Another Sad Day For Corporate Malaysia As MMC's Senai Airport Deal Is Approved!

When you own shares in a listed company, there are issues that you can vote for.

If you see a listed company comes up with a proposal and you think it stinks so bad, it is your right to vote. And when you don't vote, these stinking deals will pass. It's so simple.

The very least you can do is attend the EGM and voice out why you think the deal is not fair to you, the minority shareholders. It is your right. It is your money.

And when you do not attend then most likely than not, these unfair deals would repeated over and over again.

And that is why the minority shareholders get the short end of the stick.

Unless you are the smarter ones and you had already voted with your feet!

Yesterday, it was voting day for MMC and it's rather absurd Senai Airport deal.

• MMC shareholders say Yes to Senai Airport deal
  
  By Adeline Paul Raj Published: 2009/03/21
  
  MMC Corp Bhd's (2194) shareholders approved its controversial plan to buy Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7 billion despite strong objection from minorities.
  
  At an extraordinary general meeting (EGM) yesterday, which dragged on for four hours, minority shareholders were vocal, making it clear they were against MMC paying such a hefty price in the related-party deal.
  
  MMC is owned by Tan Sri Syed Mokhtar Al-Bukhary, who is also a shareholder in SATS.
  
  "The minorities were very unhappy and almost wanted to stage a walkout. But we managed to tell them not to do so, and vote," said Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon, who attended the EGM.
  
  Bushon said the MMC chairman had invoked his discretion to have a poll instead of a vote by hands and, in the end, 97 per cent voted in favour of the deal.
  
  This was because minority shareholders were few in number. The majority of the non-interested parties who could vote on the deal comprised institutional investors.
  
  MMC is to pay RM580 million for SATS' loss-making Senai Inter-national Airport and RM1.12 billion for land which will be developed as an "airport city".
  
  "I'm not against them buying SATS; it's just the price. It's a valuation argument, that's all," a minority shareholder said.
  
  He, and others, was irked that valuations were based on projected values rather than the current value.
  
  Some felt that MMC, which has some RM20 billion debt, should be preserving its cash now that the economy was slowing down. Others felt that it should wait for a better price.
  
  For MMC, the buy enables it to exploit SATS' potential to become a regional cargo and logistics hub.
  
  MMC chief executive officer Hasni Harun did not face the press yesterday, but in a statement reiterated that the SATS purchase was commercially viable and in the long-term interest of the group and stakeholders.
  
  "With this, MMC will own the only privatised airport in the country and it will create value to the group's transport and logistics business," he said.
  
  Asked if she was happy the deal would go through, Bushon replied: "I had expected that the board would have somehow looked at the valuation again."
  
  She said the board had given assurance, however, that it would be accountable for the purchase. The deal is expected to be accretive in two years.

Another sad day for corporate Malaysia.
Past postings:

• Hwang-DBS Advises MMC Shareholders To Vote For SATS Purchase??
• MMC And Its Senai Airport Terminal Purchase!
• More On MMC And Its Senai Airport Terminal Purchase!

Hwang-DBS Advises MMC Shareholders To Vote For SATS Purchase???

Blogged previously: MMC And Its Senai Airport Terminal Purchase! and http://whereiszemoola.blogspot.com/2008/12/more-on-mmc-and-its-senai-airport.html

On today's Star Business: Hwang-DBS advises shareholders to vote for SATS purchase

• Wednesday March 11, 2009
  Hwang-DBS advises shareholders to vote for SATS purchase
  By YEOW POOI LING
  
  PETALING JAYA: Hwang-DBS Investment Bank has advised shareholders of MMC Corp Bhd to vote in favour of the company’s controversial proposal to buy Senai Airport Terminal Services Sdn Bhd (SATS).
  
  Last August, MMC proposed to buy SATS for RM1.95bil via issuance of shares but the offer was revised downwards in December to RM1.7bil, to be paid with internally-generated funds, disposal of assets and external loans.
  
  The exercise, however, has fallen under scrutiny due to the present economic climate and the nature of the transaction, which involved a common major shareholder and parties related to Tan Sri Syed Mokhtar Al-Bukhary.
  
  In a circular to shareholders last Friday, MMC attached a recommendation letter from independent adviser Hwang-DBS, which deemed the overall terms of the SATS acquisition as “fair and reasonable,” and not detrimental to the non-interested shareholders of MMC. “There are sufficient merits to the rationale of the proposed SATS acquisition and it is in the long-term interests of the company,” Hwang-DBS said.
  
