KUALA LUMPUR: Siva Kumar M Jeyapalan, Masterskill Education Group Bhd (MEGB) executive chairman and single-largest shareholder, has broken his silence about the sudden termination of the call-and-put option between himself and the group’s chief executive officer Gary How Soong Khong.
He told The Edge Financial Daily yesterday that it was because How “wasn’t able to deliver” his end of the bargain.
“He was able to buy a small block, then kept saying that his money was coming in [to buy the rest of the shares]. So if his money came, and he wanted to buy, should I say no? But at the same time, if he could not buy my shares, and our agreement was still intact, and if a better offer came, it would not be fair to me,” Siva Kumar said.
“Currently, there are several parties that have expressed their interest in buying my stake. If someone can offer me a good price and a good plan for the business, then I will sell,” he said.
To recap, How entered into the option agreement with Siva Kumar in March, in which he agreed to acquire a 29.76% stake in Masterskill from the latter at RM1.10 apiece. The agreement allowed How until Sept 18 to exercise the option to acquire Siva Kumar’s then entire 122 million shares in the company for RM134.2 million cash, while Siva Kumar had a put option to sell his shares to How between Dec 18, 2014 and Jan 18, 2015 at RM1.10 each.
However, on Sept 17, Bursa filings showed that the agreement had been mutually terminated. How no longer has to buy Siva Kumar’s stake of 28.08% at RM1.10 apiece between Dec 18, 2014, and Jan 18, 2015, should Siva Kumar exercise his put option.
Siva Kumar increased his stake in the group to 31.99% from 28.08% after buying 8.56 million shares at 35.5 sen apiece on Sept 19. Asked about his stake increase, he merely said “the shares were cheap, so why not”.
Nevertheless, Siva Kumar said he was still happy with the appointment of How to the board as he had brought in money for the group, following Masterskill’s investment in April in Hong Kong-listed restaurant operator Gayety Holdings Ltd for RM19.9 million on How’s recommendation.
Masterskill disposed of its entire stake in Gayety in August for RM33.2 million, from which it recognised a gain of RM12.3 million, which was used in a series of share buyback exercises recently, said Siva Kumar.
As to How’s appointment as Masterskill CEO on Aug 6, which raised eyebrows in the market as he was not even a shareholder of the group at the time, Siva Kumar said it was a decision made by consensus with the rest of the group’s board members.
On why Cayman Island-incorporated Masterskill Holding Ltd (MHL) sold off its 21.52% equity interest in the group in September, Siva Kumar said it was merely because private equity firm Crescent Group — which was deemed interested in MHL — had to close the fund that held the investment in Masterskill.
“Once a private equity fund comes to the seventh year of its investment, it has to close its account. They were willing to hang on for a few months after that seven-year mark was reached [in December 2013] because they saw the turnaround happening, but once they knew that my agreement with How had been terminated, they had to exit,” he said.
Siva Kumar said the group is still working together with Crescent on its joint venture in Saudi Arabia to set up a nursing and allied health school.
Meanwhile, Siva Kumar said he is in talks with potential partners to turn the group’s education business around.
“We are talking to Temasek [Holdings Private Ltd]’s private equity arm, Barings Private Equity, about it taking up the education side. I have various scenarios of how they can get involved, so it’s very open,” he said.
Masterskill closed one sen down to 48 sen yesterday, giving it a market capitalisation of RM178.64 million.
This article first appeared in The Edge Financial Daily, on October 29, 2014.