KUALA LUMPUR (April 26): The Crown Prince of Pahang, Tengku Abdullah Sultan Ahmad Shah, together with parties acting in concert (PAC) with him who collectively have a 69.9% stake in Tanah Makmur Bhd, plans to privatise Tanah Makmur via selective capital reduction (SCR) and capital repayment at RM1.80 apiece.

The exercise involves 39.81% of the issued and paid-up capital of Tanah Makmur, or 158.504 million shares, which will entail the capital repayment of RM285.13 million to the entitled shareholders, according to Tengku Abdullah’s letter to the company yesterday, which was filed with Bursa Malaysia. The mismatch in entitled shares for the SCR repayment and total shares held by the collective party undertaking the privatisation is due to some PAC also being entitled to the capital repayment, which will result in the cancellation of their shares.

The price offered is at a 33 sen or 22.45% premium to the last closing price of Tanah Makmur shares of RM1.47 last Friday, and as much as 30% to its volume-weighted average market price over the past six months.

Tengku Abdullah, who directly owns 12.77% of Tanah Makmur shares, said this is the time for shareholders to realise their investments at a premium ranging from 22.45% to 30%. “The trading liquidity of Tanah Makmur shares has also been low, with an average daily trading volume of 498,000 Tanah Makmur shares … representing 0.42% of the free-float as at April 22, 2016,” he added. Tanah Makmur was listed less than two years ago on July 17, 2014, at an initial public offering price of RM1.25, after which it was traded beyond RM1.80 for just over two months.

The PAC with him are: Lembaga Kemajuan Perusahaan Pertanian Negeri Pahang (with a 20% stake in Tanah Makmur), TAS Industries Sdn Bhd (15.1%), Tastu Bina Sdn Bhd (6.8%), Focus Edge Indices Corp (5.28%), Tengku Datuk Uzir Tengku Ubaidillah (3.6%), Tengku Datuk Nong Fatimah Ahmad Shah (2.65%), Aimvesco Sdn Bhd (1.52%), Tengku Tan Sri Dr Meriam Ahmad Shah (0.79%), Tengku Datuk Zubir Tengku Ubaidillah (0.77%), Tengku Shahariah Ahmad Shah (0.35%), Tengku Datuk Aishah Ahmad Shah (0.17%), Tengku Datuk Muhaini Ahmad Shah (0.05%), Tengku Datuk Seri Ahmad Faisal Tengku Ibrahim (0.04%), Tengku Datuk Muhammad Mazlan Tengku Putera Zainal Abidin (0.02%) and Tengku Aidy Ahmad Shah Tengku Kamil Ismail (negligible).

Once it gets the necessary approvals, Tanah Makmur will reduce its share par value by half to 25 sen to provide more money in the company’s share premium reserve for the capital repayment. Next, Tanah Makmur will conduct a bonus issue to raise its issued and paid-up share capital, as the number of shares to be cancelled under the proposed SCR is higher than the sum of its existing shares. In total, 1.14 billion Tanah Makmur shares will be cancelled.

Tengku Abdullah does not intend to maintain Tanah Makmur’s listing status pursuant to the privatisation. “The board, save for the interested directors, will deliberate on the proposed SCR and decide on the next course of action. Accordingly, a further announcement will be made in due course,” said Tanah Makmur in response to the offer.

Tanah Makmur’s counter was suspended yesterday to make way for the announcement. It will resume trading today.

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This article first appeared in The Edge Financial Daily, on April 26, 2016. Subscribe to The Edge Financial Daily here.

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