KUALA LUMPUR (March 2): Lembaga Tabung Angkatan Tentera (LTAT) has made a voluntary takeover offer for all shares it does not already own in Boustead Holdings Bhd at 85.5 sen apiece.
The offer came on the heels of its large quarterly loss of RM402 million, dragged down by the massive RM552 million impairment of unsold Covid-19 vaccines at its pharmaceutical unit Pharmaniaga Bhd.
Based on the number of outstanding shares — 822.51 million, or 40.58% of Boustead — the armed forces pension fund is expected to fork out RM703.25 million for the deal. “The offeror [LTAT] does not intend to maintain the listing status of [Boustead],” it said in a bourse filing.
The offer price is at a 30.5% premium over the last traded price of Boustead shares at 65.5 sen prior to the announcement on Thursday. The premium is higher at 36.8% over Wednesday's closing price of 62.5 sen. However, the offer is at a sharp discount of 52% over the conglomerate's net asset per share of RM1.64 and 42% discount over its net tangible asset of RM1.496.
In a separate statement, LTAT said the offer is not conditional upon any minimum level of acceptances as the fund holds 59.42% in Boustead, exceeding the minimum 50% of voting shares needed.
“However, the offer is conditional upon the following: Minister of Finance (MOF)’s approval upon Bank Negara Malaysia (BNM)’s recommendation and BNM’s approval under Section 87 of the Financial Services Act 2013 (FSA) and Section 99 of the Islamic Financial Services Act 2013 (IFSA) to allow the Offeror to acquire up to 100% equity interest in BHB; and (ii) waiver from BNM from complying with Section 110 of the FSA and Section 122 of the IFSA in relation to the requirement for LTAT and/or its nominated company to be approved as a financial holding company of Affin Bank Bhd and other relevant licensed entities.”
LTAT said the conditions must be fulfilled within 21 days after the first closing date, in accordance with the Securities Commission Malaysia’s rules on takeovers, mergers and compulsory acquisitions.
LTAT is the controlling shareholder with a 59.42% stake, while Kumpulan Wang Persaraan Diperbadankan (KWAP ) holds a 5.29% and its former managing director Tan Sri Che Lodin Wok Kamaruddin owns 1.29%.
This confirms a report by The Edge that LTAT will be taking Boustead private.
Boustead Holdings owns a 52% stake in Pharmaniaga and a 64.99% stake in Boustead Heavy Industrial Corp Bhd. On top of that, it also owns a 57.42% stake in Boustead Plantation Bhd and 20.93% stake in Affin Bank Bhd. The group is also the controlling shareholder of BNS holding a 68.85% stake.
Notably, Boustead's 20.93% stake in Affin Bank is worth RM987.8 million based on the bank's market capitalisation of RM4.72 billion, this asset alone is more than the amount that LTAT needs to pay for the privatisation. Besides, the group's 57.42% stake in Boustead Plantation is valued at RM945 million based on market capitalisation of RM1.646 billion.
The conglomerate's share price has been in the doldrums since 2018 amid its financial stress caused by whopping debts, and it hogged the limelight for the wrong reasons particularly over the past year. Prior to that, its unit Boustead Naval Shipyard Sdn Bhd (BNS) was probed by the government on the contract to build six littoral combat ships but were not delivered.
“The offer represents a significant step for LTAT in taking [Boustead] private, allowing for greater flexibility for LTAT to implement the turnaround plan for [Boustead] as part of its objective in ensuring the sustainability of the fund for the Malaysian Armed Forces and veterans, in line with LTAT’s ongoing transformation plan.
“LTAT currently does not have any plan to dismiss or make redundant any of the employees of [Boustead Group] as a direct consequence of the offer.
“For clarity, the offer will not result in a mandatory offer by LTAT to acquire all the remaining voting shares in Affin Bank Bhd, Boustead Plantations Bhd, Boustead Heavy Industries Corporation Bhd and Pharmaniaga Bhd that are not already held by LTAT, whether direct or indirect, in view that LTAT already has statutory control over [Boustead].”
The conglomerate sank into the red in the fourth quarter ended Dec 31, 2022 (4QFY2022), posting a net loss of RM402.3 million after its 52%-owned subsidiary Pharmaniaga reported a whopping RM552.3 million impairment provision for the drugmaker’s unsold Covid-19 vaccine stock.
Boustead incurred a loss per share of 19.85 sen, in contrast to earnings per share of 3.88 sen or RM78.6 million in 4QFY2021. This was despite a 25% growth in quarterly revenue to RM3.69 billion from RM2.96 billion, Boustead’s Bursa Malaysia filing showed.
Group chief executive officer Izaddeen Daud, who took over the post in December last year, said the writedown was “indeed deeply concerning”.
“Nevertheless, we are confident that Pharmaniaga remains a going concern and is well poised to tap on the strong prospects of the pharmaceutical sector, domestically and regionally.
“We are supporting the management team to ensure a robust regularisation plan is in place to strengthen the company’s balance sheet and progressively work towards the upliftment of the PN17 (Practice Note 17) status,” he added.
On Thursday, the group had redesignated director Datuk Ahmad Nazim Abd Rahman as its non-independent and non-executive chairman.
Ahmad Nazim, 47, is also the chief executive officer of LTAT, which owns 59.4% of Boustead.
According to a bourse filing, Ahmad Nazim has “more than two decades of corporate, investment and restructuring experience across multiple geographies and industries”.
The day before, Boustead redesignated its group finance director Fahmy Ismail as its group chief financial officer.
Fahmy is currently serving as acting chief executive officer of Boustead Plantations Bhd.
Trading of Boustead’s securities was suspended between 2.30pm to 5pm on Thursday, pending the announcement.
This article was amended for accuracy.