Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on June 19, 2018

KUALA LUMPUR: Kretam Holdings Bhd’s share price yesterday sank to its lowest since September 2015 with some half a billion ringgit worth of market capitalisation wiped out in a day, after Hap Seng Plantations Holdings Bhd called off a plan to take up a controlling 55% stake in the company.

The stock opened substantially lower at 49 sen yesterday — compared with its closing price of 69.5 sen last Thursday — before tumbling further to its intraday low of 39.5 sen, a 43.2% decline since last Thursday.

By mid-morning, the proprietary day trading and intraday short selling of its shares were suspended by the stock exchange for the rest of the day, as it breached its limit down.

Though the stock rose a little after that, it did not manage to regain all its lost ground. The stock finished the day as the second biggest decliner by percentage on the local bourse — excluding warrants — at 46 sen per share, which means it is still down 23.5 sen or 33.8%.

It saw 163.93 million shares traded, which made the plantation and palm oil refining company the most actively traded counter on the local bourse yesterday. The volume was sharply higher compared with its 200-day average trading volume of 1.79 million shares.

Some RM550 million was wiped out from its market capitalisation, leaving it at RM1.07 billion at the end of yesterday, versus some RM1.62 billion last Thursday.

Shares in Kretam have been heavily traded since the start of the year, rising some 58% to its peak of 85.5 sen on Feb 22 — a level not seen since 1997 — when Hap Seng Plantations announced its intention to buy the stake through two corporate exercises valued at a combined RM1.18 billion or 92 sen a share.

The first, announced on Feb 21, involved buying a 33.5% stake from Kretam’s largest shareholder, Datuk Lim Nyuk Sang @ Freddie Lim, for RM716.99 million, and another 21.5% from Santraprise Sdn Bhd for RM460.79 million.

But rumours of the deals being terminated broke out earlier this month, sending Kretam’s share price down 20% to 62 sen. A spokesman for Hap Seng Plantations said when contacted at the time that due diligence was ongoing with no material change.

Last Thursday, Hap Seng Plantations announced to the stock exchange its decision not to proceed with the deals, after saying its due diligence on Kretam yielded “unsatisfactory and unacceptable” results, but did not reveal more. It had earlier secured two extensions that gave it until the end of this month to complete the due diligence, when it said it had “underestimated the amount of time it needed” for the exercise.

With the acquisition plan scrapped, the group will not have to extend the proposed mandatory general offer that would have been triggered for all the remaining Kretam shares not included, also at 92 sen per share.

Shares in Hap Seng Plantations closed unchanged at RM2.29 yesterday, valuing it at RM1.83 billion. Year to date, the stock has lost some 10%.

 

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