  SATS operates the Senai International Airport in Johor and holds 100% of Enigma Harmoni Sdn Bhd (EHSB), which owns 1,098.1ha designated for development into Senai Airport City.
  
  The investment bank said SATS was envisaged to play a key role in the transport and logistics segment of MMC given the strategic location to become the country’s southern logistic hub.
  
  It added that the discount rate of 10% to 12% used by Ernst & Young to value the Senai International Airport operations was within range of the cost of equity of companies involved in airport business.
  
  The implied price per passenger of the Senai International Airport of RM395 was significantly lower than other airports’ average price of RM700 from 1986 to 2006, Hwang-DBS said.
  
  Based on the price consideration of RM1.12bil for EHSB and its adjusted net asset of between RM1.18bil and RM1.35bil as at June 30, 2008, it translates into price over net asset of 0.83 times to 0.95 times, which were within the range of its peers of 0.26 times to 1.67 times.
  
  Hwang-DBS also said the valuations of EHSB’s land by IPC Island Property Consultants Sdn Bhd and Knight Frank Ooi & Zaharin Sdn Bhd were within Ernst & Young’s adjusted valuation range.
  
  IPC estimated the land at RM2.2bil while Knight Frank valued it at close to RM2bil. Knight Frank’s appointment as the second valuer complied with the Minority Shareholders Watchdog Group’s request for an alternative opinion on the valuation.
  
  The proposed acquisition of SATS would lead to MMC’s earnings in the current fianancial year being negatively impacted by RM44.06mil, or earnings dilution of 1 sen per share, assuming that the acquisition was funded entirely by bank borrowings.
  
  However, it would contribute positively to the future prospects of the enlarged MMC group.
  
  “As the Senai International Airport is already operational, there is no financial commitment required from MMC to put the existing airport business on stream,” Hwang-DBS said.
  
  SATS has stayed in the red in the past five years due to additional capital expenditure, high operating costs and financing payments.
  
  For the six months ended Dec 31, its revenue fell 3% to RM12.8mil from the previous corresponding period while losses almost doubled to RM7.9mil year-on-year. This was due to lower revenues generated and higher depreciation charges arising from the revaluation of the lease of the airport land in 2008.
  
  The MMC board, however, has forecast SATS to report a profit after tax of RM93.3mil for the 14 months ending June 30, 2010 on the back of property and sublease contracts sales as well as the success of SATS’ application for a 100% investment tax allowance.

Implied price per passenger?????

Holy cow great yardstick!!

Let me loook back at the following list of issues highlighted on the local papers.

• Based on the announcement, MMC has undertaken to advance RM417.2 million which is owed by SATS to the vendors. The vendors in the deal are Semarak Sestu Sdn Bhd and Suria Kemboja Sdn Bhd which own SATS. Both companies are believed to be linked to MMC’s major shareholder Tan Sri Syed Mokhtar Albukhary....
• In the first place, does MMC need more land? Even if it does, why must the deal be done now, especially in cash? Is it necessary for MMC to undertake the deal at this juncture when asset prices are fast coming down?
• When will Senai Airport and the land around it contribute to the bottom line of MMC positively? Also, what is the true valuation of Senai Airport and land that comes together with it?
• The unaudited net tangible asset (NTA) of the SATS Group and loss after tax as of June 30, 2008 are RM295.5 million and RM24.8 million.
• The proposed purchase of the 2,718 acres for RM9.45 per square foot (sq ft) is also questionable.Based on previous reports, the land was acquired from Lee Rubber at less than RM3 per sq ft. Now it is sold for three times the amount transacted less than two years ago.
• Why does it need more long term assets?
• Without strong cash flow, MMC will be sitting with a lot of assets but no cash to develop them.

Let me try to understand hor.

On the back of global financial crisis that is bringing companies down to their knees, MMC wants to buy SATS, a company that is losing tons of money, in a CASH deal??? Cash??? Only rm1.7 Billion!!!! And yeah, SATS so happened to be owned by MMC boss also!!!!

And this is good for MMC shareholders???

And what's Hwang-DBS advice again?

In the Star Business article there is a chart.

Can you see all the years of loss making?

And 2010.. the incredible forecast is a profit of 93.3 million.

LOL!

Life is good.

MSWG Gains Vital First Victory In Its Battle Against MMC's Senai Airport Terminal Purchase

Last December I pointed out that MMC was rightly sold down due to its incredible unjustifiable RPT transaction for Senai airpot. MMC And Its Senai Airport Terminal Purchase!

