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KUALA LUMPUR: The proposed exemption sought by Press Metal Bhd’s major shareholders, Alpha Milestone Sdn Bhd (AMSB) and persons acting in concert (PACs), from undertaking a mandatory general offer (MGO) for the remaining shares and convertible securities in the group is considered to be “fair and reasonable”.

In a letter dated Jan 19 to Press Metal’s (fundamental score: 0.65; valuation score: 2.4) minority shareholders, independent adviser Public Investment Bank Bhd (PIVB) is advising them to vote in favour of the proposal at Press Metal’s extraordinary general meeting on Feb 4.

“Premised on our overall assessment of the proposed exemption on a holistic approach together with the proposed conversion as set out in this independent advice letter, Press Metal is expected to be on a better financial footing and in a better financing term upon the completion of the proposed conversion,” said PIVB.

“In this respect, we are of the opinion that the proposed exemption is fair and reasonable and not detrimental to the non-interested shareholders,” PIVB said.

AMSB and its PACs currently hold a combined 446.31 million shares or a 40.54% stake in Press Metal.

However, with the intention of AMSB and Ong Soo Fan to convert a total of up to RM210.51 million nominal value of 2011/2019 Redeemable Convertible Secured Loan Stocks (2011/2019 RCSLS) to reduce the group’s gearing level, the shareholdings of AMSB and its PACs in Press Metal are expected to increase to 46.85% under the minimum scenario or to 49.34% under the maximum scenario.

AMSB is controlled by Press Metal chief executive officer Datuk Koon Poh Keong and his brother Koon Poh Ming, who are also directors of Press Metal. The other PACs are their respective spouses — Datin Khoo Ee Pheng, and Ong Soo Fan.

Press Metal’s gearing level stood at 1.5 times as at Sept 30, 2013.

Press Metal had on Jan 6 announced that AMSB and PACs intend to convert a total of RM233.9 million nominal value of 2011/2019 RCSLS, representing their entire holdings of the securities, into 106.32 million shares.

“The conversion would result in AMSB and its PACs triggering a MGO for the remaining Press Metal shares and convertible securities which is not owned by AMSB and its PACs,” the group had said.

Press Metal owns the Samalaju aluminium smelter in Bintulu, Sarawak, which has an installed capacity of 320,000 tonnes per year.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on January 20, 2015.

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