The reclusive tycoon holds a 59.56% stake in MEASAT and 30.92% in Tanjong plc. Ending long-time speculation, MEASAT Global Network Systems Sdn Bhd announced yesterday evening a privatisation offer for MEASAT Global Bhd at RM4.20 cash per share.
The offer is conditional upon acceptance from 90% of the nominal value of the shares (excluding those already held by MEASAT Global) and relevant approvals and will close not later than 60 days from the date of posting of the offer document. Following the close, the company has 21 days to obtain the relevant approvals, if required.
Meanwhile, Tanjong has yet to make an announcement on its impending corporate exercise.
Its shares will be suspended from trading until 5pm tomorrow, according to announcements made to Bursa Malaysia yesterday. Tanjong made a similar request for a suspension on the London Stock Exchange. MEASAT’s shares will resume trading today.
The privatisation offer of RM4.20 per share for MEASAT is at an 11% premium over the stock’s last traded price of RM3.80. The exercise will cost MEASAT Global a total of RM662.34 million cash.
The deal values the company at RM1.64 billion. The price offered is 17% below its latest net assets per share of RM5.08, as at March 31, 2010.
Moreover, the company appears to be turning around nicely. In the first quarter of 2010, it posted a net profit of RM49.79 million, or 12.8 sen per share, although RM41.67 million was from a forex gain. This was a reversal from a net loss of RM41.48 million a year earlier, which was caused by a forex loss of RM50.3 million.
As at March 31, 2010, MEASAT had cash of RM172.41 million, and borrowings of RM764.11 million. Net debt stood at RM581.7 million, with a gearing of 29.4%.
Although the premium over the last traded price was only 11%, it is noteworthy that MEASAT’s share price has rallied sharply over the past six months, doubling from just above RM1.80 in February due to on-and-off privatisation rumours.
Following the privatisation of Astro All Asia Networks Bhd, another company controlled by Ananda, MEASAT’s shares surged in March on renewed privatisation speculation, but later fell back on the lack of developments. In the most recent rally which started in May, its shares have risen about 50%.
While MEASAT’s recent shareholders would be happy with their capital gains, those who have held its shares since its restructuring days would be exiting with unexciting returns.
MEASAT was listed back in 2002 via a reverse takeover of Malaysian Tobacco Co (MTC), through the purchase of 100% of Binariang Satellite Systems Sdn Bhd. The acquisition was satisfied by RM750 million cash and the issuance of 187.43 million new shares at RM3.74 per share, pricing Binariang at RM1.45 billion.
Thus, it would appear that Ananda is effectively buying back MEASAT shares at just 13% higher than the price he listed them eight years ago.
What about Tanjong?
While the news on MEASAT is out, investors will have to keep guessing on Tanjong. Opinion appears divided on what the company would announce.
“For Tanjong, the possibilities are many. The suspension could be due to a privatisation exercise. We are also not ruling out the possibility of upcoming acquisitions in the power sector, a new launch of number forecast operations (NFOs) or separation of the power and gaming businesses,” said an analyst.
Tanjong has strong cash flows from its gaming and power operations, and is a favourite among fund managers and analysts.
The company’s cash balance is RM1.54 billion as at April 30, 2010, against borrowings of RM4.78 billion, which are mostly for the power assets. Investors will be eagerly awaiting Tanjong’s announcement.
This article appeared in The Edge Financial Daily, July 29, 2010.
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