MMC Privatisation Offer For Aliran Ihsan

MMC is taking its 62.8% owned subsidiary Aliran Ihsan private in a deal valued at RM 181.1 million.

On Business Times:

• MMC to take AIRB private
  
  By SHAREN KAUR Published: 2012/07/10
  
  EARNINGS CONSOLIDATION: RM181.12m deal will be conducted via selective capital reduction and repayment exercise
  
  MMC Corp Bhd plans to take Johor's top water concessionaire, Aliran Ihsan Resources Bhd (AIRB), private in a deal valued at RM181.12 million, or RM1.84 a share.
  AIRB, which is 62.82 per cent-controlled by MMC, is the third largest supplier of treated water in the country.
  
  Its core subsidiaries are Southern Water Corp Sdn Bhd, Southern Water Technology Sdn Bhd, Southern Water Engineering Sdn Bhd and Aliran Utara Sdn Bhd.
  
  These companies are involved in the operation, maintenance and management of water treatment plants, rehabilitation of water treatment plants and construction of water works.
  
  The offer price of RM1.84 by MMC is a five per cent premium on AIRB's closing price of RM1.75 last Friday. Based on the closing price, AIRB's market capitalisation was RM463 million.
  
  The securities of both MMC and AIRB were halted from trading yesterday. MMC closed last Friday at RM2.61.
  
  In a filing to Bursa Malaysia yesterday, MMC said it planned to take AIRB private via a selective capital reduction and repayment exercise.
  
  The plan will result in the reduction of the issued and paid-up share capital of the company from RM264.74 million, or 264.7 million shares, to RM83.8 million, or 83.6 million shares.
  
  This is by way of cancelling 181.1 million shares comprising all outstanding AIRB shares amounting to 98.4 million held by the shareholders and 82.7 million held by MMC.
  
  MMC said upon the completion of the exercise, it would hold 83.6 million AIRB shares, representing the entire issued and paid-up capital of the company.
  
  MayBank Investment Bank Bhd is advising MMC on the deal.
  
  MMC Corp group managing director Datuk Hasni Harun said the privatisation exercise was timely, given the near-term expiry of its main concession/contract, coupled with the illiquidity and lower trading volume of AIRB shares.
  
  "This move will allow MMC to fully consolidate AIRB's earnings into its accounts and also enable both companies to derive more benefits from each other," he said in a statement.
  
  The proposed selective capital reduction and repayment initiative is expected to be completed by the first quarter of 2013.
  
  Besides AIRB, MMC's other core businesses are Port of Tanjung Pelepas (Malaysia's largest container terminal), Johor Port (the country's leading multi-purpose port), and Malakoff Group Bhd (the largest local independent power producer).
  
  It also has interest in Gas Malaysia Bhd (sole supplier of natural gas to the non-power sector) and Senai Airport Terminal Services Sdn Bhd, among others.

The offer carried a 5% premium over last traded share price!!!!

On Star Business: http://biz.thestar.com.my/news/story.asp?file=/2012/7/10/business/11632585&sec=business

• Tuesday July 10, 2012
  MMC to privatise AIRB
  
  It proposes to take Aliran Ihsan private via capital reduction, repayment
  
  PETALING JAYA: MMC Corp Bhd has proposed to privatise its 62.82%-owned subsidiary Aliran Ihsan Resources Bhd (AIRB) via a selective capital reduction and repayment exercise (SCR).
  
  Upon completion of the proposed SCR, expected to be by the first quarter of 2013, MMC would emerge as the sole shareholder of AIRB, whose other significant shareholders at present include Lembaga Tabung Haji, Effective Strategy Sdn Bhd and Public Dividend Select Fund.
  
  In a statement to Bursa Malaysia, MMC explained that the proposed SCR entailed a reduction of the issued and paid-up share capital of AIRB from RM264.7mil, represented by 264.7 million units, to RM83.6mil, represented by 83.6 million units by way of cancelling a total of 181.1 million AIRB shares.
  
