KUALA LUMPUR (Sept 8): The proposed selective capital reduction (SCR) and privatisation of MMC Corp Bhd by tycoon Tan Sri Syed Mokhtar Albukhary are deemed not fair, but reasonable, said independent adviser Alliance Investment Bank Bhd.

In the company's circular on the exercise today, Alliance said the SCR is "not fair" as the offer price of RM2 per share is lower than the estimated value of between RM3.32 and RM3.41.

However, the adviser is of view that the proposal is "reasonable" on grounds that MMC shares had not traded above the offer price for three years before the proposal was announced on June 3.

The highest open market price in the period was RM1.55 in July 2018, while the lowest was 46.5 sen in March this year.

"Save for the proposed SCR, MMC has not received any other offer for MMC shares or to acquire the assets and liabilities of the MMC Group as at the last practicable date (LPD) [June 3]," the adviser added.

"As at the LPD, the offeror held the majority equity stake/voting rights of approximately 51.76% in MMC. As such, any other offer from a third party to acquire MMC shares will require the support of the offeror to be successful," it added.

Syed Mokhtar is extending the offer through his investment vehicle Seaport Terminal (Johore) Sdn Bhd (STJSB), for the 1.47 billion shares or 48.24% stake it does not own in MMC, which operates sea ports in Johor, Port Klang, Penang, and Melaka as well as in Jeddah, Saudi Arabia.

In total, STJSB would be spending RM2.94 billion for the privatisation bid. MMC's latest issued share capital stood at 3.05 billion shares.

At RM2 per share, the SCR values MMC Corp at RM6.08 billion. Alliance's estimated value of MMC shares puts the company at a value of between RM10.1 billion and RM10.37 billion.

The company will call for an extraordinary general meeting in the coming months to obtain shareholders' approval for the proposal.

The other substantial shareholder in MMC is Permodalan Nasional Bhd, with a 20.97% stake in the port operator.

Shares of MMC setted up two sen or 1.09% to RM1.86 today, valuing the group at RM5.66 billion.