This article first appeared in The Edge Malaysia Weekly, on March 14 - 18, 2016.

Fashion retailer Voir Holdings Bhd’s announcement on March 1 that its holding company, Marvellous Future Sdn Bhd, had taken up the offer to sell all of its shares and warrants to third party Vista Lestari Sdn Bhd is nothing short of intriguing.

This is because Vista Lestari’s nature of business, which according to a company search is in “real estate activities and wholesale of goods without any particular specialisation”, seems like an odd fit for Voir. More so given the rough spot fashion retailing is in, amid weak consumer sentiment and a competitive market.

However, further checks show that Vista Lestari has 41.7% equity interest in Zenith Construction Bhd,  one of the parties of Consortium Zenith BUCG Sdn Bhd that was awarded the tender for an underground tunnel linking Penang island and the mainland three years ago.

A familiar name that surfaces on both companies’ lists of directors is Datuk Zarul Ahmad Mohd Zulkifli, who has a 50% stake in Vista Lestari. Zarul is the chairman of Vista Lestari and Zenith Construction.

The other shareholders in Vista Lestari include Zarul Ikwan Zarul Ahmand and Mohd Asfirdaus Asri,  who each have a 25% stake in the company.

Does this mean that Voir Holdings could see a business diversification after the share sale agreement is completed?

A source familiar with the takeover exercise says there is a business strategy in place after the completion of the takeover of Voir, but the source declined to elaborate.

“The business plans will definitely look into minority shareholders’ interests,” says the source.

If all goes to plan, the takeover exercise is set to be completed by May this year.

Voir Holdings has a long history. It has been around since the 1970s. One of Voir Holdings’ founders, Seow Khim Soon, who is executive chairman and the largest shareholder through his company Marvellous Future, joined the family business in 1977.  In 1988, he and his mother set up Kumpulan Voir Sdn Bhd.

Seow could not be reached for comment at the time of writing.

In the filing with Bursa Malaysia, Voir Holdings said Marvellous Future and Vista Lestari Sdn Bhd had entered into a conditional sale and purchase agreement on Feb 29, under which Marvellous Future will dispose of its entire shareholding of 50.71% and all of its warrants, amounting to 55.78%, at 50 sen per share and 9 sen per warrant, to Vista Lestari.

It is interesting to note that the offer price of 50 sen per share and 9 sen per warrant are at steep discounts to their closing prices on Feb 29, when the shares last traded at 74 sen apiece while the warrants closed at 26.5 sen.

Voir Holdings’ share price had been rallying since Oct 1 last year. Between Oct 1, 2015 and March 1, 2016, the counter has risen 87.5% from 40 sen to 75 sen. Before that, it hovered below 50 sen throughout most of 2015.

Its warrants have also seen a surge over the same period, gaining 188.24% to 26.5 sen by March 1, from 8.5 sen on Oct 1 last year.

Marvellous Future’s sale of 50.71% equity interest in Voir Holdings to Vista Lestari would trigger a mandatory takeover offer for the remaining shares. However, at the offer price of 50 sen apiece, there is no appeal for the minority shareholders to take up the offer. A source says there are no plans to take Voir Holdings private, which could explain the low offer price.

Nevertheless, Voir Holdings’ earnings have taken a beating in recent years. Net profit has been on a steady decline since 2010. In FY2014, the fashion brand slipped into a net loss of RM1.26 million on the back of revenue amounting to RM172.79 million.

As for its fourth quarter ended Dec 31, 2015, net profit declined by 11.1% to RM1.52 million, from RM1.71 million a year earlier. Revenue declined marginally to RM48.06 million from RM48.12 million previously.

The company said the decrease in revenue was due to the general softening in market demand, while the lower profit was a result of lower margins as it dished out more discounts during the period.

On a full-year basis, net losses widened to RM4.42 million from RM1.26 million a year ago, while revenue slipped to RM160.7 million from RM172.79 million previously. Voir’s net gearing stood at 0.19 times with net debt amounting to RM16.88 million as at Dec 31, 2015. However, the company still had retained earnings of RM22.55 million.

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