This article first appeared in The Edge Financial Daily on November 12, 2019

KUALA LUMPUR: Mercedes-Benz distributor Cycle & Carriage Bintang Bhd (C&C Bintang), whose share price has tumbled to a 10-year low, is joining the privatisation list on Bursa Malaysia which seems to be getting longer.

C&C Bintang announced yesterday its controlling shareholder Jardine Cycle & Carriage Ltd (Jardine CCL) had proposed a selective capital repayment and reduction to the board at RM2.20 per share compared with its last traded price of RM1.29 — the lowest level since April 2009.

The proposed selective capital repayment and reduction will pave the way for the privatisation of the auto player, on a downhill in the past five years amid dismal earnings performance.

C&C Bintang said the capital repayment will provide minority shareholders a “clean cash exit opportunity” from their investments in the auto group.

The capital repayment of RM2.20 per share is a 70.5% premium over the last traded price of RM1.29 and a 44.24% premium over a one-year volume weighted average price of RM1.5252 per share. However, the capital repayment sum is 18.2%, or 49 sen, below the company’s net asset per share of RM2.69 as at Sept 30.

Singapore-based Jardine CCL has a 59.1% equity stake, equivalent to 59.54 million shares, in C&C Bintang. The entitled shareholders have 41.2 million shares, and the selective capital repayment will cost C&C Bintang RM90.64 million in cash. The capital repayment will be funded by Jardine CCL, which has assured the exercise would not fail by reason of insufficient funding. For the financial year ended Dec 31, 2018 (FY18), C&C Bintang returned to the black with a net profit of RM22.31 million versus a net loss of RM12.47 million for the year before. Its revenue grew to RM1.513 billion for FY18 from RM1.42 billion for FY17.

Nonetheless, the auto group slipped back into the red for the nine months ended Sept 30, with a net loss of RM16.9 million compared to a net profit of RM17.8 million a year ago. Its revenue shrank substantially to RM862.5 million for the period from RM1.211 billion a year ago.