KUALA LUMPUR: Goldis Bhd has made a cash call of RM460 million, in a move to partially refinance its borrowings obtained in acquiring all the remaining shares in IGB Corp Bhd at RM2.88 apiece in cash.
Goldis is proposing a renounceable rights issue of up to 460 million new redeemable convertible cumulative preference shares (RCPS), with a five-year tenure at an issue price of RM1 apiece.
“The entire proceeds from the proposed rights issue are proposed to be utilised to partially refinance the borrowings obtained in connection with the proposed conditional takeover offer by Goldis to acquire all the remaining shares in IGB Corp,” said Goldis in a filing with Bursa Malaysia yesterday.
The proposed rights issue of RCPS is expected to be completed by the first quarter of 2015.
Goldis highlighted that the proposed rights issue is conditional upon the proposed takeover offer.
However, in a separate filing yesterday, the takeover offer made by Goldis was deemed “not fair and not reasonable” by independent adviser RHB Investment Bank Bhd (RHB IB).
In an independent advice circular (IAC) to IGB shareholders posted on Bursa Malaysia yesterday, RHB IB has advised and recommended that IGB shareholders reject the offer.
“After careful examination of the terms of the offer and taking into consideration the evaluation and recommendation by RHB IB, the non-interested directors have concurred with the recommendation of RHB IB that the offer is not fair and not reasonable, and recommends that holders reject the offer,” RHB IB said.
According to the IAC, Goldis already owns 31.11% of IGB. Goldis has obtained irrevocable undertakings from IGB shareholders, who own a collective 17.3% stake in IGB, to accept the offer.
Goldis’ offer is deemed unfair after taking into account the offer price is below revaluated net asset value (RNAV) of IGB, renowned for its Mid Valley City project here.
RHB IB said the offer price represented a discount of RM2.45 or 45.96% to the RNAV for IGB at RM5.33 a share.
“Although the share price of IGB had traded below the offer price for the past one year, we are of the opinion that the offer price is not fair based on the revaluated net asset value (RNAV) evaluation,” said RHB IB.
RHB IB said IGB’s prospects were expected to remain positive given its ongoing and proposed projects.
Therefore, by not accepting the offer, RHB IB said IGB shareholders would continue to participate in the growth of IGB and have the opportunity to fully realise their investments based on IGB’s prospects.
Shares in Goldis closed unchanged yesterday at RM2.32, with a market capitalisation of RM1.4 billion. IGB’s share price ended the day 1 sen lower at RM2.86, with a market capitalisation of RM3.8 billion.
This article first appeared in The Edge Financial Daily, on October 14, 2014.