Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on February 12, 2020

KUALA LUMPUR: The minority shareholders of the country’s largest dealer of German premium marque Mercedes-Benz, Cycle & Carriage Bintang Bhd (C&C Bintang), have blocked the privatisation of the company by its single largest shareholder Jardine Cycle & Carriage Ltd (Jardine CCL) in an extraordinary general meeting (EGM) yesterday.

The privatisation was via a proposed selective capital reduction (SCR) and repayment exercise at RM2.20 per share.

However the special resolution on the SCR was not carried out in the shareholder meeting as 13.18% of disinterested shares (of the total voting shares) voted against the resolution. This is more than the threshold allowed at 10%.

Note that in order to be passed, the resolution must not be voted against by more than 10% of the votes attached to all the disinterested shares of the total voting shares of C&C Bintang.

Furthermore, based on the poll results, the number of disinterested shareholders who voted for the resolution stood at 46.22%, which is less than the minimum requirement of a simple majority required in order for the resolution to pass.

Meanwhile, the 57.94% in terms of value that voted for the resolution is also short of the required 75%, according to a filing with Bursa Malaysia yesterday.

After the EGM, when asked if the company has any other offer apart from Singapore-listed Jardine CCL, its chief executive officer Wilfrid Foo said: “Right now that’s the only offer on the table, which has been decided upon.”

Foo declined to reveal the result of the vote, saying the company will only make the announcement through Bursa.

“As in consistent with what we’ve said in the past, we are an auto retailer that is about to deliver exceptional journeys to our customers,” said Foo of C&C Bintang’s operations.

“We are investing to make sure we are the auto retailer with systems, sites and people that are of good standards for Mercedes-Benz customers and employees alike,” he said, adding that investing in these three categories helps the company to be sustainably profitable in the longer term.

While he said the auto-retailing segment is a capital expenditure-intensive market, he only noted that there would be “a significant amount invested behind the business” and declined to reveal any figures.

“[The] competitive environment remains what it is. We are not the only auto retailer for Mercedes-Benz ... there are many and we are one of the biggest,” said Foo.

“On some fronts we are leading, on some fronts we could do better for sure. But the business continues, we are still the auto retailer that is here to stay for a long time,” he added.

The Edge Financial Daily on Monday, quoting corporate observers, wrote that the sharp drop in C&C Bintang’s share price could be an indication that the SCR may not go through due to reports that Muar Ban Lee Group Bhd (MBL) was against the SCR.

On Jan 6, The Edge Malaysia weekly, citing sources, reported that the minority shareholder of C&C Bintang, with a 1.02% stake as at Feb 28 last year, wrote to the company on Dec 26 expressing its intention to scuttle the privatisation bid.

MBL, a locally-listed, family-owned palm kernel oil expeller manufacturer specialising in palm oil and oilseed crushing machinery, was of the view the offer price is not fair and not in the best interests of minority shareholders.

The Johor-based firm was seeking a better offer from Jardine CCL. Jardine CCL is part of the empire of British family-owned Asian conglomerate Jardine Matheson Holdings Ltd.

Share price continues to fall

C&C Bintang shares, which leaped 14.8% yesterday morning before the result of the privatisation deal, pared its gain from then and was down four sen or 2.47% to close at RM1.58. Some 3.11 million shares were traded.

At the current level, its share price is some 28% below the SCR of RM2.20, but still above its share price before the announcement of the privatisation deal offer.

Notably, in an independent advice circular in relation to the SCR released on Jan 14, Affin Hwang Investment Bank Bhd said the offer is reasonable, albeit noting it as unfair.

Accordingly, Affin Hwang recommended that the disinterested shareholders of C&C Bintang vote in favour of the exercise.

Based on the revalued net asset value (RNAV) method, the equity value of C&C Bintang is approximately RM366.67 million, translating into approximately RM3.64 per share, said Affin Hwang. This means that the SCR offer price of RM2.20 is lower than the estimated RNAV per share, representing a discount of RM1.44 or 39.56%.

However, Affin Hwang said the proposed SCR is reasonable as it provides an exit opportunity to the disinterested shareholders of C&C Bintang, especially those holding a significant number of shares, to realise their investment as the offer price represents a premium over its historical market prices.

For one, the independent adviser said that C&C Bintang shares have not traded above the SCR offer price during the past one year prior to Nov 8, 2019, which was the last trading day prior to receipt of the SCR offer letter by the board.

The SCR offer price represents a premium of 70.54% over the last traded market price of the shares on Nov 8, 2019 and premiums ranging between 44.24% and 75.52% over the five-day, one-, three- and six-month and one-year volume-weighted average price of the shares up to last trading day.

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