by SULHI KHALID & BHUPINDER SINGH/ pic by TMR GRAPHIC

Affin Hwang Investment Bank Bhd said that YTL Corp Bhd’s shares offer for YTL Land shares is not fair but reasonable and advise investors to accept the offer.

Affin Hwang said the irredeemable convertible unsecured loan stock (ICULS) offer is fair and reasonable and advise and recommend YTL Land ICULS holders to accept the offer.

The investment bank said that the estimated fair value of YTL Corp Shares of RM1.38 would translate into an implied offer price of RM0.44 for YTL Land Shares based on the exchange ratio, the document said.

The implied offer price of RM0.44 for YTL Land Shares represents a significant discount of approximately 73.49% and 49.43% over the fair value of the YTL Land shares of RM1.66 and RM0.87 on a basic and fully diluted basis, respectively. 

“This means that based on the implied offer price for YTL Land shares, the securities exchange will result in shareholders effectively receiving YTL Corp shares which are worth less in terms of the fair value of the YTL Land shares.

“Accordingly, we are of the view that the shares offer is not fair to the shareholders based on relative comparison evaluation of the shares offer,” it said.

The report stated that despite the significant discount of approximately 73.49% and 49.43% to the implied offer price of RM0.44 for YTL Land Shares over the fair value of the YTL Land shares, the shares offer is reasonable as board has not received any competing or any other offer to acquire the assets and liabilities of YTL Land. 

“As such, the Offer represents the only available offer for the Holders’ consideration,” it said.

Affin Hwang said the estimated fair value of YTL Corp shares of RM1.38 would translate into an implied offer price of RM0.39 for YTL Land ICULS based on the exchange ratio which represents a premium of approximately 11.43% over the value of the latter’s ICULS of RM0.35. 

“This means that based on the implied offer price for YTL Land ICULS, the securities exchange will result in ICULS Holders effectively receiving YTL Corp Shares which are worth more in terms of the fair value of the YTL Land ICULS,” it said.

YTL Corp has proposed to acquire all remaining shares and ICULS it did not own in YTL Land. 

YTL Corp had said the offer was a strategic initiative to provide shareholders with the opportunity to swap their shares in YTL Land with more liquid YTL Corp shares.

It also provided YTL Land shareholders with the opportunity to reduce their exposure to a single industry business — property development — which has plateaued in terms of growth and development opportunities in recent years, and for which the outlook is soft for the near to medium-term.

Following the news, YTL Corp’s shares closed yesterday to RM1.09, three sen lower valuing the company at about RM12 billion. YTL Land’s shares closed at 33.5 sen with a market capitalisation of RM296 million.

YTL Land has a landbank of more than 2,000 acres (809.37ha) of strategic development land in Malaysia.

YTL Land’s key property development projects in Malaysia include Pantai Hillpark and Sentul, the most recent being The Fennel at Sentul East in Kuala Lumpur. Meanwhile, in Singapore, YTL Land developed 3 Orchard By-The-Park, comprising exclusive luxury condominiums on Orchard Boulevard.

(The article differs from the print version. It has been edited and updated for clarity and correctness.)