It made zero sense in my flawed opinion.

More On MMC And Its Senai Airport Terminal Purchase

Some of the points highlighted in the local papers which I agreed so much.

• Based on the announcement, MMC has undertaken to advance RM417.2 million which is owed by SATS to the vendors. The vendors in the deal are Semarak Sestu Sdn Bhd and Suria Kemboja Sdn Bhd which own SATS. Both companies are believed to be linked to MMC’s major shareholder Tan Sri Syed Mokhtar Albukhary....
• In the first place, does MMC need more land? Even if it does, why must the deal be done now, especially in cash? Is it necessary for MMC to undertake the deal at this juncture when asset prices are fast coming down?
• When will Senai Airport and the land around it contribute to the bottom line of MMC positively? Also, what is the true valuation of Senai Airport and land that comes together with it?
• The unaudited net tangible asset (NTA) of the SATS Group and loss after tax as of June 30, 2008 are RM295.5 million and RM24.8 million.
• The proposed purchase of the 2,718 acres for RM9.45 per square foot (sq ft) is also questionable.Based on previous reports, the land was acquired from Lee Rubber at less than RM3 per sq ft. Now it is sold for three times the amount transacted less than two years ago.
• Why does it need more long term assets?
• Without strong cash flow, MMC will be sitting with a lot of assets but no cash to develop them.

Yesterday on Star Business.

• Wednesday March 4, 2009
  MMC investors want second opinion on SATS deal
  By DANNY YAP
  
  KUALA LUMPUR: Minority institutional and retail investors of MMC Corp Bhd want a second independent valuation on the proposed acquisition by MMC of the entire stake in Senai Airport Terminal Services Sdn Bhd (SATS).
  
  They reached the decision after two separate meetings held yesterday with the Minority Shareholders Watchdog Group (MSWG).
  
  A number of the minority shareholders, both institutional and retail, present at the meetings had expressed their concerns to MSWG over the valuation process.
  
  The first valuation on SATS, valued by IPC Island Property Consultants Sdn Bhd, was tagged at RM2.229bil.
  
  However on Aug 4, 2008, MMC announced to the stock exchange that the SATS valuation would be RM1.95bil to be satisfied by the issuance of 696.4 million new MMC shares at RM2.80 per share.
  
  But on Dec 5, 2008, MMC told Bursa the company was prepared to acquire SATS for RM1.7bil and that payment would be made by cash in full, via internally generated funds and disposal of some assets as well as external borrowings.
  
  This prompted the stock exchange to query MMC on Dec 10 on the reason for the revised mode in acquiring SATs (from shares to cash) and also the fall in price.
  
  Minority shareholders at yesterday’s meetings said since the acquisition involved a hefty sum of money, they felt a second independent valuation of SATS was warranted to ensure an objective and fair market price.
  
  Moreover, SATS was still a loss-making entity, they said.
  
  The minority stakeholders also wanted to know in greater detail how the acquisition of SATs would benefit and enhance their interest, especially in terms of future dividends and the impact on MMC’s performance, going forward.
  
  “We are not against MMC’s acquisition of SATS so long as the purchase price is fair and is potentially yield-accretive but we need to be given sufficient knowlegde by the company to make an informed decision,” one shareholder said.
  MSWG chief excutive officer Rita Benoy Bushon said the meetings were held to enable institutional and retail investors to voice their concerns so that MSWG could relate their views to MMC’s management on Wednesday.
  
  “We will be seeing them (MMC management) tomorrow,” she said, adding that MSWG would be having more of such meetings in future with minority shareholders to benefit all stakeholders.
  
  Bushon said the meetings were also to educate minority shareholders on their rights as shareholders so that they could make an informed vote.
  
  MMC’s AGM could be in this month and an EGM for minority shareholders to vote on the SATS acquisition was expected before the AGM.
  
  It is believed that the proposed SATS acquisition would further increase MMC’s intangible assets and goodwill upon consolidation.
  
  Bushon said that since the SATS acquisition by MMC involved a related-party transaction, the minority shareholders’ votes were critical in the decision-making process.
  
  She said this was MSWG’s first meeting on such issues and that while the turnout was encouraging, it could have been better.
  
  “MSWG would like to see greater participation from retail and institutional investors in future meetings since they are financial custodians to many smaller investors.”

Great job Rita!

Great job MSWG!

And yes, I agree with what Rita is saying about participation.

