lim hwa has left a new comment on your post "Investment Adviser: Just Who Are You Advising For?...":
I refer to the recent announcement by Goldis Berhad on 8 May 2013 for
the capital distribution of IGB shares. From the first reading of the
announcement, it seems the proposal is really to reward the shareholders
of Goldis. However, with further understanding of the proposal, the
proposal seems to me just another way of taking the value from the
minority shareholders.
In my humble opinion, to put the unlisted
share as an alternate option to cash to MI is as good as forcing the MI
to have no option but just have to take up the cash option. My
rationale is that one of the key objectives of us investing in stock
markets / listed shares as compared other investments is due to
liquidity. As the proposal is to distribute the unlisted shares, then
such proposal is defeating the our objective.
To simplify it,
assuming a listed co only owns a very profitable subsidiary (say with
NTA of RM100 mil). The major shareholders then propose the similar
structure to all the shareholders whereby the profitable subsidiary to
be transferred to a non-listed company at say RM50 mil. Thereafter, all
the shareholders will be given the options to choose (i) the unlisted
shares or (ii) cash value per listed share which will be substantially
undervalue as the valuation for the transfer is only half of the NTA.
Eventually,
the major shareholders will own 100%/ majority of the unlisted company
cuz i presume majority of the MI will not opt for unlisted shares due to
liquidity.
With this, the major shareholders are essentially
privatise the jewel of the listed company at a cheap valuation in the
expense of the MIs' value.
I see the above illustration happens to GOLDIS now.
May
I have your view on this case i.e. GOLDIS just to make sure MIs' are
well protected before the same structure to be replicated for the next
many more coming proposals if this first kind of proposal is
successfully completed.
Finally, another ship Maemode failed to service it's debt.....this is in your radar if I am not too old to forget....
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