This article first appeared in The Edge Financial Daily on September 13, 2017

KUALA LUMPUR: A group of Willowglen MSC Bhd substantial shareholders has sold their shares cheap at 80 sen per share, which is a 42% discount to the last traded price of RM1.39, to the company’s managing director Wong Ah Chiew and parties acting in concert (PAC).

The substantial shareholders signed a share sale agreement with Wong and PAC to sell to the latter 55.75 million shares, or a 22.92% stake, in Willowglen for RM44.61 million cash, according to a filing with Bursa Malaysia yesterday.

Wong and PAC’s collective equity stake in Willowglen will rise from 32.08% to 55% . Consequently, Wong’s investment vehicle, New Advent Sdn Bhd, and PAC have to launch a mandatory general offer at 80 sen per share.

The offer price represents a discount of 40.3% to RM1.34, which is the five-market-day volume weighted average price (VWAP) of Willowglen shares up to and including Sept 11.

It is also 43.26% less than RM1.41, which is the one-month VWAP up to and including Sept 11, and 48.05% less than RM1.54, the three-month VWAP up to the same date.

Willowglen’s share price has been on a steady climb, jumping 120% in the past 12 months. The transaction price has raised eyebrows considering that the company’s earnings have fared well over the past three years. Furthermore, Willowglen has a strong balance sheet with net cash of RM30.17 million.

Willowglen’s profit grew from RM17.4 million in the financial year ended Dec 31, 2014 (FY14) to RM18.27 million in FY16. For the six-month period ended June 30, 2017, the company posted a net profit of RM9.29 million, up 22% to RM7.61 million a year ago.

Wong has a direct 55.51% stake in New Advent, with the remaining stake spread out among his wife Ling Kim Po and two sons — Willowglen executive director Simon Wong Chu Keong, and Wong Chu Kee.

The PAC include Elegant Preference Sdn Bhd and Jian Qi Holdings Sdn Bhd. Elegant Preference is owned by the managing director and his spouse, while Jian Qi is a wholly-owned unit of Elegant Preference.

New Advent intends to maintain the listing status of Willowglen, a computer-based control system developer and supplier, on the Main Market.

The offer will be open for acceptances for 21 days from the posting date of the offer. Trading of Willowglen shares will resume today.