Minority shareholders block Lafarge's RM3.5b RPTs with YTL Cement

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KUALA LUMPUR (Sept 23): Minority shareholders of Lafarge Malaysia Bhd today voted down a resolution that would have mandated the company to undertake recurrent related party transactions (RPTs) worth RM3.51 billion in aggregate, with its new controlling shareholder YTL Cement Bhd and its subsidiaries.

The Yeoh Siblings — Tan Sri Yeoh Sock Ping, Datuk Seri Yeoh Sock Siong, Datuk Yeoh Seok Kian, Datuk Yeoh Seok Hong and Datuk Yeoh Soo Keng — being interested directors and common directors in the proposed recurrent RPTs, had abstained from voting.

According to Lafarge’s circular to shareholders, the proposed new mandate would have allowed Lafarge to deal with YTL Cement on the sale and purchase of materials such as clinker, cement, pulverised fly ash, slag, drymix, aggregates, and manufacturing sand.

Other transactions include support services such as the provision of terminal management fee, gross charge of terminal costs, support function fee and packing services.

Both parties would also have been mandated to deal with tribute income for aggregates mining activities, rental receivable for the use of land in Kota Tinggi, Johor, as well as the rental of an office premise in Singapore.

Lafarge said the transactions are necessary for the day-to-day operations of the company, carried out in the ordinary course of business, on normal commercial terms, and on terms which are not more favourable to the related parties than those that could be arranged with unrelated parties, and not to the detriment of minority shareholders.

YTL Cement Bhd is the immediate holding company of Lafarge, which as at July 31, holds 76.98% of the latter’s issued shares. Other substantial shareholders of the company are: Amanah Saham Bumiputra with 8.99%, and FIL Ltd with 5.3%, according to Bloomberg data.

YTL Cement first emerged as Lafarge's new controlling shareholder after it acquired a 51% stake in the company for RM1.63 billion cash or RM3.75 per share from Associated International Cement Ltd, and consequently launched a mandatory general offer to acquire the remaining shares of Lafarge Malaysia that it did not own. The MGO ended with YTL Cement acquiring another 25.98% stake in the company.

The acquisition has been perceived as a way for YTL Cement, which is a 98%-owned unit of YTL Corp Bhd, to expand its capacity substantially, making it the country’s leading cement product maker.

Read also:
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