Many depressed firms require capital injection to stay afloat or a ‘white knight’ to save them from winding up

by MARK RAO/ pic by MUHD AMIN NAHARUL

BIG names in Malaysia’s corporate world are leading the way in many deals — especially aiming at cash-strapped firms and loss-making companies with battered share prices — and sniffing takeovers opportunities after a quiet 2018.

Corporate exercises were tepid in Malaysia, last year with a report by Transaction Trail Annual Report showed the total deals in mergers and acquisitions (M&A), private equity/ venture capital and initial public offerings were valued at US$12.5 billion (RM51.38 billion) last year compared to US$20.3 billion in 2017.

Many of the targeted M&A are related to depressed companies which require capital injection to stay afloat or a “white knight” to save them from possible winding up options.

Among them are Tan Sri Dr Francis Yeoh (picture), Tan Sri Vincent Tan, Tan Sri Wan Azmi Wan Hamzah, Tan Sri Syed Mokhtar Al-Bukhary and Datuk Amar Abdul Hamed Sepawi have been making headlines over the last few months.

YTL
Yeoh’s YTL Cement Bhd acquired a 51% stake in Lafarge Malaysia Bhd for RM1.63 billion in one of the biggest corporate deals this year. The deal also increases YTL’s stake in Lafarge to about 77%.

The firm re-designated Yeoh as its executive chairman from ED previously. The tycoon’s spending did not stop there. The family-controlled YTL Corp Bhd is planning to delist its unit, YTL Land & Development Bhd, via a consolidation exercise.
The eldest son of the late billionaire and YTL founder Tan Sri Dr Yeoh Tiong Lay, through YTL Corp, undertook a share swap exercise to acquire shares not already held by the company in its majority-owned property arm, YTL Land.

This is in view of delisting YTL Land due to its relatively low trading volumes which is preventing shareholders from maximising the value of their investment via a continued listing.

The family’s interest in these companies are largely represented by private vehicle, Yeoh Tiong Lay & Sons Holdings Sdn Bhd. The YTL Group is firmly consolidating their positions in companies and sectors which would see a turnaround especially related to construction.

Berjaya

The founder of Berjaya Corp Bhd has been increasing its stake in Caring Pharmacy Group Bhd after acquiring 3.1 million shares from Perbadanan Nasional Bhd.

Tan’s (picture) interest in the company has increased to 8.44% or 18.37 million shares.

Another of his company, Berjaya Land Bhd, plans to buy a 75% stake in Icelandair Hotels ehf for US$53.63 million. The acquisition included a put and call option on the remaining 25%, Berjaya Land said.

GGSB

Wan Azmi (picture) and his private vehicle Gelombang Global Sdn Bhd (GGSB) had agreed to inject a combined RM42 million in the financially-troubled Scomi Group Bhd as part of the latter’s rights issue that is aimed at repaying creditors and funding working capital.

The injection will be in the form of two loans at RM21 million each which represents both parties’ commitment to subscribe to their respective commitments and excess undertakings.

Wan Azmi and GGSB hold 0.75% and 0.01% stake in the company respectively.

However, following the exercises, as well as a planned capital reduction and debt settlement, their shareholdings will increase to 15.02% and 14.76% respectively.

Wan Azmi, presently Rohas Tecnic Bhd’s chairman, sold his 30% stake in water concessionaire Syarikat Pengeluar Air Selangor Holdings Bhd earlier this year. He has reportedly realised a RM570 million gain from the sale.

GGSB, meanwhile, is an investment holding company owned by sole shareholder United Flagship Sdn Bhd — a company that also 100%-owned by Datuk Mohd Zakhir Siddiqy Sidek who is currently the independent non-executive chairman of HSS Engineers Bhd.

Aurora Mulia
Low-profile businessman Syed Mokhtar has emerged as a key player in Malaysia’s media industry after his private vehicle, Aurora Mulia Sdn Bhd, became the largest shareholder in Media Prima Bhd with a RM73.81 million valued share acquisition.

Aurora Mulia, which now holds a 16.05% stake in the media group, has Syed Mokhtar’s son, Syed Danial Syed Mokhtar Shah, as one of its directors.

Syed Mokhtar also has a 14.76% stake in Utusan Melayu (M) Bhd, which is currently a Practice Note 17 company, as well as a stake in TMR Media Sdn Bhd — the publisher of The Malaysian Reserve.

Media Prima posted a net loss of RM40.41 million for the first three months, almost double than the losses incurred a year ago.

Naim Holdings
Meanwhile, Abdul Hamed held 254.92 million shares in Sarawak-based oil and gas (O&G) service provider Dayang Enterprise Holdings Bhd representing an indirect 26.42% interest, according to a filing to the local bourse last Friday.

It is important to note, however, that the Sarawak tycoon is also chair and substantial shareholder in Naim Holdings Bhd which was last listed as a 26.42% shareholder in the company.

The 26.42% stake, valued at approximately RM254.9 million last Friday and deemed an indirect interest, is likely a reflection of this ownership structure.

Dayang Enterprise is undertaking cash call exercises, in the form of a rights issue and private placement, which could raise up to RM187.17 million in funds to pare down its debt, thus capitalising on any upturn in the O&G industry.

For the rights issue, the company secured irrevocable and unconditional undertakings from its shareholders, including Naim Holdings.

Besides his shareholding in Naim Holdings and indirect interest in Dayang Enterprise, Abdul Hamed also chairs public-listed firms — Ta Ann Holdings Bhd and Sarawak Plantation Bhd — as well as Sarawak’s state-owned utility, Sarawak Energy Bhd.

Maju Holdings
More corporate deals are brewing with Maju Holdings Sdn Bhd, as the company had submitted a bid to take over PLUS Malaysia Bhd.

Maju Holdings group executive chairman Tan Sri Abu Sahid Mohamed in 2017 put in a bid of RM36 billion to take over PLUS. The government is evaluating the offer.

Another key takeover or shareholding change is Malaysia Airlines Bhd. The government is expected to decide what to do with the ailing airline which continued to post losses.