In this MMC deal, the RPT nature of the Senai purchase made utter no sense in my flawed opinion. And if the minority shareholders wishes NOT to get the short end of the stick, they should participate in such events. It's their money, their rights and it makes only logical sense that the minority shareholders fight for what is just!

And on today's Business Times, there were some 'form' of positive development!

• MMC agrees in principle
  
  By Adeline Paul RajPublished: 2009/03/05
  
  MMC Corp Bhd (2194) has agreed in principle to get a second opinion on the value of its proposed acquisition of Senai Airport Terminal Services Sdn Bhd (SATS), says Minority Shareholder Watchdog Group (MSWG).
  
  "MMC has agreed in principle, subject to their board's approval, to obtain a second valuation by a reputable independent valuer to give comfort to the minority shareholders," MSWG chief executive officer Rita Benoy Bushon said after meeting with MMC's management yesterday.
  
  She said the board's approval was needed as it would be a costly exercise for MMC to appoint another valuer.
  
  If approved, the new valuation would take into consideration the current market situation.
  
  MMC's plan to buy the loss-making SATS for RM1.7 billion is controversial as it is a related-party transaction.
  
  Institutional and minority shareholders are worried as to whether MMC, a conglomerate owned by Tan Sri Syed Mokhtar Al-Bukhary, is paying a fair price for SATS, which is also owned by Syed Mokhtar.
  
  The first valuation, by IPC Island Property Consultants Sdn Bhd, tagged SATS at RM2.23 billion, but minorities argued that the sum did not reflect the current market situation and have been insisting on another independent valuation.
  
  MMC, meanwhile, said yesterday that it would address all concerns over the SATS deal in a circular to shareholders sometime this month.
  
  It is targeting to hold an extraordinary general meeting, at which shareholders can vote on the deal, by the end of the month.
  
  "All their concerns will be addressed in the circular, which has been submitted to Bursa Malaysia for approval," senior general manager of corporate services Azlan Shahrim told Business Times yesterday.
  
  The circular will provide sufficient information for shareholders to make an informed decision and determine whether the deal is earnings-accretive to MMC, Azlan said.
  
  MMC's management had an hour-long meeting with MSWG yesterday afternoon to discuss the SATS deal.
  
  MMC took note of MSWG's views, including concern, over the valuation process, Azlan added.
  
  According to Bushon, MMC had said that borrowings for the deal would be minimal and that the credit line was available.
  
  Minorities had been concerned that MMC's cash funds of RM3.8 billion would be reduced after the proposed acquisition. It already has large long-term borrowings of almost RM20 billion.

My fingers are crossed for a positive ending in this annoying RPT transaction in MMC.

More On MMC And Its Senai Airport Terminal Purchase!

Posted earlier: MMC And Its Senai Airport Terminal Purchase!

Just saw this article on TheEdgeDaily. It's excellent!

• 10-12-2008: Institutional shareholders should scrutinise Senai deal
  Commentary by M Shanmugam
  
  As the economy skids, companies are conserving cash to weather the storm ahead. Some have called off deals to buy property, and they included IOI Corp Bhd which in the process lost a deposit of RM73 million.
  
  On the other hand, others such as YTL Corp have splurged billions scooping up power generation and property assets in Singapore.
  
  MMC Corp, it appears, is following the YTL example by proposing to pay RM1.7 billion cash to acquire Senai Air Terminal Services Sdn Bhd (SATS), which holds Senai Airport and 2,718 acres of land around the Senai Airport.
  
  Based on the announcement, MMC has undertaken to advance RM417.2 million which is owed by SATS to the vendors. The vendors in the deal are Semarak Sestu Sdn Bhd and Suria Kemboja Sdn Bhd which own SATS. Both companies are believed to be linked to MMC’s major shareholder Tan Sri Syed Mokhtar Albukhary.
  
  Last week, MMC announced that the price tag for the airport and land had been reduced from RM1.95 billion to RM1.7 billion. With the reduction in price, the proposal is to be transacted in cash as opposed to shares previously.
  
  Irrespective of whether the deal is done in cash or shares, there is every reason for minorities to scrutinise the proposal.
  
  In the first place, does MMC need more land? Even if it does, why must the deal be done now, especially in cash? Is it necessary for MMC to undertake the deal at this juncture when asset prices are fast coming down?
  
  To be sure, YTL Corp splurged S$4.3 billion (RM10.33 billion) gobbling up assets in Singapore over the past one year. But then, MMC’s coffers are nowhere near YTL’s level. Also, the quality of assets that YTL has scooped up makes it likely that they will contribute to its earnings in the next one year or so.
  
