This article first appeared in The Edge Malaysia Weekly on October 7, 2019 - October 13, 2019
BOUSTEAD Holdings Bhd’s plan to sell its stake in Boustead Petroleum Marketing Sdn Bhd (BPM) is understood to have been thwarted by Vitol Malaysia Sdn Bhd, a unit of the Dutch oil giant Vitol group, sources say.
Three separate and unrelated sources — one of whom is a high-ranking official with an interested acquirer — had similar information when contacted by The Edge, that Vitol was blocking the planned sale.
BPM is 70% controlled by Boustead Petroleum Sdn Bhd and 30% by Lembaga Tabung Angkatan Tentera (LTAT) or the armed forces fund board.
It operates BHPetrol stations in Malaysia.
Meanwhile, Boustead Petroleum’s shareholders are Boustead Holdings with a 59.82% stake, PE Petroleum Sdn Bhd (21.11%), Vitol Malaysia (14.07%) and Tan Sri Che Lodin Wok Kamaruddin (5%), who helmed both Boustead Holdings and LTAT for many years but stepped down late last year.
In an email response, Vitol, via its spokesperson Andrea Schlaepfer, says, “We have no comment to make.”
One source says Vitol may be blocking the sale as it is looking to buy BPM, but this remains unsubstantiated.
A few weeks ago, to questions on whether BPM was up for sale, Boustead Holdings had replied, “As an investment holding company, Boustead Holdings holds multiple investments in various sectors of the Malaysian economy. The group is always on the lookout for ways to strengthen our diversified investment portfolio and extract the best value from our investments.
“BPM is today a key contributor to the group and at this juncture, it continues to remain a key performing asset for us. Boustead Holdings is governed by exacting disclosure requirements. Should there be any pertinent announcements to be made, we will do so according to disclosure requirements.”
But is Boustead Holdings keen to sell its petrol station business?
BPM is a lucrative proposition. For its financial year ended December 2018, the company registered an after tax profit of RM78.39 million on the back of revenue of RM4.97 billion. It also paid out RM80.49 million in dividends.
As at end-December last year, BPM had total assets of RM1.35 billion and total liabilities of RM877.71 million. Retained earnings stood at RM162.25 million.
However, at a speculated price tag of as much as RM1.5 billion, the sale of BPM would not help Boustead Holdings substantially but act more as a stopgap measure to help it deal with its woes.
For its six months ended June, Boustead Holdings registered a net profit of RM1.9 million on revenue of RM5.05 billion.
As at end-June, Boustead Holdings had deposits, cash and bank balances of RM781 million, while short and long-term debt stood at RM4.48 billion and RM3.16 billion respectively. It incurred RM158.4 million in finance costs during the period.
Interesting shareholders
Many questioned how Lodin, the former CEO of Boustead Holdings and LTAT, came to own a lucrative 5% stake in Boustead Petroleum.
Checks reveal that in mid-May 2005, Lodin was given the option to acquire the block of shares in recognition of his “contributions to the Boustead group”.
Even more intriguing is why Boustead Holdings, a 59.45%-owned unit of LTAT, would need a co-shareholder such as PE Petroleum?
CTOS checks reveal that PE Petroleum is wholly owned by Hesselink Investments. According to Singaporean High Court case Tong Seak Kan and another v Jaya Sudhir Jayaram, Hesselink Investments is controlled by Datuk Mohamed Nazim Razak, the younger brother of former prime minister Datuk Seri Najib Razak.
The trail of how PE Petroleum, and Nazim — albeit indirectly — came to control 21.11% of Boustead Petroleum is not clear. Checks on Bursa Malaysia reveal that in February 2005, Boustead Holdings via BPM (then known as Boustead Mint Sdn Bhd) acquired a 70% stake in BP Malaysia Sdn Bhd for RM456 million cash and subject to working capital requirements.
However, there was another agreement for a private company, Tegas Pertini Sdn Bhd, to subscribe for 43% in new shares in BPM, but no price was disclosed in the Bursa announcements.
Checks on CTOS indicate that Tegas Pertini is now dissolved, and that its shareholders were Vitol Malaysia with an 81.82% stake and PE Petroleum with 18.18% equity interest. However, according to news reports, when the share subscription was done in 2005, Tegas Pertini’s shareholders were Dr Shafiq Sit Abdullah and Maya Petroleum Sdn Bhd, with the two equally controlling the company.
CTOS reveals that Maya Petroleum, a dissolved company, was largely controlled by Dr Shafiq and Datuk Zainol Abidin A Hamid.
According to CTOS, Dr Shafiq was also a director of Tegas Pertini.
News reports have it that Dr Shafiq is the ex-husband of Dr Rozita Halina Hussein, daughter of the third premier Tun Hussein Onn and cousin to Nazim and Najib.
Other than Boustead Petroleum, there are other eyebrow-raising deals at Boustead Holdings involving former premier Najib and his associates.
Boustead Holdings was also a 20% shareholder in Perimekar Sdn Bhd, a company linked to political analyst Abdul Razak Baginda, a close associate of Najib. LTAT had a 20% stake in Perimekar, with the remainder 60% held by KS Ombak Laut Sdn Bhd, a private company in which Abdul Razak’s wife, Mazlinda Makhzan, held a majority stake.
According to Boustead Holdings’ 2012 annual report, Perimekar ceased operations during the year.
Perimekar was embroiled in a corruption scandal involving the acquisition of two Scorpene class submarines in 2002, when Najib was defence minister.
The issue of corruption stemmed from a payment of €114 million (RM570 million then) in commissions and kickbacks to Perimekar for “coordination and support services” for the acquisition of the submarines.
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