PETRA : Waiting for Tengku Ibrahim’s next move

Tengku Ibrahim Petra, in his bid to retake control of Petra Perdana Bhd through nominees, may have his work cut out for him at the AGM slated for July 20.

On that day, shareholders will deliberate on the nominations to the board made by certain shareholders and the re-election of four existing directors namely its managing director Shamsul Saad, Idris Zaidel, Raja Anuar Raja Abu Hassan and Surya Hidayat Abd Malik.

The Tengku Ibrahim faction, which is up against the management of Petra Perdana, namely Shamsul and executive director Datuk Henry Kho Poh Eng, had recently managed to get a court order to adjourn the nominations and re-election of directors to July 20.

It had been widely believed that Tengku Ibrahim may receive the backing of pilgrim fund Lembaga Tabung Haji (LTH) in the ongoing tussle for board control at Petra Perdana.

However, LTH had abstained from voting at the AGM on June 28.

If this can be taken as a cue, it is likely that LTH will again abstain from voting, as institutional investors normally do, on July 20.

On the morning of June 28, Tengku Ibrahim’s faction had only managed to get the court to defer the tabling of the nominations and re-elections of directors for shareholders’ approval.

By that time, the proxy forms had already been filled, and according to insiders, LTH had opted to abstain from voting.

This could leave Tengku Ibrahim, who owns an 11.8% stake in Petra Perdana, standing alone in the tussle with the Shamsul-Kho faction, which also controls about the same amount of equity.

According to sources familiar with Tengku Ibrahim, he is abroad now and will be back shortly before the next AGM.

LTH is the fourth-largest shareholder of Petra Perdana with a 9.2% equity interest. Another substantial shareholder is Permodalan Nasional Bhd with a slightly above 18% stake.

Prior to the AGM on June 28, four Petra Perdana shareholders, including Tengku Ibrahim’s wife Datin Che Nariza Hashim, had nominated four new directors, namely John Pang Yun Nian, Suhaimi Badrul Jamil (Che Nariza’s brother-in-law), Datuk Syed Norulzaman Syed Kamarulzaman and Datuk Shaik Sulaiman S Mohamed Ismail.

LTH had also nominated a candidate, Hamdan Rasid who is a director of TH Properties Sdn Bhd, to the board of Petra Perdana.

The Shamsul-Kho faction did not oppose this nomination by LTH but on a technicality, declined to table the nominations proposed by the Tengku Ibrahim’s faction.

While it would seem like a small victory for the Tengku Ibrahim faction to have the courts consent to their nomination of candidates, since then, Pang has withdrawn his consent to be nominated to the board. There were no reasons given for Pang’s withdrawal.

Strengthening the Shamsul-Kho faction is the presence of Nam Cheong Dockyard Sdn Bhd with a 9.1% stake in Petra Perdana, making it the fifth largest shareholder.

A 10% private placement to Nam Cheong recently diluted Tengku Ibrahim’s stake from about 13% to 11.8%, and LTH’s from 10.2% to current levels.

While the Shamsul-Kho faction said the presence of Nam Cheong would assist Petra Perdana, as it would place the latter in a better position to place orders, there were others who questioned the placement exercise.

The 10% private placement, at RM1.32 a share, raised RM39.3 million and was dilutive for existing shareholders.

The main grouse was that the placement price at RM1.32 was well below Petra Perdana’s latest NTA of RM1.70 as at March 31, 2010.

In addition, the proceeds from the placement are insufficient to finance two new ships which Petra Perdana plans to purchase for RM200 million. Thus, gearing levels could be raised again.

It was only in February this year that Petra Perdana hived off three vessels to its 29.6% associate, Petra Energy Bhd for some RM213 million, to help pare down debts.

“Why are they buying ships now when only a few months ago, they were selling assets to pare down borrowings?” a market observer asked.

As at end-March this year, Petra Perdana had long-term borrowings of some RM164.76 million while the company’s short-term debt obligations were almost RM122 million.

For its first three months of FY2010, Petra Perdana posted a net profit of RM3.60 million on the back of RM50.93 million in revenue. In contrast to a year ago, net profits fell by more than 80% while revenue tumbled close to 69%. In its notes, which accompany its financials, Petra Perdana said among the reasons for the fall in profits was lower vessel utilisation.

Petra Perdana ended trading last Friday at RM1.24, slipping four sen.



Written by Jose Barrock
This article appeared in The Edge Financial Daily, July 5, 2010.