Thursday 28 Mar 2024
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KUALA LUMPUR (Mar 6): Tenaga Nasional Bhd (TNB) has come out to say it is standing firm by its revised offer of RM3.25 a share to buy out the rest of Integrax Bhd, expressing optimism that its offer, this time, will be "well-received" by the shareholders of the port operator.

Its president and chief executive officer Datuk Seri Azman Mohd, whose tenure has been extended until June 30, 2018, reiterated that RM3.25 is a fair offer.

"It provides Integrax shareholders the opportunity to exit their investment with healthy returns," he said in a statement today.

TNB (fundamental: 1.3; valuation: 1.8) currently has a 23% stake in Integrax (fundamental: 1.65; valuation: 1.2), which owns and operates the Lumut Port in Perak.

"We are optimistic of getting more than 50% shareholding in Integrax and acquiring a controlling stake, so as to ensure seamless supply of coal for continuous and reliable power supply to the nation.

"So, obviously we are pleased the board of Perak Corp Bhd has announced they will be recommending our offer to their shareholders,” Azman said.

TNB is now awaiting Perak Corp's shareholders to accept the offer at its upcoming extraordinary general meeting on March 27. Perak Corp holds a 15.74% stake in Integrax via its wholly-owned unit Taipan Merit Sdn Bhd.

Meanwhile, Integrax shareholders have until March 31, 2015, to decide on the revised offer.

TNB had raised its offer price for the rest of Integrax to RM3.25 per share on Feb 25, 2015 from the original RM2.75.

“Since TNB’s Janamanjung power plants began its operations in 2003, we have been Lekir Bulk Terminal's (LBT) major client. Our coal supply to Janamanjung power plants comes through the LBT’s jetty terminal and is stored at our own stockyard,” he said, in giving the rationale for the takeover bid.

“Acquiring the port is an obvious fit as it is an integral part of our Janamanjung power generation infrastructure network. When opportunity came knocking in 2011, TNB bought its initial stake in the port operations.

"With 22.12% purchased then, we moved from being a major client to a major shareholder,” said Azman, adding that TNB has been Integrax's main customer for the past 12 years.

"With the expected operations of Manjung 4 and Manjung 5, the total annual coal consumption is expected to increase, possibly with TNB continuing to be the port operator’s major revenue contributor.

“In this context, it makes business sense for TNB to acquire the port, which we see as a further vote of confidence on our already substantial investments in Perak,” he added.

Currently, TNB Janamanjung’s three power plants supply 2,100-megawatt (MW) electricity to Peninsular Malaysia. With additional two power generators, which are scheduled to be in commercial operation on March 31, 2015 and Oct 1, 2017 respectively, the entire power plants are forecast to consume 14 million tonnes of coal annually to boost a combined capacity of 4,100MW.

Azman's remarks come amid Integrax directors' recent call for its minority shareholders to reject TNB's revised offer, saying the updated underlying value per Integrax share of RM3.60 to RM3.66 per share is still at a material premium of 10.8% to 12.6% to TNB’s revised offer price of RM3.25.

Amin Halim Rasip, who is Integrax’s deputy chairman and substantial shareholder with a 24.26% stake, has confirmed that he will reject the revised offer.

Integrax shares closed up 0.94% at RM3.23 today, bringing a market capitalisation of RM971.6 million. 

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
 

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