This article first appeared in The Edge Malaysia Weekly on August 16, 2021 - August 22, 2021
Asdion Bhd’s share price collapse after an aborted mandatory general offer (MGO) by AT Systematizaton Bhd (ATS) should not surprise anyone.
ATS had offered 50 sen per share for Asdion, which is in logistics, commodity trading and property development. Asdion has been in the red for the last five years and its net asset per share is only 3.1 sen.
Why did the shareholders opt to frustrate a takeover offer at 50 sen per share for a company that is loss making, without a strong core business and has a net asset per share of only 3.1 sen?
ATS launched the MGO on March 11. A week later, Asdion announced a private placement of 20% of the shares. In subsequent weeks, it also announced the issuance of irredeemable convertible preference shares (ICPS) at a mere 6.5 sen each to settle its debts.
ATS, through its investment adviser, lodged a complaint with Securities Commission Malaysia (SC), alleging that the issuance of new shares and the debt settlement corporate exercise was tantamount to frustrating the MGO.
The SC ruled that Asdion’s shareholders must decide on the private placement and issuance of ICPS before the company could proceed with the exercise. Surprisingly, a shareholders’ meeting earlier last week approved the proposals and ATS called off the MGO.
Asdion shares are now trading at just 16.5 sen, far from the MGO offer of 50 sen.
It is perplexing why shareholders of Asdion voted for a placement and a debt settlement exercise, which is dilutive to their shareholding.
A closer look at the shareholders’ list shows that a mere 74 shareholders control almost 93% of Asdion. It had a total of only 1,061 shareholders as at Jan 15, 2021.
So, effectively, a small group of shareholders in Asdion scuttled the takeover offer by ATS. Why did they do so, and who benefitted from it?
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