Friday 14 Jun 2024
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This article first appeared in The Edge Malaysia Weekly on April 10, 2023 - April 16, 2023

ASSET-rich Pelikan International Corp Bhd (Pelikan), which sold its logistics centre in Germany for €81 million cash in July 2021, is believed to be in the midst of sealing another asset divestment deal that is expected to be a bigger one.

According to several sources, the major asset disposal that Pelikan is working on could fetch more than RM500 million cash.

If the deal is successful, Pelikan will exit its core stationery business, which is the 180-year-old Pelikan brand from Germany. It will become a cash-rich listed shell, sources say.

““Foreign buyers have expressed interest in Pelikan’s business that is mainly based in Germany,” says a source.

About 80% of Pelikan’s revenue comes from its German operations; the remaining 20% is from other parts of Europe, the Americas and Asia.

Over the past 10 months, shares in Pelikan had more than tripled to 78 sen last Friday, from 21 sen in mid-June. The stationery maker’s market capitalisation soared to RM467.5 million, with an issued share capital of 608 million shares.

Interestingly, amid the price surge, Pelikan CEO Loo Hooi Keat, who is the second-largest shareholder, has been raising his shareholdings in Pelikan by mopping up shares on the open market since the start of last year.

Since January 2022, he has bought 14.32 million shares in Pelikan, raising his direct stake to 12.62% as at March 17, from 10.24% previously. Loo has a 5.82% indirect stake in the company.

Loo did not respond to The Edge’s query about the asset divestment plan, which is not something new to the market. In early 2020, there was already market talk that the group wanted to sell its European assets, following the emergence of several new shareholders in the company.

The largest shareholder of Pelikan is Urusharta Jamaah Sdn Bhd, with a 26% stake, which it took over from pilgrim fund Lembaga Tabung Haji (LTH) in 2018 as part of the latter’s rescue and restructuring plan.

Prior to the transfer, LTH had held the Pelikan stake for more than 12 years and the cost is said to be close to RM1.80 per share.

In September 2019, Ikhlas Capital Singapore Pte Ltd, in which Tan Sri Nazir Razak is co-founder and chairman, bought a 9.09% stake in Pelikan through a private placement at 39 sen per share, or RM21 million.

Another substantial shareholder is private equity fund manager Brahmal Vasudevan, who initially held a 6.66% stake in Pelikan via Auctus Ventures Ltd and Nominees. Auctus has trimmed its stake to 4.8%.

Pelikan’s first asset disposal was in July 2021, when it announced the disposal of its logistics centre in Germany to the wholly-owned subsidiaries of HWE Investor GP Sàrl, which is part of the Hillwood Group, a Dallas, Texas-based real estate developer.

The bulk of the proceeds of about RM200 million was used to pare down its borrowings, while RM120.64 million was for a special dividend of 20 sen per share.

As at Dec 31, 2022, Pelikan’s total assets stood at RM1.19 billion, comprising non-current assets of RM548.5 million, including goodwill of RM130.29 million, and current assets comprising inventories of RM296.38 million plus receivables of RM243.8 million, among others.

Pelikan’s net asset per share stood at 85 sen, compared with last Friday’s closing price of 78 sen. Its share price has been trading below its net asset per share for more than a decade.

Pelikan reduced its borrowings substantially to RM155.85 million as at end-2022, compared with RM398.24 million two years ago.

The group has seen improvement in the financial year ended Dec 3, 2022 (FY2022) and has started to record profits since the second quarter.

Excluding a one-off disposal gain in FY2022, Pelikan posted a RM49.05 million profit before tax, compared to RM23.6 million in the previous year, mainly on the back of better operating results in the Americas and from its German plant.

The transformation of Pelikan from a logistics player into a global stationery player can be traced back to 2005. Then known as Diperdana Holdings Bhd, it acquired Pelikan Holding AG and Pelikan Japan KK. The acquisition was followed by that of another German-based stationery maker Herlitz AG in 2010.

The global expansion by Pelikan has been tough for the company, though. It reported losses from 2011 until 2015 before it returned to the black in 2016, after the company said it had completed a lengthy asset streamlining exercise. It slipped into the red again in early 2020, however,  at the onset of the pandemic.

It remains to be seen whether Pelikan can pull through to seal a good deal of asset divestments. Nonetheless, the company’s shareholders — particularly those who bought shares cheaply — should be glad to see the steady climb in its share price, as it paves the way for a good exit.

 

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