Perils of Failed Privatization Bids

Perils of Failed Privatization Bids

Bids by major shareholders to privatize companies are sometimes very intriguing. The recent unsuccessful bid by Perak Corporation Bhd (PCorp)'s major shareholders Perbadanan Kemajuan Negeri Perak (PKNP) is one example of how the share price swung sharply before and after the D-day's decision. D-day means the day shareholders know whether it is going to be successful or not.

In January 2014, PKNP proposed a selective share capital reduction (Proposed SCR) and a corresponding capital repayment under Section 62 of the Companies Act 1965 worth RM183.60 million in cash payment. This translates into RM3.90 per Perak Corp share for the other share holders.

Perak Corp's share price surged from below RM3 to RM3.75 in that month, and stayed there throughout the next several months until D-day recently. But for this Proposed SCR to go through, one major shareholders Sime Darby Property Bhd (SDPB) who holds a 13% stake, must support. Without SDPB's vote, the Proposed SCR would not be a successful one.

In October, expectedly, SDPB did not give this Proposed SCR its supports and thence, the privatisation bid ended in failures.

Immediately after the announcement came out on Oct 24, Perak Corp's share price fell by sharply the next day. By the time of posting, Perak Corp's share is trading at RM2.73 on Nov 28, 2014.

Now one very intriguing question in my mind is if SDPB did not support the bid, SPDB must have seen higher value then the offered price of RM3.90. According to regulatory fillings, the net asset value per Perak Corp share is RM5.32!

Shouldn't then that Perak Corp's share price be at least traded higher or at the same pre-Proposed SCR price? Instead, its share price fell to RM3 plus and  is now at RM2.73. Why are minorities selling at this depressed price knowing that the several major shareholders are not willing to let go at RM3.90? Surely the selling are not sold by the several major shareholders, otherwise, there would be announcement on the website of Bursa Malaysia.

So this brings the question of the participation of minorities. Why are they selling now? Shouldn't the minorities be happy that the bid was not successful and hang on the shares for the longer term for its share price to reflect its so-called higher value in the long run.

The major shareholders of Perak Corp are not fazed by the swings of its share price as they are basically companies holding on for the long term. But for the minorities, the wide swing of its share price has a big bearing on individual's portfolio. For example a minority holding 100,000 shares of Perak Corp would be feeling the big difference! If he had sold at the pre-Proposed SCR period, he could have sold at easily RM3.75 and thence netted RM375,000.00. But because he held, the current price of RM2.73 means his shares are now worth only RM273,000.00. See a different of around RM100,000.00. Any ordinary investor would feel very  "sakit hati" like it or not.

So as we can see, privatisation can cause minority shareholders to feel happy and depress when it does not go through.

This also make me wonder about my shares in Delloyd Ventures Bhd which is also in the midst of a  proposed privatisation. According to a report, Deputy group MD, Datuk Leon Tee Wee Leng said the company is currently going through a due diligence process, whereby independent advisors as well as valuers are being appointed.

Delloyd Ventures Bhd's proposed privatisation would depend on the shareholders' feedback at the company's extraordinary general meeting (EGM) to be held in December.

What would happen then? I do not know. I can only pray it won't go the way of Perak Corp and see the share price falling to RM4 or below.

Cameron Highlands is over developed

Recently our beloved famous Cameron Highlands was in the limelight for all the wrong reasons. Floods, some landslides, rampant illegal land-clearing, occupation by undocumented foreign workers and even deaths due to the one main issue - i.e. over development. Fingers are being pointed at who or whom are responsible for allowing all these illegal clearing of trees and land for cultivation of fruits and vegetables.

To witness the extend of these so called over development, last week I drove to see for myself how extensive it was. I must admit over development is not the correct word enough. Cameron Highlands is massively over developed from all sides. Whether illegal or legal, the authorities must immediately take the most drastic actions to stop this.

Compared to my trip five years ago and last week, there are simply too many developments from new hotels or apartments, new attraction park Lavendar where visitors would be greeted by a Mickey Mouse mascot, continuous clearance of land for cultivation every turn here and there along the road. Even one bee farm is doing extension of a two or three storey building for business just by the back of its bee farm.

The hotel where I stayed is in Brinchang where from my top view, I could see two major developments going on. Look at the picture which I captured. On the top right side are two giant cranes in action for a big development while on the top left side, one can see the top hill has been cleared and planted for cultivation. Now when the top side are cleared, surely continuous heavy rain's water will seep downwards below as there are no massive big trees to help retain the water. That is one of the reasons landslides occur.

To rehabilitate back Cameron Highlands is possible. No one can run away from any illegal clearance or new building without approvals. The authorities need to send their team on a regular weekly basis to check. I don't think the illegals have a chance against the authorities as long as they are being checked from time to time.

Perhaps more rangers/officials should be directed to cover certain stretch/ares of Cameron Highlands respectively and they are to report directly to their superiors in a weekly basis. The superiors would then submit a monthly report to the higher authorities. In this way, every officials are responsible for their own areas. In this way, officials would not be over burdened and would be able to carry out their duties more efficiently.

Only the highest authority has the power to direct such orders. It is still not too late to save Cameron Highlands.

 

Massive wastage of food and resources

Another moment that caught my attention was the massive wastage of food by a thirty plus couple during the morning buffet breakfast. As I was sitting next to their table, I noticed that they were busy accumulating varieties of food on their table. I also wondered if they are able to finish all those food. In the end, they left all those food untouched including chilly sauce!

It is not that I wish to criticize this couple, but really I felt very "geram" when this sort of incidents occur right in front of me. I really cannot understand what is in their mind when they left the table with all those untouched food, but taken. Not only the hotel staff has more unnecessary plates to wash, precious water and detergents are also needed just because of such uncallous action of people. So "geram"  was I on that morning that I snapped a few pictures to share with readers about this.