This article first appeared in The Edge Malaysia Weekly, on April 3 - 9, 2017.

RECENT events at Halex Holdings Bhd have raised more questions among some of its minority shareholders.

Two weeks ago, Halex announced that its wholly-owned subsidiary Halex Realty Sdn Bhd received an offer letter from Bestempire Ltd to buy back 1.25 million ordinary shares, equivalent to a 25% stake, in Kensington Development Sdn Bhd.

Shortly after that, Halex put up another announcement on Bursa Malaysia saying the offer price from Bestempire amounted to RM13 million, a steep discount of RM9 million to its purchase price of RM22 million for the 25% equity stake in Kensington in 2014.

The announcement adds that the board of directors is deliberating on the offer.

“It would make no business sense to sell the stake back at a discount. How is it possible for the value to depreciate so much within two years?” asks a source.

Kensington Development is a property developer with several projects in Sabah.

It seems that this could be another related party transaction which has not been disclosed by Halex, like its earlier acquisition of the 25% stake in Kensington.

To recap, The Edge reported previously that a prominent businessman in the 1990s, Datuk Yip Yee Foo, appears to be linked to Halex as well as Kensington Development. This can be traced to the shared business address of the companies.

According to the Companies Commission of Malaysia (CCM), Kensington Development’s business address is Unit 108 Block C, Ground Floor, Phileo Damansara 1, No 9 Jalan 16/11 Off Jalan Damansara, Petaling Jaya.

This is the same address disclosed to the CCM for Halex’s largest shareholder Olive Park Development Sdn Bhd, which has 13.75% equity interest, and its second largest shareholder, Solaris Cemerlang Sdn Bhd, which has 5.92% in the agrochemical producer.

It is also known to be Yip’s office address.

This means if these two companies are linked to Yip, he would have collectively controlled at least 19.67% of Halex until a few weeks ago.

CCM records also show that Solaris Cemerlang’s directors are Sara Nina Shahruddin, 27, and Shaza Lina Shahruddin, 26, who have the same registered address in Shah Alam. Sara Nina has a 42.86% stake in Solaris Cemerlang while Shaza Lina has 57.14%.

Sara Nina and Shaza Lina are believed to be Yip’s proxies in Halex.

Nevertheless, Olive Park Development and Solaris Cemerlang as well as Sara Nina and Saza Lina had disposed of their entire stakes in Halex on March 27 after a mandatory general offer (MGO) from Waras Dinamik Sdn Bhd and Datuk Ong Soon Ho turned unconditional on March 23.

The MGO offer price from Waras Dinamik and Ong was 64 sen per share in cash. The MGO was triggered after Waras Dinamik acquired an additional 26.12 million Halex shares, or a 24.56% stake on March 22, through a direct business transaction, bringing its total interest to 39.16%. Ong holds a 4.57% stake in Halex.

The offer document reveals that Ong is in the business of manufacturing and supplying pesticides and fertiliser for the local market and exports to over 30 countries through his company, Hextar group.

According to CCM records, Waras Dinamik is a wholly-owned subsidiary of Hextar Holdings Sdn Bhd, and was incorporated on Jan 12 this year.

The MGO became unconditional after Waras Dinamik and Ong’s collective shareholding in Halex exceeded 50% of the issued share capital.

With new shareholders in Halex, it is uncertain whether Yip is now out of the picture.

Since the beginning of the year, Halex’s share price has surged 230% from 25.5 sen to 84 sen last Wednesday. The FBMKLCI, which has also been on the rise since the beginning of the year, only managed a 7.02% increase.

As a result of the sky-rocketing share price, Bursa slapped the company with an unusual market activity query on Jan 18.

Last Thursday, Halex closed at 88 sen after hitting a 52-week high of 91.5 sen. It had a market capitalisation of RM93.3 million.

For the financial year ended Dec 31 last year, Halex recorded a net loss of RM22.05 million on the back of RM69.35 million in revenue, compared with a net profit of RM2.1 million and revenue of RM105.6 million the year before.

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