  When will Senai Airport and the land around it contribute to the bottom line of MMC positively? Also, what is the true valuation of Senai Airport and land that comes together with it?
  
  Let’s take a look back. In 2003, Malaysia Airports Holdings Bhd (MAHB) sold the airport, which comprised a runway measuring 3.3km in length and one passenger terminal that is able to accommodate 2.5 million passengers per annum. The previous year, Senai handled 874,278 passengers, 28,759 aircraft movements and 3,849 tonnes of cargo.
  
  When MAHB sold the airport and its operations for RM80 million, the unaudited net book value of Senai Airport was RM76.8 million while the turnover and operational losses were RM8.8 million and RM300,000 respectively.
  
  According to MMC’s announcement, Senai Airport is situated on a 1,226-acre site, has a 3.5km runaway and nine aircraft parking bays, four of which are connected to the terminal.
  
  The unaudited net tangible asset (NTA) of the SATS Group and loss after tax as of June 30, 2008 are RM295.5 million and RM24.8 million. SATS has commenced the construction of an aero mall which will include a hotel, restaurants and entertainment facilities.
  
  The airport and its operations are now valued at RM580 million. On what basis has the value increased to RM580 million? Even if the work in progress on the aero mall is worth that much, does MMC need such assets?
  
  The proposed purchase of the 2,718 acres for RM9.45 per square foot (sq ft) is also questionable.
  
  Based on previous reports, the land was acquired from Lee Rubber at less than RM3 per sq ft. Now it is sold for three times the amount transacted less than two years ago. The status of the land has probably been converted from agriculture to industrial.
  
  But MMC does not need that piece of land, especially now. It is a long term development and MMC already has enough long term projects in its hands now. It has its hands full with the Port of Tanjong Pelepas and the Jizan Economic City in Saudi Arabia.
  
  Why does it need more long term assets?
  
  MMC used to be majority owned by Permodalan Nasional Bhd. It was an asset rich company and concentrated mainly on natural resources. Today it is majority controlled by Syed Mokhtar and its cash flow is mainly from Malakoff Bhd, an independent power producer (IPP).
  
  Both the port and Malakoff are operating in regulated environment where things can change and affect cash flow. The Senai Airport and the land around it is something that requires a lot of capital before it pays off. Without strong cash flow, MMC will be sitting with a lot of assets but no cash to develop them. Worse still, there will be no dividend pay-outs.
  
  If PNB and other institutional shareholders do not stop the deal, they only have themselves to blame.
  

Source: here


Oh, PNB do you see what the market is seeing?

Do you?

MMC And Its Senai Airport Terminal Purchase!

Published on Star Business: MMC shares fall on weak sentiment

• Wednesday December 10, 2008
  MMC shares fall on weak sentiment
  By LOONG TSE MIN
  
  PETALING JAYA: Shares in MMC Corp Bhd fell yesterday on weak sentiment, after the company announced revised terms for its proposed acquisition of Senai Airport Terminal Services Sdn Bhd (SATS).
  
  MMC shares fell 8%, or 10 sen, to RM1.15.
  
  AmResearch said in a report yesterday that it expected sentiment on the stock to remain weak due to concerns over corporate governance risks and a likely contraction in future earnings if the deal were to materialise.
  
  MMC announced on Friday that the price for its proposed acquisition of SATS and the surrounding 2,718 acres had been lowered to RM1.7bil, a discount of 12.8%.
  
  However, the purchase would now be paid for entirely in cash.
  
  AmResearch analyst Alex Goh said in the report: “This is a negative development as this involves the sale of MMC’s assets to fund the acquisition.
  
  “MMC may end up swapping a profitable business with a currently loss-making airport operation on top of a huge undeveloped land, which will take years to mature.”
  
  MMC is a related party to SATS through Tan Sri Syed Mokhtar Al-Bukhary, who is a major shareholder of both companies and also a substantial owner of the surrounding land.
  
  AmResearch is lowering its fair value on MMC to RM1 per share, pegged to financial year 2009 price/earnings ratio of six times compared with its earlier fair value of RM2.22 per share based on a sum-of-parts valuation of RM4.40 a share.
  
  The research house is also uncertain when the group can turn SATS’ operations around given the global economic downturn. However, it added that this could be mitigated if MMC managed to dispose of part of the Tanjung Bin land for cash.
  
  A local head of research, who maintains a “buy” call on the counter, disagreed with AmResearch’s view.
  
