MUI sells 69% stake in Pan Malaysia Holdings at 12 sen per share

KUALA LUMPUR (Dec 12): Malayan United Industries Bhd (MUI) is selling its 69.192% equity stake in Pan Malaysia Holdings Bhd (PM Holdings) to Datuk Dr Yu Kuan Chon for RM77.124 million cash or 12 sen pe share, in a move to divest its non-core assets and reduce its bank borrowings.

In a filing with Bursa Malaysia today, MUI said its six subsidiaries, namely Acquiline Sdn Bhd, Loyal Design Sdn Bhd, Malayan United Management Sdn Bhd, MUI Media Ltd, MUI Property Services Sdn Bhd and Megawise Sdn Bhd, had signed a shares sale agreement with Yu to sell 642.7 million shares in PM Holdings.

“About RM60 million of the proceeds will be used to repay MUI’s bank borrowings, while the balance will be for other working capital purposes,” said the announcement.

MUI, the flagship of tycoon Tan Sri Khoo Kay Peng, with 47.67% stake, is expected to realize a gain on disposal of about RM40 million, which will translate to net gain of 1.3 sen in earnings per share.

Its net assets per share will increase from 27 sen to 28 sen, while its gearing ratio will reduce from 1.25 times to 1.09 times.

Yu, a well-regarded investor, had emerged as the top 30 shareholders in MUI, as well as its three listed subsidiaries — MUI Properties Bhd, Pan Malaysia Corp Bhd (PM Corp) and PM Holdings — based on the latest annual reports.

In a separate filing, PM Holdings told Bursa that aggregate interests of Yu and the persons acting in-concert with him, will increase from 5.33% to 74.522% upon completion of the shares transaction.

However, there is no mention of Yu being required to launch a mandatory general offer to buyout the remaing shares in PM Holdings, whose share price closed at at 11 sen today.

In another filing with Bursa, PM Corp said the sale of 8.91% stake in PM Holdings at RM9.929 million, will incur about RM1.6 million losses to PM Corp.

Megawise, which is wholly-owned by PM Corp, is one of the six vendors of PM Holdings shares. Following the disposal, Megawise will cease to be a substantial shareholder of PMHB.

To recap, last month (November), MUI announced to Bursa it is currently engaged in serious discussions with a potential party, to explore the possibilities of disposing certain “substantial assets”, in order to realise their value.

The announcement has sparked speculation as to which assets Khoo is going to hive off. The center of speculation is mainly on its property assets in Malaysia, Australia, the United States, Hong Kong, Singapore and the United Kingdom, which collectively held a net book value of RM827.3 million, as at Dec 2013.

It is believed MUI’s chain of hotels in the UK have not been revalued for more than a decade, and could now be worth more than the current book value.

Its business segments include the retail division, including a 35% stake in London-listed Laura Ashley Holdings plc and Metrojaya Bhd, the food, property as well as financial services divisions.

Yu is the chairman of YNH Property Bhd and the director of Rapid Synergy Bhd. He is widely known as the one who has single-handedly blocked Hong Leong Capital Bhd from being privatised by Tan Sri Quek Leng Chan.

It was reported that MUI had tasked Debutesq Group, a luxury real estate form, to sell the hotel for £200 million (about RM1.05 billion). MUI, however, dismissed the report.