Plantation company Kretam Holdings Bhd’s major shareholders have extended an unconditional takeover offer to acquire all the remaining shares they do not already own at RM1.43 cash per share, after they had acquired more shares and converted their irredeemable convertible unsecured loan stocks (ICULS).
The offer price represents a mere 2% premium over its last traded price. The stock fell six sen yesterday to RM1.40 with 811,500 shares changing hands. It traded at a 52-week high of RM1.72 on July 9, 2010 and a low of RM1.01 on Aug 28, 2009.
For the six months to June 30, 2010, Kretam’s net profit rose 44% to RM17.89 million from RM12.45 million, while revenue grew 20% to RM64.31 million from RM53.54 million. Basic earnings per share rose to 9.62 sen from 6.69 sen.
The company has a clean balance sheet. Cash and cash equivalents stood at RM65.27 million, while total borrowings amounted to RM10 million.
As at June 30, 2010 (FY10), net assets per share stood at RM1.62, pricing the offer at 0.88 times book.
Kretam is also involved in the stockbroking business and has proposed to dispose of its securities unit, Innosabah Securities Bhd, but has yet to find a buyer.
In a statement yesterday, Kretam said it had received a notice of unconditional takeover offer from the joint offerors — Nasalim Sdn Bhd, Santraprise Sdn Bhd and Lim Nyuk Sang @ Freddy Lim (LNS). Parties deemed to be acting in concert are Low Seng Lee, Lim Nyek Kiong @ Lim Nyuk Min, Lim Nyuk Chong @ Lim Nyuk Siong and Lim Nyuk Foh. LNS is Kretam’s executive director and group CEO.
Kretam said its board had deliberated on the notice and did not intend to seek an alternative takeover offer. It will appoint an independent adviser to advise its independent directors and shareholders on the offer.
Yesterday, the joint offerors served notices of conversion of a total of 57.04 million ICULS, representing 23.33% of Kretam’s enlarged share capital, while LNS acquired a total of 4.7 million shares from Lai Ai Fong and Pang Fong Tsao, representing a 1.92% stake.
The transactions raised the joint offerors’ stake in Kretam to 50.11% from 32.64% previously.
LNS’ direct interest in Kretam rose to 41.48% from 22.57%, triggering the 33% threshold for a mandatory general offer.
In their notice to Kretam, the joint offerors said they intended to maintain the company’s listing status and, in the event the minimum public shareholding spread was not met, they would explore various options to rectify the shortfall.
The takeover offer for Kretam follows a spate of privatisation moves, although Kretam’s major shareholders are planning to keep the company listed.
This article appeared in The Edge Financial Daily, August 4, 2010.
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