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Ho Hup rises on approval to restructuring exercise

KUALA LUMPUR: Shares of Ho Hup Construction Company Bhd (Ho Hup) rose as high as 11.48% in intraday trading yesterday on the back of positive investor sentiment after Bursa Malaysia approved its financial regularisation plan.

Ho Hup climbed to a year-to-date high of 82.5 sen before paring down its gains to close at 80.5 sen with 1.06 million shares traded. The stock had risen by 15% since early May.

Having languished in its PN17 status since 2008, Ho Hup announced yesterday that the stock exchange had approved its regularisation plan which was initiated a few years ago and had undergone several changes.

In beefing up its balance sheet, the company is planning a par value reduction from RM1 to 50 sen, a rights issue of 102 million irredeemable convertible preference shares (ICPS) of 50 sen each, 136.63 million redeemable convertible preference shares (RCPS) of 50 sen each, and 51 million additional warrants at an exercise price of 60 sen.

Ho Hup’s jewel is a 60-acre tract in Bukit Jalil that made it a target for predators and subject of a lengthy boardroom tussle.

The previous management headed by Datuk Vincent Lye entered into a joint development agreement with Pioneer Haven Sdn Bhd, a subsidiary of Malton Bhd, a few hours before he and his team were ousted in a shareholders meeting in March 2010.

Ho Hup’s financial restructuring was put on hold for two years after the company got into a legal battle with Pioneer Haven over the rights to develop the land.

Both parties reached an out of court settlement in January this year under which Ho Hup gets to develop 10 acres on its own while the rest of the land is jointly developed with Malton.

Members of the Low family, comprising Datuk Low Tuck Choy, Low Teik Kien, Low Kheng Lun, and Low Lai Yoong, have been steadily increasing their majority stake in Ho Hup through Low Chee & Sons Sdn Bhd (LCS), their private investment vehicle. The family patriarch, Low Chee, founded the construction company in 1960.

Latest filings show that LCS currently owns a 22.99% stake. For the financial year ended Dec 31 last year, Ho Hup incurred net losses of RM 11.74 million from RM 39.98 million in revenue. The group was given PN17 status on July 31, 2008. It submitted its regularisation plan on Sept 28, last year.


This article first appeared in The Edge Financial Daily, on May 15, 2013.

 

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