THE call options granted by MCT Bhd’s major shareholders, Tan Sri Barry Goh and Datuk Seri Tong Seech Wi, to Ayala Land Inc, the largest property developer in the Philippines, gives rise to speculation that the duo are selling out of the newly listed property outfit.
The reason for the speculation is because Goh and Tong, being the promoters and major shareholders of MCT (fundamental: 1.65; valuation: 0.3), are not allowed to undertake any material property development projects outside of the group, as per the condition imposed by Securities Commission Malaysia (SC) for approving MCT’s reverse takeover (RTO) of GW Plastics Holdings Bhd.
When contacted, Goh denied that he is exiting MCT or reducing his commitment to the company by entering into the call option agreement with Ayala, which could see the latter emerge as the single largest shareholder in MCT.
“I still hold a substantial stake in MCT, even after its being diluted due to the call options. Of course, I will hold on to the remaining stake, as Datuk Tong and I cannot sell down any more stakes in MCT after that.”
“Datuk Tong, Ayala Land and I will all be the major shareholders of MCT, holding [a combined] 75% stake. We will lock it, and not sell. We want to build more value for the rest of the shareholders,” assures Goh.
To recap, Goh and Tong entered into call options agreements in their own capacity with Regent Wise Investment Ltd (RWIL), a subsidiary of Ayala Land, on May 8. The first option gives RWIL the right to increase its stake in MCT to 24.82% from 9.16% at an issue price of RM1.28 per share.
Following the first option, RWIL will also have the right to increase its shareholding to 32.95%, through a second call option. The purchase price for the second option will be at least RM1.28 per share, being the original entry price of RWIL into MCT. MCT closed at RM1.35 last Friday.
The call options were entered into just a month after MCT’s shares started trading on Bursa Malaysia, following the RTO of GW Plastics. MCT took over GW Plastics’ listing status after Goh and Tong injected RM1.5 billion worth of property projects into the company.
Market talk has it that Goh is trying to reduce his stake in MCT to a level that he appears not to be in control of the company. At the moment, Goh is the single largest shareholder with a 42.7% stake, followed by Tong with 23%.
Note that based on the SC’s approval of the RTO of GW Plastics, so long as Goh remains the largest shareholder of MCT, he is barred from undertaking any material property development outside the restructured group.
When asked if the reason for granting the call options was because he wanted to dilute the stake as he wants to undertake property projects outside MCT, he said, “It’s not that. It’s because Ayala Land will bring more jobs and property development projects to us [MCT] and we will have better capacity to undertake bigger projects in the future … they have a better brand name than we do,” explains Goh.
Ayala Land is the largest public-listed property developer in the Philippines. It is so large that its market capitalisation of US$13.3 billion dwarves that of Malaysia’s nine largest public-listed property developers.
The Manila-based company has been a substantial shareholder of MCT since it acquired 122.2 million shares or a 9.17% stake on April 1, 2015.
If Ayala Land exercises both options, its stake will increase by 23.79% to 32.95%, while both Goh and Tong’s shareholdings will decrease by the same quantum. Goh’s stake will decrease to 27.2% and Tong’s to 14.7%. Lembaga Tabung Haji owns a 10.05% stake in MCT.
With Ayala Land being a major shareholder of MCT, its shareholders can expect the latter to be its local partner in its expansion into Malaysia.
Commenting on the options agreement, Ayala Land says it is confident in its partnership with MCT and the synergies that will benefit both companies.
Ayala Land earlier said MCT will be able to deliver projects at lower costs as it is an integrated builder with an in-house design team and in-house trading company, directly executes specialist works and has its own pre-cast and ready-mixed concrete plants. It also uses a modular construction technique.
“By partnering with a company such as MCT, Ayala Land will be expanding its footprint in Southeast Asia in line with its diversification goals and set the platform for growth in Malaysia,” Ayala Land’s chief financial officer Jaime E Ysmael, was quoted as saying in Philippine media.
He added that “this allows Ayala Land to enter the Malaysian market with an experienced team, benefit from synergies of the partnership, and further add value to MCT over the long term to enable it to be a key player in the Malaysian real estate market.”
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This article first appeared in The Edge Malaysia Weekly, on May 18 - 24, 2015.