KUALA LUMPUR (April 25): The Crown Prince of Pahang, Tengku Abdullah Ibni Ahmad Shah, and parties acting in concert with him who collectively have 69.9% in Tanah Makmur Bhd, have proposed a privatisation exercise via selective capital reduction (SCR) to buy out the remainder stake they don't already own in the company, at RM1.80 apiece.

The stake involves 39.81% of the issued and paid up capital of Tanah Makmur or 158.504 million shares, which will entail the payment of RM285.13 million to the entitled shareholders, according to Tengku Abdullah's letter to the company today, which was filed to Bursa Malaysia.

The price offered is at a 33 sen or 22.45% premium to the last closing price of Tanah Makmur's shares of RM1.47 on April 22. Tanah Makmur’s counter was suspended today to make way for this announcement.

Tengku Abdullah said this is the time for shareholders to realise their investments at a premium, ranging from 22.45% to 30%.

“The trading liquidity of Tanah Makmur shares have also been low, with an average daily trading volume of 498,000 Tanah Makmur shares… representing 0.42% of the free float as at April 22, 2016,” he added.

Once it gets the necessary approvals, Tanah Makmur will reduce its share par value by half to 25 sen, to provide more money into the company’s share premium reserve for the capital repayment.

Next, Tanah Makmur will conduct a bonus issue — to be facilitated using its share premium account and retained earnings — to raise its issued and paid-up share capital, as the number of shares to be cancelled under the proposed SCR is higher than the sum of its existing shares.

In total, 1.14 billion Tanah Makmur shares will be cancelled, or 7.2 times the existing shares entitled for the capital repayment.

Tengku Abdullah does not intend to maintain Tanah Makmur’s listing status, pursuant to the privatisation.

"The board, save for the interested directors, will deliberate on the Proposed SCR and decide on the next course of action. Accordingly, a further announcement will be made in due course," said Tanah Makmur in response to the offer.