BERJAYA Corp Bhd (BCorp) (3395) chairman and chief executive officer Tan Sri Vincent Tan will reduce his stake in his other companies to raise cash for his BCorp rights issue obligation, following his massive charity pledge.
Tan's initial plan was to use RM525 million from the sale of his 70 per cent stake in his privately-owned Ascot Sports Sdn Bhd to BCorp last month to pay for the rights issue. His son, Datuk Robin Tan, holds the remaining stake in Ascot.
But the older Tan has decided to donate all of the RM525 million to his Better Malaysia Foundation, which will provide scholarships and interest-free loans to students seeking funding to further their education.
"I will have to raise the funds through the sale of shares in my other companies. As you know, we will be listing Berjaya Retail Bhd. So the option there is to reduce my stake but (hold) enough to maintain the controlling stake," he said at a media briefing on Saturday evening in Kuala Lumpur.
When the deal was first announced, Tan was not expected to net in any cash as he had committed to reinvest up to RM400 million to undertake his BCorp rights issue obligation. BCorp was also to withhold the remaining RM125 million from the total purchase price to back up Tan's three-year cumulative net profit guarantee of RM375 million.
BCorp planned to finance the Ascot purchase by undertaking a renounceable rights issue of up to RM614.46 million nominal value of 10-year 8 per cent irredeemable convertible unsecured loan stocks (Iculs). Tan pledged to subscribe to his and his private companies' entitlements in full, which would amount to at least RM400 million.
"I will still undertake my (Iculs) entitlement in full," Tan said.
The business tycoon's move to donate all of the Ascot sale proceeds comes after several quarters have alleged that Tan has been unjustly enriched by the re-issuance of the conditional sports betting licence to Ascot by the Finance Ministry.
"It has also been insinuated that in the process, some government officials and political parties have also benefited. I would like to say that none of this is true," he said.
Tan said that the government had re-issued the licence to Ascot given the rampant growth of illegal betting operations, which is estimated to be some RM20 billion-RM30 billion, and also since Ascot has the first right of refusal over this licence.
Although BCorp plans to appeal to the three opposition states of Kedah, Selangor and Penang to reverse their decision on banning legal sports betting, the company should see the bulk of the business coming via phone bets.
"About 75 per cent (of the business) will come from phone betting as people tend to place larger bets. The remaining portion will come from the outlets," said Tan.
BCorp will offer sports betting for soccer games only to non-Muslims starting this September in 220 Sports Toto outlets. Tan added that the conditional sports betting licence was given with the understanding that no new outlets will be established for this purpose.
He said that sports betting would not be ready for the upcoming World Cup 2010 as BCorp did not want to rush the process of putting in place the necessary systems.
"We wanted to be careful and do a good job in implementing this," he said, adding that the software to be used was designed locally but used in other countries such as the UK and Philippines.
Meanwhile, Tan said his ultimate vision was to donate some of his company shares to the Better Malaysia foundation so that it can see a donation of one billion ringgit.
"I am inspired by what Warren Buffett and Bill Gates have done (by giving away their fortune). One day when I'm ready, I hope to do the same," he said.
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