  Shares to be cancelled comprised the 98.4 million units held by the shareholders other than MMC, and 82.7 million units held by MMC.
  
  Upon successful completion of the proposed SCR, MMC said it would hold the entire remaining 83.6 million shares in AIRB, resulting in the latter becoming a wholly-owned subsidiary of MMC.
  
  It would delist AIRB from Bursa Malaysia.
  
  MMC said pursuant to the proposed cancellation of 181.1 million AIRB shares, qualified shareholders would be entitled to receive a capital repayment of RM181.1mil, which was equivalent to RM1.84 per AIRB share, while MMC would waive its own entitlement for the capital repayment of RM82.7mil under the proposed SCR.
  
  The capital repayment exercise would be funded through the internal funds of AIRB.
  
  “The intention of privatising AIRB is timely given the near term expiry of AIRB's main concession/contract, coupled with the illiquidity and lower trading volume of AIRB shares,” MMC said in a statement.
  
  “This move will allow MMC to fully consolidate AIRB's earnings into its accounts and also enable both companies to derive more benefits from each other,” it added.
  
  It was noted that the bulk of AIRB's operating revenues are generated from its concession-related businesses, namely, Southern Water Corp Sdn Bhd (SWC), Equiventures Sdn Bhd (ESB) and Aliran Utara Sdn Bhd (AU).
  
  The concession/contract for SWC and AU would be expiring within the next 24 to 28 months, while the concession for ESB had already expired last month.
  
  Both MMC and AIRB were suspended from trading yesterday. AIRB was last traded at RM1.75, and MMC at RM2.61.
  
  Both counters will resume trading today.

A quick look at Aliran Ihsan's last reported quarterly earnings: Quarterly rpt on consolidated results for the financial period ended 31/3/2012 

Aliran's Balance Sheet:

Aliran Ihsan said it had cash deposits worth 273.124 million.

Hardly any borrowings.

Better earnings and the prospects is said to be good with the group's revenue expected to increase....

So how?

MMC will be forking out 181.12 million for a company that has 273.124 million in its piggy bank!!!!

Now is this a great deal or is this not a great deal?

(ps: Good for a read: MSWG Asking Why So Much Money Donated By Syed Mokhtar Firms To Albukhary International University )

MSWG Asking Why So Much Money Donated By Syed Mokhtar Firms To Albukhary International University

I do want to highlight the following article posted on the Edge Financial.

• Syed Mokhtar-linked firms’ donations questioned
  Written by Jose Barrock
  Thursday, 17 June 2010 11:07
  
  KUALA LUMPUR: Tradewinds Plantation Bhd’s (TPB) AGM today could be an interesting affair as the Minority Shareholder Watchdog Group (MSWG) has sent to the company a set of questions ranging from crude oil pricing to a donation of RM10 million made to the Albukhary International University, sources said.
  
  Of particular interest to minority shareholders will be the RM10 million donation, which is deemed as excessive, representing about 20% of the company’s net profit. MSWG’s list of questions also include seeking clarity on its plans to build palm oil mills.
  
  TPB’s 69.76% parent Tradewinds (M) Bhd is also understood to have received a letter from MSWG over its own contribution of RM10 million as well, to the same university. Tradewinds’ AGM is slated for June 22.
  
  The RM10 million contribution by Tradewinds works out to about 12% of its net profit for FY09. Issues have cropped up as Tan Sri Syed Mokhtar Albukhary controls almost 43% of Tradewinds and has an interest in the university as well.
  
  The RM350 million Albukhary International University in Alor Setar, Kedah comes under the control of the Yayasan Albukhary, which in turn is controlled by Syed Mokhtar.
  
  This will not be the first fiery AGM in the businessman’s stable of companies.
  
  The Edge Financial Daily learnt that Syed Mokhtar’s flagship MMC Corporation Bhd’s AGM at end-April was also a fiery one, with shareholders questioning a RM75 million contribution to the university.
  
  For FY09, MMC posted a net profit of RM236.71 million on RM8.44 billion in revenue, which means the contribution to the Albukhary International University amounted to over 30% of the net profit. Syed Mokhtar, via his vehicle Seaport Terminal (Johore) Sdn Bhd, controls about 42.47% of MMC.
  
