Tong takes stake in UPP Holdings

-A +A

KUALA LUMPUR: Datuk Tong Kooi Ong has taken up a 26.92% stake in Singapore-based paper products manufacturer, UPP Holdings Ltd, a company controlled by Singaporean billionaire Peter Lim Eng Hock.

According to an announcement by UPP Holdings to the Singapore Stock Exchange (SGX) last night, Tong has acquired 156.786 million shares in the company, marking his first acquisition of a Singapore-listed vehicle.

Tong, who is chairman of The Edge, acquired the shares in his personal capacity.

The stake is worth S$26.65 million (RM63.87 million) based on UPP’s market capitalisation of S$99.02 million, at yesterday’s closing price of S$0.17.

Tong’s shares are believed to have been acquired from several parties, including Singapore-listed Rowsley Ltd through broker UOB Kay Hian Pte Ltd.

Last Friday, Rowsley announced that it had agreed to sell its entire 18.56% stake in UPP Holdings, comprising 108.1 million shares, to UOB Kay Hian Pte Ltd at S$0.17 each.

This valued the company at 0.894 times book value, based on net assets of S$0.1935 per share as at Dec 31, 2011.

Rowsley had also disposed of 53.6 million UPP warrants, due in March 2013, at S$0.07 each.

That same day, Tong acquired 127.59 million shares, or a 21.9% stake, at an average cost of S$0.1678, according to an announcement made to SGX yesterday.   

On Monday, he topped up his stake in UPP Holdings to 26.92% by buying another 29.2 million shares, according to another filing with the SGX.  

Since last Friday, UPP Holdings has seen a surge in its trading volume and stock price with Rowsley’s announcement triggering speculation of the entry of a new substantial shareholder.

The stock surged 36.2% to S$0.173 while volume increased 36-fold from 1.42 million to 51.8 million shares last Friday.

On Monday, the stock eased slightly to S$0.17 but volume surged further to 177 million shares.

UPP Holdings closed unchanged at S$0.17 yesterday, with 42.86 million shares traded.

Lim has direct interests in both Rowsley and UPP Holdings.  

He currently owns about 29.9% of Rowsley.

Apart from his stake via Rowsley, Lim also has a direct 37.45% stake in UPP Holdings, according to Bloomberg data, although he is believed to have sold some of his shares in recent days.

That would still make him the largest shareholder in UPP Holdings, followed by Tong.

It is speculated that Tong will be taking on a managerial role in UPP Holdings.

Coincidentally, the company announced last week the resignation of its CEO and chairman, Koh Kim Huat, who will be leaving at the end of May.

It is believed that UPP Holdings will be transformed into a vehicle for investments in the Southeast Asian region.

In particular, Tong is said to be eyeing some investment opportunities in Myanmar, which has been undergoing democratic and economic reforms.

The release of Myanmar’s democracy icon, Aung San Suu Kyi, from house arrest in 2010 was a symbolic turning point for a nation of 54 million people.

Already, the country’s reforms have been a catalyst for investor interest in what is the poorest Asean country.

Myanmar and its neighbours make up approximately 39% of the world’s population, sharing borders with the likes of China, India, Bangladesh and Thailand.

For Tong, who has previously controlled listed companies like PhileoAllied Bhd, PhileoLand Bhd, Nexnews Bhd and Sunrise Bhd, this is the first time he has acquired a substantial stake in a Singapore public-listed company.

UPP Holdings was originally known as United Pulp and Paper Company Ltd when it was established in 1967.

Through its subsidiaries, most of which are based in Malaysia, it deals with the pulp and paper business as well as that of waste paper collection and trading.

Its 86.1%-held UPP Pulp & Paper (M) Sdn Bhd operates a paper mill and produces industrial grade paper products such as testliner, corrugating medium, chipboard and core board from recycled waste paper.

Looking at its financials, UPP Holdings made a net loss of S$450,000 for the full year ended Dec 31, compared to a net profit of S$1.47 million the previous year.

At the same time, the company’s revenue fell by 3% from S$52.79 million to S$51.13 million.

This article appeared in The Edge Financial Daily, March 7, 2012.