  “Why downgrade now when the price is lower? The acquisition is only a small part of MMC’s overall business and may have synergy with MMC’s (other logistics businesses) Port of Tanjung Pelepas and Johor Port assets.
  
  MMC owns 70% of the Port of Tanjung Pelepas and 100% of Johor Port.

I FULLY AGREE 108% with AmResearch views. **Yeah I agree more than 100%**

Nice to see Star Business publishing those comments, however...

I do not understand the reporting by Star biz on the last few passages.

• A local head of research, who maintains a “buy” call on the counter, disagreed with AmResearch’s view.
  
  “Why downgrade now when the price is lower? The acquisition is only a small part of MMC’s overall business and may have synergy with MMC’s (other logistics businesses) Port of Tanjung Pelepas and Johor Port assets.

So who is this LOCAL HEAD OF RESEARCH?

Why un-named? So shy?

Comeon, if those comments come from a HEAD OF RESEARCH why afraid to be quoted?

Comments like those makes NO SENSE when the source is not quoted!

So is the acquisition small? Can one compare with MMC's overall business and calls the Senai Airport purchase small? Can this HEAD OF RESEARCH justify the purchase in terms of returns? Yeah, what kind of return of investment are we even talking about? And can this HEAD OF RESEARCH justify the RPT in this deal? Yeah, RPT! It's like left hand selling to the right hand. Where is the justification to MMC's minority shareholders?

And on Business Times, the article was even better!

So firstly we have MMC shares being punished yesterday due to the RPT nature of a rather unjustifiable purchase of Senai Airport Terminal.

Look at what Business Times has to offer below. (Comments in Green is mine)

• Strong interest in PTP stake
  
  By Shahriman JohariPublished: 2008/12/10
  
  MMC Corp Bhd (2194), an operator of ports and power plants, may sell part of Malaysia's second largest container port to fund expansion plans, sources said. (Sources again?)
  
  The group, controlled by Tan Sri Syed Mokhtar Albukhary, has received strong interest from local and foreign parties to buy a stake in the Port of Tanjung Pelepas (PTP).
  
  "It is understood that one foreign party has even offered to take control of the port. That shows how much they value the business," one of the sources told Business Times. (one of the sources ah? Only one? )
  
  MMC needs to raise at least RM1.7 billion to buy airport operator Senai Airport Terminal Services Sdn Bhd (SATS), that also owns a big piece of land in Johor.
  
  MMC now holds 70 per cent of PTP, with the rest held by Danish shipping giant Maersk Line.
  
  Another source said an independent valuer has priced the port at around RM9 billion. (Full of sources!!!)
  
  Assuming MMC sells a fifth of PTP at this value, it could raise about RM1.8 billion. It would also still have control of the port, which is the 17th busiest container port in the world.
  
  Sources said that several large shipping lines including Taiwan's Evergreen Marine Corp have made their interest known, while some local institutional investors are also in the running.
  
  MMC's ports business, which also includes Johor Port Bhd, is the group's second biggest profit contributor after its power plants.
  
  In the year to December 31 2007, the ports division posted an operating profit of some RM418 million, its annual report showed. It did not give a breakdown of how much PTP earned for that year.
  
  MMC officials declined comment when contacted.
  
  Last week, MMC said that talks on the disposal were at an advanced stage.
  
  MMC has now proposed to buy SATS from Syed Mokhtar at a lower price and will pay in cash instead of shares.
  
  It had wanted to buy SATS for RM1.95 billion in an all-share deal when the stock was trading around RM2.80 apiece.
  
  However, it now has more than halved, which means that if the deal was done at a lower share price it would dilute MMC's shareholders (other than the main shareholders).
  
  MMC's earnings per share would also fall due to the bigger number of shares.
  
  "The current share price is not reflective of MMC's inherent value which now trades at a multiple of approximately only 0.7 times book value per share of RM1.94.
  
  "The cash consideration will eliminate earnings dilution resulting from issuing a sizeable number of shares at the current depressed price," it said in a statement last week.
  
  The new price includes RM580 million for airport operations and RM1.1 billion for SATS' 1,099ha of freehold land slated for development as a logistics city.
  
  However, the revised deal has been criticised by analysts who said the sale could be "value destroying" as it reduces profit from its core business. They also pointed out to governance risks as the deal is a related party deal while SATS has yet to make money.
  
  Shares of MMC fell eight per cent to close at RM1.15 yesterday. (my article source is here )

So many un-quoted sources in just one article. How? Where's the credibility in such reporting?