Genting Malaysia gets mandate to dispose of interests in Genting Hong Kong, although price deemed low

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KUALA LUMPUR (July 2): Genting Malaysia Bhd has obtained the mandate from shareholders to dispose of the entire 1.43 billion shares of US$0.10 each in Genting Hong Kong Ltd (GenHK), representing 17.81% of the total issued and paid up share capital of the company, although some minority shareholders view the price as low.

According to a shareholder William Ng who attended the extraordinary general meeting, a total of 1.55 billion shares representing 75.84% were in support of the proposal, while 493.04 million shares representing 24.16% were against the proposal.

Ng, who is chief investment officer in William Capital PLt, said the shareholders are concern about the low minimum price fixed at US$0.33 (equivalent to RM1.23, according to the circular of the EGM).

The bulk of shares was priced between US$0.33 and US$0.45 (or equivalent to RM1.67), according to a circular to the shareholders.

The group's original cost of investment in this bulk of share was US$604.1 million (RM2.25 billion), representing an average price of US$0.42 (RM1.56) per GenHK share.

This means the minimum price of US$0.33 apiece was a 21.43% discount to the cost of US$0.42 per share.

The audited net asset of GenHK group as at Dec 31,2014 was US$3.19 billion (equivalent to RM11.88 billion) or US$0.40( RM1.49) per share. The minimum price represents a 17.5% discount to the audited net assets, according to the circular.

Another two shareholders who talked to theedgemarkets.com also voiced their concerns over the low minimum disposal price.

"The concern is that the price is low, but what to do? We can't amend the resolution," he said after attending the EGM.

Ng added that the shareholders were also concerned by the way the shares would be disposed, which will allow third parties and/or related parties of the company to purchase them, as this may benefit the existing substantial shareholders of the company.

Another shareholder who wish to stay anonymous told theedgemarkets.com that the management had indicated that the largest shareholder in the company and five to six buyers have expressed interests to acquire the shares, either in tranches or in bulk.

“Tan Sri Lim Kok Thay had on June 13, indicated to our company that he and entities in which he has interest or has deemed interest may be interested in acquiring part of all the disposal shares held by us,” GENM said.

As at June 15, 2015, Lim owned 4.96billion shares, representing 58.44% equity in the GenHK.

Meanwhile, a source from GenM (fundamental: 2.4; valuation: 0.8) said the company has yet to receive any firm offer for the bulk of shares, but they are engaging investment banks to carry out the sales process.

"We have not received any firm offers at this stage. However, we will be engaging investment bankers and brokers to advise us on sale process and next steps.

"Several parties have approached the company on this transaction. We have told them that it is subject to shareholders vote and once approved, the bankers will contact them.
 
In terms of timeline, she said, "we have up to 12 months to dispose the stake."
 
As at 12.30pm, shares of GenM's share traded at RM4.24, an increase of 1 sen or 0.24%, with 411,100 units having changed hands.