Public Mutual may abstain from voting at EGM

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KUALA LUMPUR: The funds under Public Mutual may decide to abstain from voting at the Tradewinds (M) Bhd extraordinary general meeting (EGM) today that will deliberate on the proposed acquisition of a controlling stake in Padiberas Nasional Bhd (Bernas), sources said.

Public Mutual via its various funds has about 9.8% and is the third largest shareholder after businessman Tan Sri Syed Mokhtar Albukhary, who has about 43% of Tradewinds, and billionaire Tan Sri Robert Kuok Hock Nien whose Grenfeld Holdings Sdn Bhd has 21.1%. The Kuok Group also has additional interest in Tradewinds through Dalex Investment Ltd and Taloh Sdn Bhd that jointly hold 2.6% of the plantation company.

Collectively, the three largest shareholders control more than 75% of Tradewinds equity. There are also no other substantial shareholders in Tradewinds other than the three. The top 30 shareholders control about 88.3% in Tradewinds, according to its latest annual report.

During the EGM, shareholders will deliberate on Tradewinds’ proposed acquisition from Hong Kong-based but Malaysian- owned Wang Tak Co Ltd’s 31.5% in Bernas. Shareholders will also deliberate on Tradewinds proposed acquisition of a 22% stake in Bernas from Gandingan Bersepadu Sdn Bhd. Both proposed acquisitions at RM2.08 per share will cost Tradewinds RM526 million.

Both acquisitions, if approved, will trigger a mandatory general offer for the rest of the shares that Tradewinds does not own in Bernas. The general offer will cause it another RM452 million.

Sources said the Kuok Group has yet to make any firm indication whether they would vote in the resolutions, which has led some to believe that they may also abstain from the proposed acquisitions. The Edge weekly had reported that the Kuok Group may abstain from voting in the proposals because they were unhappy with the exit offer on the table for them.

It is learnt that Felda Holdings Bhd was to buy out the Kuok Group’s interest in Tradewinds. However, the offer by Felda is said to be too low for any serious consideration.

Tradewinds’ acquisition of Bernas for RM978 million via borrowings will increase its gearing to about 2.2 times, something that has earned it criticism. However, Tradewinds plans to reduce the gearing by disposing of non-core assets worth some RM300 million over the next 18 months and also placing out the shares in Bernas, if it has to make a MGO.

Syed Mokhtar’s Bukhary Sdn Bhd (BSB) owes Tradewinds some RM193.9 million or almost 50% of Tradewinds receivables of RM401.3 million. Thus, almost the entire cost of buying Wang Tak’s equity and Gandingan Bersepadu’s shares in Bernas could be financed if BSB repays Tradewinds, and the company hives off its RM330 million worth of non-core assets.

If Public Mutual abstains, it is likely that the acquisition of Bernas by Tradewinds may go through, unless of course Kuok Group decides at the eleventh hour to vote and scuttle Syed Mokhtar’s plans.    

This article appeared in The Edge Financial Daily, October 28, 2009.