SC grants four-month extension for LTAT to decide on privatisation of Boustead

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KUALA LUMPUR (Oct 27): Five months have passed and the Armed Forces Fund Board (LTAT) is still making up its mind on the privatisation of its debt-laden flagship group, Boustead Holdings Bhd, since the army fund first expressed consideration for the corporate exercise.

In view of that, the Securities Commission Malaysia (SC) granted a further extension of four months to LTAT to announce its firm intention in relation to the proposed privatisation. This is the second extension granted by the regulator. 

In a statement today, LTAT said the extension of time of up to Feb 2, 2021 was granted by the SC via a letter yesterday.

It also noted that the SC had advised that it would not grant any further extension of time beyond the new extension date.

“Save for the above, there has been no material development in respect of the proposal. We wish to highlight that this notification does not amount to a firm intention that we will undertake the proposal.

"Accordingly, there can be no certainty that we will proceed with the proposal,” it said.

Previously, the SC on July 24 granted LTAT more time until today to announce its firm intention in relation to the proposed privatisation.

LTAT first confirmed on May 28 that it is considering taking Boustead private at an indicative price of 80 sen per share, although it also stated that there is no certainty that it would proceed with the proposal.

Based on the indicative price, the proposed privatisation exercise would cost LTAT around RM660 million. The indicative offer price represents 45% of Boustead’s net assets of RM1.76 per share as at end-June 2020.

LTAT already received a letter from the central bank, saying it had no objection to LTAT's negotiations with Boustead, which holds equity interest in four public listed companies — Affin Bank Bhd, Boustead Plantations Bhd, Boustead Heavy Industries Corp Bhd (BHIC) and Pharmaniaga Bhd.

News of Boustead’s privatisation proposal came at a time as the group commenced its three-year turnaround plan back towards profitability, which was hit further by the impact of the Covid-19 pandemic on business sectors.

For the six-month period ended June 30, 2020 (6MFY20), Boustead booked a net loss of RM146.7 million, from a net profit of RM1.9 million a year earlier, while revenue fell 25.5% to RM3.76 billion from RM5.05 billion. The group's borrowings were at RM7.9 billion as at June 30.

Its share price, trading at 62 sen at the time of writing today, has also been affected, having lost some 35% from 95 sen at the start of the year. Boustead's market value stood at RM1.26 billion.

Surin Murugiah