According to an announcement to Bursa Malaysia Securities made at lunchtime yesterday, the US-registered Grantham, Mayo, Van Otterloo & Co LLC, acquired 28.28 million Zelan shares or a 5.02% stake in the company on Monday. Zelan’s stock had closed at 62.5 sen that day.
According to its website, the Boston-based company, better known as GMO, is a global investment management firm managing funds for endowments, pension funds, public funds, foundations and cultural institutions. As of June 30, 2010, GMO managed over US$94 billion (RM297.98 billion) in client assets.
Trading in Zelan’s shares immediately surged in afternoon trading, following the announcement. It was the second-most actively traded stock of the day, with volume jumping 2,000% to 43 million shares yesterday compared to a day earlier.
The counter had hit its 52-week high of RM1.02 last August and had been trending down, touching a 52-week low of 45.5 sen on June 7, 2010.
The performance of the former high flyer in the past two years has been in stark contrast to its previous performance about three years ago.
In January 2007, its share price reached as high as RM6.35.
The construction and property development firm had been hit negatively following its project cost overruns. For the financial year ended March 31, 2010, its net loss widened to RM254.26 million or 45.15 sen per share, compared with the loss of RM137.22 million a year earlier. Its net assets per share stood at 83 sen then.
Zelan was badly hit by cost overruns for its projects in the Middle East, while lower contribution from its engineering and construction business dragged its revenue down by 90% to RM51.82 million from RM517.7 million previously.
The company is also a specialist design-and-build power plant contractor.
Just last month, Zelan’s managing director Raja Azmi Raja Nazuddin resigned. The company has yet to announce a replacement.
Raja Azmi joined Zelan as MD and CEO on June 5, 2009. He was formerly the senior director of corporate development division of UEM Group Bhd and executive director of Time Engineering Bhd prior to his appointment at Zelan.
Raja Azmi took over the driving seat of Zelan after Albert Chang, who was among the founding members of the group, left at the end of January 2009.
Aside from his resignation, there were several corporate developments in the company last month.
On July 23, Zelan announced that the government had agreed, inter alia, that the development project of the integrated transport terminal at Gombak, Selangor would be implemented by the 95:5 joint venture between Zelan and Landasan Kapital (M) Sdn Bhd.
It added that details of the project, including its value, would be disclosed upon the conclusion of the ongoing negotiations with the government.
Following that, Zelan disposed of 409,500 IJM Corporation Bhd shares representing 0.03% stake for RM2.07 million at the end of July. The shares were sold in the open market at an average price of RM5.07 per share.
Zelan announced that the rationale of the disposal was to realise funds to provide working capital for the group’s operating requirements. The gain on the disposal at the group level was about RM370,000.
As a result of the sale, Zelan has 98.5 million IJM shares remaining, or a 7.31% stake. Interestingly, Zelan’s 7.31% stake in IJM is larger than its own market capitalisation of RM343.59 million at the point of writing. Its stake in IJM is worth RM495.5 million based on its closing price of RM5.03 on Aug 3.
Following the disposal, Zelan proposed to obtain a mandate from its shareholders to dispose of up to 30 million shares in IJM translating into a 2.23% stake.
The proposed disposal will be for cash, to buyers to be identified and at a price to be determined later. Part of the proceeds from the sale would be used for the repayment of borrowings of Zelan. As at July 15, 2010, the total borrowings of the Zelan Group stood at RM291.98 million.
The Employees Provident Fund and MMC Corporation Bhd also have substantial interests in the company. As at June 30, 2010, MMC Corp has a 39.25% stake in Zelan. Local tycoon Tan Sri Syed Mokhtar Al-Bukhary, who controls MMC, had emerged in the firm back in 2007.
by Joyce Goh
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