IOI Corp: If Investors Are Not Happy

Posted a few days ago: Comments On IOI's Right Issue: Version II

Now from an investor point of view, we all knew that IOI said it made huge profits the last year. More precisely from quarterly earnings ended 31/12/2007 to quarterly earnings ended recently on 31/3/2009, IOI said it made some 2.276 Billion in net earnings.

And yet the company said it wants to raise some 1.2 billion in a new rights issue.

Surely, it's not logical and neither is it any comforting for its shareholders.

Why the rights issue? What happened to all the big money made?

And then there was the Menara Citibank fiasco. Article entitled: IOI Corp wins bid for Menara Citibank? A rm586 million to buy an office building. And it ended up in a horror story. Yup, it lost some rm73 million when IOI abruptly decided NOT to proceed with the deal. Yes, the press was not impressed at all. IOI Corp should better explain why it’s losing its RM73mil deposit.

The following comments were raised in that article.

• So, why is that changed in three months? Was there an exodus of tenants from Menara Citibank? Did the rental income drop? Was there a collapse in office space prices? Why is the acquisition not strategic anymore?
  
  Why could not IOI Corp have foreseen these problems earlier? After all, the subprime crisis was already upon us. Why did it pay the deposit which it now has most likely lost if it had felt there could be problems?
  
  IOI Corp’s explanation is poor at best and we really don’t know what it is at worst. Investors certainly expect a lot more from this company, once the darling of the stock market. And so should regulators. Minority shareholders certainly have a right to be seriously upset.
  
  Coming so soon after its recent debacle where it reported foreign exchange losses of over RM312mil for the quarter to end-September, the latest episode will put another dent in its reputation, largely unsullied until the forex episode.

And needless to say there wasn't any clear explanation till this very day.

And on Business Times IOI Corp chief says rights plan won't affect dividend payout

• IOI Corp Bhd does not expect its proposed rights issue to affect its ability to pay dividends in the short term and says its major shareholder is ready to pick up shares that are not taken up.
  
  "Not really. Well, if they (investors) are not happy, then we (Progressive Holdings Sdn Bhd) can take it up," IOI Corp (1961) executive chairman Tan Sri Lee Shin Cheng said yesterday.

Did not like what I read at all.

Sorry... just me.

This rights issue is not about it affecting its ability to pay dividends.

It's all about IOI Corp being transparent on why such a huge rights issue coming on the back of a period where IOI made a lot, lot of money. Where did the money go? Why does IOI need the rights issue?

And to say.. if investors are not happy, they will take up the rights issue ... is simply lacking in taste.

How can he say like this? I mean this is rather arrogant, yes?

So if investors are not happy, should they sell their shares?