KUALA LUMPUR: Padiberas Nasional Bhd (Bernas), the country’s sole rice importer that was taken private by businessman Tan Sri Syed Mokhtar Al-Bukhary, is offering RM4 per share to minority shareholders who did not take up the takeover offer in 2014.
Bernas obtained shareholders’ approval in an extraordinary general meeting (EGM) last week for selected capital reduction and repayment to buy out the remaining shares of some 9.69 million, or a 2.06% stake, currently held by the minorities of Bernas. The offer price is 30 sen higher than RM3.70 per share previously.
The selected capital repayment will pave the way for Bernas’ listing exercise, which is expected to be in 2020, a year before the expiry of its rice import concession at end-2021.
“That is the initial notion that has always been deliberated at the board and shareholder levels. The idea communicated to me is for the company to be listed before the concession to import rice comes to end in 2021,” Bernas chief executive Abdul Karim Md Lassim told The Edge Financial Daily.
“Today, I can say the current market is not conducive for any listing exercise… in the medium term, sentiment on the local bourse will improve,” he said.
Bernas was taken private in April 2014. The privatisation was met with strong criticism amid concerns that Syed Mokhtar, who has many strategic assets, for instance ports and power plants, would soon monopolise the import of rice.
Some minority shareholders who had opposed to Bernas’ delisting exercise did not take up the offer.
In January this year, Perspective Lane — together with Tradewinds — instructed Bernas to fork out RM38.78 million to undertake the selected capital reduction and repayment exercise.
At RM4 per share, which Mercury Securities Sdn Bhd assessed as “fair and reasonable”, the exit price for Bernas minority shareholders was valued at a price-earnings ratio of 28 times and a price-to-book value of 1.37 times. It also valued Bernas at RM1.88 billion.
Bernas, which also owns a 50% stake in bread maker Gardenia Bakeries (KL) Sdn Bhd, held the EGM in Shah Alam last week to table the corporate exercise proposal.
“Despite some opposition from certain minority shareholders, all of the resolutions were carried out as we only recquired [a] simple majority approval of 50%. We got more than that and we expect to complete this by the third quarter of this year,” Abdul Karim said, noting that only 1.64% of minority shareholders voted against the corporate exercise proposal.
“The success of this exercise will enable us to focus on consolidating our business efficiently. A lot has to be done before Bernas embarks on the relisting plan, and chief of all is protecting our farmers and delivering the mandate that has been given by the government,” Abdul Karim added.
This year, Abdul Karim expects Bernas to have a “mild year” on the back of a weak ringgit, with earnings expected to grow between 8% and 10%.
He said based on unaudited accounts, Bernas posted a pre-tax profit of some RM133 million for the financial year ended Dec 31, 2016 (FY16), on a revenue of RM4.7 billion. Compared with FY15, Bernas’ pre-tax profit in FY16 grew 2.3% from RM130.05 million, while revenue jumped 11.2% from RM4.23 billion.
As at end-September 2016, Bernas had a cash balance of RM349.79 million, and a unit trust investment of RM50 million, while total borrowings stood at RM2.23 billion, equivalent to a gearing ratio of 1.42 times. “Our gearing has risen to 1.7 times now, but is still manageable. We’re still within the covenant we have with respect to our bank loans,” said Abdul Karim.