  Even more interesting was a contribution by water player Aliran Ihsan Resources Bhd, which gave away some RM20 million to the university. Aliran Ihsan’s net profit for FY09 amounted to RM30.23 million, meaning that the company forked out almost two-thirds of its net profits to the university.
  
  Syed Mokhtar’s MMC has more than 70% equity interest in Aliran Ihsan.
  
  Another company the tycoon controls, Padiberas Nasional Bhd (Bernas), has forked out RM20 million to the Albukhary International University. Bernas is 72.57% owned by Tradewinds.
  
  In total companies linked to the tycoon is understood to have donated anywhere between RM135 million and RM150 million to the university. Another Syed Mokhtar-controlled company, DRB Hicom Bhd, has not done so.
  
  According to MSWG’s letter to TPB, such donations are normally in the 2% or 3% range of net profits and that “the (TPB) board should provide more clarification on the substantial contribution”.
  
  “Giving out to charity or such causes is fine; just ensure the company pays out dividends and then pay it from your own pocket,” an industry observer said.
  
  
  This article appeared in The Edge Financial Daily, June 17, 2010.

Link: http://www.theedgemalaysia.com/in-the-financial-daily/168106-syed-mokhtar-linked-firms-donations-questioned.html

How?

So much money... going to just one university.

Here is Albukhary International University website: http://www2.aiu.edu.my/

Here is one blog posting on AIU last year:

http://syedcardiac.blogspot.com/2009/07/albukhary-international-university.html

• The proposed University Campus, located near Alor Setar city center will be built on approximately 70 acres of land. It is envisage that this university will be a modern and progressive Islamic Institution, focusing on Islamic knowledge in Science, Technology and Arts.

Do check it out as it as pictures of the University loaded.

Aliran Ihsan: What's Up Doc?

Posted on the Star Business on the 14th June 2007. Aliran Ihsan price surge leads to talk of takeover

• Aliran Ihsan price surge leads to talk of takeover
  
  By C.S. TAN
  
  PETALING JAYA: Shares in Aliran Ihsan Resources Bhd (AIRB) rose 36 sen to RM1.09 while its loan stock, AIRB-LA, climbed 10.5 sen to 99.5 sen in active trading yesterday.

Highlighting a hot stock? Ok, the reporting is perhaps trying to give an idea what's happening to the stock.

• That led to market talk the company could be taken private by its major shareholders, which are reportedly linked to Tan Sri Syed Mokhtar Al-Bukhary.

Market talk? That's pure speculation, yes?

And as usual, such speculation published on our local financial news is denied by the company mentioned.

• We refer to the query from Bursa Malaysia Securities Berhad dated 14 June 2007, pertaining to an article appearing in the Star, Starbiz Section, page B3, Thursday, 14 June 2007.
  
  After making due enquiries with all the Directors and major shareholders of the Company, we wish to inform that the Company is not aware nor has any knowledge of the proposed exercise as stated in the said article.
  
  This announcement is dated 15 June 2007.

So for whom does such reporting serves?

Are we now living in a society in search of hot stocks that we condone news based on "market talk" or as highlighted in blog postings, More Reporting Woes: Surely They Are Unaware! and If Accounting Woes is Bad, what about Reporting Woes? , financial news based on baseless SOURCES?

Back to Aliran Ihsan.

Article was published on June 14th.

Have a look at Aliran Ihsan stock market data below.

On the 13th, this stock came alive. Up a whopping 36 sen.

Now thanks to the article, the stock SURGED to its all time high of 1.35!

The stock chart depicts the impressive flight of Aliran Ihsan.

Last evening, AS EXPECTED, Aliran has denied this MARKET TALK.

How?

If Aliran Ihsan tanks on Monday, how?

And what about the role that the reporter has played in all this? Did that news report helped propel Aliran much higher?

So do you think that it is right that a news report should be used to help promote and help propel a stock higher?

How?