Tan family to tighten grip on mall assets again?

KUALA LUMPUR: Trading in shares of Goldis Bhd and IGB Corp Bhd will be halted today pending a “very material announcement” that is speculated to be a second attempt by the controlling Tan family to tighten their grip on the prized Mid Valley Megamall and The Gardens Mall assets, which are wholly-owned by IGB Real Estate Investment Trust (REIT).

IGB shares closed 3 sen higher at RM2.84 yesterday, while Goldis share price rose 5 sen to end the day at RM2.39.

Goldis stock has begun attracting trading interest before the announcement and hit a seven-year high of RM2.72 on June 27 on market talk that the company was to be taken private.

Slightly more than a year ago, Goldis had attempted a corporate exercise that would have granted the Tan family tighter control of IGB Corp. The Tan family has an estimated shareholding of 59% in Goldis held collectively through vehicles of siblings Datuk Seri Robert Tan Chung Meng, Pauline Tan Suat Ming and Tony Tan Choon Keat, and their cousin Tan Boon Seng.

The proposal at the time had been controversial — to inject Goldis’ 30.59% stake in IGB Corp into unlisted Steady Paramount Sdn Bhd.  It forced minority shareholders to choose between exchanging their shares in Goldis for that of an unlisted company or accepting a cash offer of RM1.72 per Goldis share, which would have been a good deal for the Tan family.

At this price, the first proposal valued IGB Corp’s shares at RM2.34 a piece, a 17.5% discount to the share price yesterday.

Since the Tan family was allowed to vote on the proposal, it was seen as a done deal at the time and it was a surprise when management called off the deal weeks later after “considering negative feedback” from minority shareholders.

Note that Tan Lei Cheng is the chairman and chief executive officer of Goldis and a cousin of Robert, who in turn is the group managing director of IGB Corp and the son of its co-founder Tan Kim Yeow. Both are substantial shareholders of Goldis as well as IGB Corp and IGB REIT.

The proposal was seen as a second step in the Tan family’s plans to streamline the complicated group structure which began almost three years ago when the shopping mall assets were injected into IGB REIT from KrisAssets Holdings Bhd. KrisAssets was subsequently delisted.

Ultimately, IGB REIT was and is the prize at stake with its two one-of-a-kind mall assets in its stable. Goldis has a 30.45% stake in IGB Corp, while the Tan family through its various vehicles has an additional 11% stake in IGB Corp. IGB Corp in turn has a 51% stake in IGB REIT.

IGB REIT yesterday closed at RM1.24 a share, valuing it at a market capitalisation of RM4.26 billion and a dividend yield of 5.82%.

Last year’s proposal also valued Goldis’ remaining assets, which includes G-Tower, at 42 sen a share against earnings for remaining operations of 2.5 sen per share.

This article first appeared in The Edge Financial Daily, on July 18, 2014.