A corporate exercise is in the pipeline for Tan Sri Syed Mokhtar Al-Bukhary to acquire the 31.5% stake held by Hong Kong-based Wang Tak Co Ltd in rice importer Padiberas Nasional Bhd (Bernas), say sources.
News that Wang Tak has emerged as the single largest shareholder in the rice importer has hogged the headlines of late.
Syed Mokhtar already has a 30.8% indirect stake in Bernas through Budaya Generasi Sdn Bhd, which is 72.2% owned by his private vehicle Gandingan Bersepadu Sdn Bhd.
Under the plan, Tradewinds (M) Bhd — in which Syed Mokhtar has a 30% stake — will acquire Gandingan Bersepadu’s entire stake in Budaya Generasi as well as Wang Tak’s entire 31.5% stake for RM530.5 million or RM2.10 a share, sources say. Gandingan Bersepadu has an effective 22.2% stake in Bernas, which means Tradewinds will end up with 53.7% equity interest in Bernas.
The RM2.10 price tag was at a 7% premium to Bernas’ closing price of RM1.96 last Thursday. Bernas’ net assets per share as at end-March stood at RM1.98.
The exercise will add rice trading to the core businesses of Tradewinds, which is mainly involved in plantations and sugar.
It is learnt that negotiations on acquiring Wang Tak’s stake have already started. Wang Tak is a unit of Hong Kong-listed Lee Hing Development Ltd, which is controlled by Tan Boon Seng, who has a 36.7% stake. Tan is one of the sons of Datuk Tan Chin Nam, the patriarch of IGB Corp Bhd. The Tan family also controls listed Goldis Bhd, KrisAssets Holdings Bhd and Wah Seong Corp Bhd. The younger Tan is on the board of IGB.
Tradewinds is likely to seek a waiver from having to make a general offer for the rest of the shares in Bernas. It will also have to seek funding for the acquisition since it only had RM32.9 million cash as at March 31 this year. It is not known how the company is going to raise the financing.
Bernas’ shareholding has come into focus with the emergence of Wang Tak as its single largest shareholder. Several, politicians have called for Malaysians to buy over the Hong Kong-based company’s stake.
It was reported that even the Federation of Malaysian Consumers Associations (Fomca) has expressed concern.
Such demands for market intervention will send the wrong signal to investors, especially after the government’s recent move to liberalise the country’s capital markets.
Bernas’ existing concession expires in January 2011 and the rice importer is in the midst of renegotiating a five-year extension until 2016.
Early this month, Agriculture and Agro-based Industries Minister Datuk Noh Omar said the process of buying back Bernas’ shares from Wang Tak was expected to be completed within two to three months.
Bernas’ shareholders are said to be well connected. The people behind Batu Bara & Batu Bara Resources Sdn Bhd, which has a 4.9% stake, are said to be business associates of former Perlis menteri besar Datuk Seri Shahidan Kassim. Yayasan Pok Rafeah Berdaftar, which has a 0.5% stake in Bernas, is believed to be linked to former finance minister Tun Daim Zainuddin.
Assuming the deal goes through, Syed Mokhtar will end up with a cash pile of RM219.3 million from the sale of Gandingan Bersepadu’s stake in Budaya Generasi. He emerged as a shareholder in Bernas when Gandingan Bersepadu bought a 55% stake in Budaya Generasi from three companies. It was reported that the purchase price was RM100 million. Over the years, Gandingan Bersepadu has been raising its stake in Budaya Generasi.
Wang Tak has been a shareholder in Bernas since 2000 when it owned a 3.4% stake. It began to accumulate shares in the rice importer on the open market from mid-2005. Between June 2005 and now, Bernas’ share price has traded at an average of RM1.70. It hit a high of RM2.32 on June 18, 2007, and a low of RM1.05 on Oct 26 last year.
For the first three months ended March 31 this year, Bernas posted a net profit of RM10.2 million on the back of RM735.4 million in revenue. For FY2008, the company reported a surprise net loss of over RM50 million despite having a monopoly over rice imports.
This article appeared in Corporate page of The Edge Malaysia, Issue 767, Aug 10-16, 2009.