PETALING JAYA: Property developer Talam Transform Bhd is working on a restructuring exercise that will see the emergence of new investors and the exit of its existing largest shareholder – Kumpulan Europlus Bhd (KEuro).
Among the new investors are existing shareholders of Multi Purpose Holdings Bhd (MPHB), which is controlled by Datuk Surin Upatkoon. Surin is already an indirect shareholder of Talam, which was founded by Tan Sri Chan Ah Chye (pic inset) , through MWE Bhd.
“Some new money will come from the investors as the company undertakes a corporate exercise to beef up its balance sheet. They are investing money because they believe the stock has long-term potential.
“But the new investors will remain as passive shareholders and will not drive operations,” said a source.
Chan is likely to stay on at Talam but his role may be reduced.
Analysts were not too concerned about shareholders of MPHB taking up an interest in Talam. They were more interested in the potential dividend pay-out by MPHB’s listed-subsidiary, MPHB Capital Bhd.
“MPHB Capital recently sold some land, which gave rise to talks of it paying out a special dividend. That is where the attention is now,” said an analyst.
After three consecutive years of making losses, Talam returned to the black in its recent financial year ended Jan 31, 2014.
It posted a full-year net profit of RM9.58mil on revenue of RM171.7mil, mainly due to a RM100.67mil disposal gain of investment properties.
In its filing with Bursa Malaysia, the group said it had completed all unfinished houses and will continue to team up with “reputable corporations” to develop its land bank.
However, it foresees a difficult year ahead due to tougher lending guidelines by Bank Negara as well as increasing construction costs.
KEuro’s impending exit from Talam is not surprising as the company that is managed by its largest shareholder, IJM Corp Bhd, is focussed on implementing the West Coast Expressway.
KEuro needed strong shareholders to undertake the RM6bil 233km highway project, which resulted in the exit of Chan.
In October last year, Chan, together with his wife Puan Sri Thong Nyok Choo, sold a 22.15% stake in KEuro to MWE Holdings Bhd for RM155.8mil.
This transaction paved the way for MWE to becoming the second largest shareholder in KEuro after IJM’s 25.1%.
MWE is another listed company that is controlled by Surin.
Chan’s direct stake in Talam stands at 1.09%, while his indirect stake is through his remaining holdings in KEuro.
Surin’s emergence in Talam in October sent the share price to a 19-month high of 7.5 sen on Oct 16. It then settled at the between 6.5 sen and eight sen range.
A subsidiary of MWE, Pijaya Sdn Bhd, has been nibbling shares of Talam.
On April 14, its shares spiked to a high of 11 sen. Last Friday, it closed at 9.5 sen, 0.5 sen lower than the previous day with 89.26 million shares done.
In the 1990s, Talam was the dominant property developer in Selangor as the company bagged several privatisation projects from the state.
Some attributed this to Chan’s close links with the state government at that time.
However, like most other developers, Talam’s debts piled up and eventually was caught flat-footed during the Asian financial crisis in 1998.
Over-geared and unable to service its loan, Talam was forced to halt some of its half-completed projects.
Although it restructured its debts, Talam could not recover from the crisis.
When it was saddled with thousands of uncompleted houses, IJM Corp stepped in by taking up a stake in KEuro in 2005.
Since then, IJM has been driving KEuro, leaving the running of Talam to Chan and existing management.
Talam has a landbank of some 2,000 acres situated mainly in Cyberjaya, Selayang, Ulu Klang and Bukit Beruntung.
At its AGM in July 2013, Talam said that it was embarking on build-then-sell projects on a smaller scale, to prove that it is able to deliver.
It is calling tenders for its build-then-sell affordable housing project in Puchong, which is expected to commence in the second half of 2014.
by wong wei-shen
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