This article first appeared in The Edge Malaysia Weekly on September 25, 2023 - October 1, 2023

Opcom Holdings Bhd’s purchase of an 18.03% stake in Binasat Communications Bhd seems to suggest that there could be more to what has been announced.

Last week, Opcom disclosed that it was buying the stake from Binasat group managing director Na Boon Aik for RM39.2 million. The deal would see Opcom become the single largest shareholder in the company that provides services for all the major telecommunications companies in the country.

The next largest shareholders in Binasat are Boon Aik’s brother Na Boon Tiam, who holds a 13% stake, and private company Dynamic Paradigm Sdn Bhd with 8% equity interest.

Binasat also has 194 million warrants that will expire in 2026 and have a conversion price of 32 sen.

Boon Aik had disposed of not only his shares in Binasat but also his entire holding of warrants, which make up almost 19% of the outstanding warrants of 194 million. If the warrants were converted, the holder would own an 8% stake in the enlarged capital of Binasat.

So, who bought the warrants from Boon Aik?

And why would Opcom want to purchase a minority stake of 18.03% in Binasat? And that too by paying 56 sen per share, which is a premium to the market price of about 43 sen.

An 18.03% stake is meaningless for Opcom. It does not control the company and also the board — unless Opcom has other plans to exert control over Binasat.

Binasat, which was listed in 2020, has undertaken at least one exercise to raise cash. Based on the latest results, it has cash of RM35.7 million and borrowings of RM7 million. However, the trade receivables are high at RM74 million.

The Binasat acquisition is the second major exercise for Opcom in the last two months as it seeks to diversify its business into the provision of services for the telecommunications and electricity sectors.

On Aug 1, Opcom acquired a 49% stake in Transgrid Ventures Sdn Bhd for RM98 million to be paid in cash and shares. Transgrid Ventures is involved in the manufacturing and installation of electricity power transmission and generation equipment.

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