Felda eyeing Kuok’s stake in Tradewinds?

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Felda Holdings Bhd could emerge as a major shareholder in Tradewinds (M) Bhd after speculation surfaced that it may acquire a 21.1% stake in the plantation and sugar manufacturer from Grenfell Holdings Sdn Bhd. Grenfell is an investment holding company controlled by billionaire Robert Kuok Hock Nein.

It is learnt that negotiations have been ongoing between the two parties but nothing has been finalised.

A check with the Companies Commission of Malaysia showed that the directors of Grenfell are Lim Bee Kuen and Koh Mei Leng, who are not known associates of Kuok. However, a glance at Grenfell’s shareholding structure shows the presence of Kuok in the company. Among the prominent shareholders of Grenfell Holdings are Taloh Sdn Bhd, Anak Johore Sdn Bhd, Sixam Sdn Bhd, Kuok Brothers Sdn Bhd and Kota Johore Realty Sdn Bhd, which are all controlled by Kuok.

It is also not known if the acquisition is a friendly purchase or if Kuok’s possible disposal of Tradewinds shares has any link with the recent exit of Wang Tak Co Ltd from Padi­beras Nasional Bhd (Bernas).

A party familiar with the deal says the whole issue boils down to the pricing of the Tradewinds shares held by Kuok if the transaction is to go through.

Last week, Tradewinds announced the proposed acquisition of Hong Kong-based Wang Tak’s 31.5% shareholding in Bernas, and also proposed to acquire Gandingan Bersepadu Sdn Bhd’s 72.2% in Budaya Generasi Sdn Bhd. Budaya Generasi controls 30.8% of Bernas’ equity. Tradewinds is controlled by well-connected businessman Tan Sri Syed Mokhtar Al-bukhary.

Tradewinds’ acquisition of Bernas was made after several politicians expressed their uneasiness over the Hong Kong company emerging as the largest shareholder in the listed rice trader. Despite being registered in Hong Kong, Wang Tak is owned by public-listed Lee Hing Development Ltd there, which in turn is controlled by the Tan family, which helms property developer IGB Corp Bhd.

The Tan family controls IGB Corp and the patriarch of the family is businessman Datuk Tan Chin Nam. Besides IGB Corp, the other businesses under the control of the Tan family are Wah Seong Corp Bhd, KrisAssets Holdings Bhd and Goldis Corp Bhd. The family also has diverse business interests outside Malaysia.

Similarly, Johor-born Kuok, whose businesses in Malaysia range from shipping, sugar, flour, insurance, hotels to air freight services, has diverse businesses and assets overseas, especially in China, Hong Kong and Singapore.

Kuok’s overseas businesses are held through Kerry Properties Ltd, SCMP Group Ltd, Keck Seng Investments (Hong Kong) Ltd and Shangri-La Asia Ltd, which are all listed in Hong Kong. Other companies in the Kuok stable are Singapore-listed Allgreen Properties Ltd and Wilmar International Ltd.      

It is not known if the government had asked Felda Holdings to buy into Tradewinds to have an indirect equity interest in Bernas. Felda Holdings is a 51% unit of Felda Investment Cooperative. Its remaining 49% is held by the Federal Land Development Authority.

Kuok, the country’s wealthiest individual for many years, was also known to be a close associate of former prime minister Tun Abdul Razak Hussein after they met at the Raffles College in Singapore before the Japanese occupation.

Grenfell Holdings was  a shareholder of Tradewinds even before the company’s shares were floated on the local stock exchange in 1988. Some of Tradewinds’ main assets, such as wholly owned Central Sugars Refinery Sdn Bhd, have been linked to Kuok or his business associates.

Kuok, who was estimated to have a net worth of US$10 billion (RM35.25 billion) by Forbes magazine, has his nominees — Tan Gee Sooi and Boo Yew Ling — on Tradewinds’ board.

For the six months ended June this year, Tradewinds posted a net profit of RM21.6 million on the back of RM769.8 million in revenue. The company’s earnings per share was seven sen.

Syed Mokhtar and his brother Syed Azmin Syed Nor control about 43% of Tradewinds via their vehicles Perspective Lane (M) Sdn Bhd, Kelana Ventures Sdn Bhd and Seaport Terminal (Johore) Sdn Bhd.

Tradewinds, which had a net asset per share of RM4.63 as at  June 30, was last traded at RM2.94 last Friday.

This article appeared in Corporate page of The Edge Malaysia, Issue 770, Aug 31-Sept 6, 2009.