that minority shareholders stand up and voice their dissent more strongly at the meetings if they believe the offer is not in their best interest, especially the institutional investors who are more savvy and have the muscle to influence the outcome.
  The regulators too must look into similar deals to protect the interest of the minority shareholders.
  Rita Benoy Bushon is chief executive officer of Minority Shareholder Watchdog Group.

Independent adviser claims BRDB OFFER NOT FAIR BUT REASONABLE

On Star Business: Independent adviser recommends acceptance of Bandar Raya Developments buyout

• 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.

What kind of recommendation is that?

The offer is deemed not fair but reasonable and because it is reasonable the minority shareholder should accept the offer???

WTH?!!!

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?

Utter bullocks!

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 BRDB buyout in sight? Has the minority shareholders agree anything on this lopsided deal?

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

The shares and warrants were trading at EXTREMELY 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.

MSWG Wants SC To Mandate Property Revaluation Prior To Privatisations

Just posted this morning: Glenealy: Sad Day For Investing

• Ok, one of the questions raised was Glenealy did not carry a property valuation of their plantations during this privatisation.
  
  If that was true, then this privatistion offer was simply absurd.
  
  How could SC allow an offer to be made without any proper valuation?

On the Edge:

• Watchdog wants authorities to mandate property revaluation prior to privatisations Written by Cindy Yeap of theedgemalaysia.com 
  Friday, 14 September 2012 18:27
  
  KUALA LUMPUR (Sept 14): Authorities should make it compulsory for public listed companies to revalue their assets prior to any privatisation exercise so that minority shareholders can better evaluate buyout offers, a shareholder watchdog group said Friday.
  
  "We reiterate our call to authorities to mandate the revaluation of PROPERTIES [] prior to any privatisation exercise," Rita Benoy Bushon, the CEO of the Minority Shareholder Watchdog Group (MSWG) wrote in a weekly newsletter dated Friday.
  
  Her comment was in reference to the privatisation of Glenealy PLANTATION []s Bhd, which was passed by shareholders at a court-convened meeting earlier this week, where Bushon said some queries by minorities weren't sufficiently addressed.
  
  "The most apparent was on the issue of the group's landed properties, comprising mainly plantation land which have not been re-valued since 1998," she wrote in the newsletter.
  
  On Wednesday, Bushon told The Edge Financial Daily that an updated valuation report on assets like plantations land would make it easier for minority shareholders to make educated decisions with regards to takeover offers. The valuation reports should be within a six month period prior to the privatisation exercise to ensure validity of the numbers, she added in an emailed reply.
  
  "Though the law is silent on the revaluation of land in cases of privatisation, we urge companies to embrace transparency by undertaking such revaluations especially when most assets are land-based," Bushon said.
  
  In Friday's newsletter, Bushon also asked that independent advisors "play their role in advising minority shareholders with greater sense of responsibility". When advising minority shareholders, Bushon said advisors should, for instance, "be transparent" about material parameters such as how the absence of an up-to-date asset revaluation exercise could impede decision-making.

I am shock to read that SC doesn't have such a mandate.

How can?

Without such a mandate, minority shareholders are going to be screwed if another company follows what Glenealy did to its shareholders.

Glenealy Shareholder: "It is the rape of the century on the minority shareholders"

Posted on the Edge:

• Disgruntled shareholders fail to scuttle Glenealy privatisation Written by Chong Jin Hun of theedgemalaysia.com 
  Friday, 14 September 2012 17:00
  
  KUALA LUMPUR: Standing in front of the board of Glenealy Plantations (M) Bhd at the court convened meeting (CCM), minority shareholder Cho Kwai Lin told other shareholders who were present to cast their vote that the company’s privatisation exercise was “the sale of the century in Malaysia”.
  
  “If I may be allowed to say so, it is the rape of the century on the minority shareholders,” Cho said in her speech which was read at the CCM and made available to reporters.
  
  Cho told other minority shareholders that the offer price of RM7.50 per share essentially values Glenealy’s plantation sites at a book value of RM25,000 per hectare.
  
  “This is a discount to the estimated RM36,000 per hectare which Glenealy paid for a tract in Indonesia”, she said, referring to figures from analysts’ reports.
  
  At RM36,000 per hectare, Cho argues that Glenealy shareholders should be entitled to at least RM10.26 a share under the privatisation. She said should major shareholders insist on taking over Glenealy, the offer price “should be not less than RM10 a share and that the company’s entire cash pile should be entirely distributed to shareholders”.
  
  “For all the above reasons, I stand here to call on all minority shareholders present today to join me in voting against the resolution in its present form,” she told those at the CCM.
  
  Nonetheless, the controlling shareholder, Samling Strategic Corp that held 53.68% equity interest in Glenealy, garnered enough votes to take over the company at RM7.50 per share.
  
  Analysts noted that Glenealy’s board declared a special dividend of 52.75 sen per share two days before the CCM. This might have to some extent have helped convince some minority shareholders to accept the offer as the dividend narrowed the value gap. The CCM lasted for about four hours at the Prince Hotel.
  
  Some disgruntled shareholders were voicing their dissatisfaction to the media. Shareholder Lim Thian had asked why wasn’t there a valuation report for the plantation land owned by Glenealy.
  
  He said having a valuation report is crucial to ensure shareholders get a fair price for the privatisation of the firm. He said the estimated RM25,000 per hectare for the company’s tracts significantly undervalues the company based on previous transactions involving other plantation firms.
  
  “If there was a valuation report on the deal, shareholders will most likely not approve the proposal. “This is material information but Bursa Malaysia and Securities Commission have not said anything so far,” Lim told reporters.
  
  Minority shareholder Leong Lau Chew, 71, was outside the hotel ballroom, where other shareholders had deliberated and the voted on the proposed privatisation yesterday.
  
  Leong, a seasoned investor, said he did not want to attend the meeting as he was unhappy that the unfair privatisation offer price would deny the minorities’ opportunities to ride on the company’s future growth. “I don’t want to go into the meeting … I’m afraid I will probably shout [at the board].
  
  If the company is not good, why would the major shareholders want to privatise it?” Leong told The Edge Financial Daily while the CCM was in progress. He said Glenealy should remain listed as investors like him had enjoyed dividends from the company all these years.
  
  When it is taken private, minority shareholders would not be able to reap the gains from Glenealy’s future expansion plans. Leong is one of the many disgruntled minority shareholders of Glenealy who had opposed the privatisation exercise as they viewed the offer price of RM7.50 per share undervalued the plantation company.
  
  The value of its parcels of plantation land has not been appraised since 1998. The offer price values Glenealy at RM865.2 million, which works out to about RM16,067 per hectare.
  
  Independent adviser Hwang-DBS Investment said in a circular to shareholders that Glenealy’s implied enterprise value/planted area of RM23,628 per hectare is below the average of RM39,261 per hectare among comparable companies but still within the range of RM18,380 and RM54,940 per hectare.
  
  As the meeting was ongoing, some shareholders walked out without voting on the proposal as some felt that the RM7.50 per share offer price does not reflect the true potential of the company.
  
  Some contended that whether they cast their votes or not, the company would still be taken private by major shareholders. The shareholding in Glenealy was fragmented.
  
  The pass on the resolution on the privatisation exercise once again indicates that a concerted effort by all the minority shareholders is still a rare occurrence in Malaysia corporate scene.
  
  This article is appeared in The Edge Financial Daily on 14 September, 2012.