KUALA LUMPUR (Jan 9): KUB Malaysia Bhd, whose largest shareholder is newly appointed Plantation Industries and Commodities Minister Datuk Seri Johari Abdul Ghani, is now planning to issue redeemable convertible preference shares (RCPS) to Johari's investment vehicle — JAG Capital Holdings Sdn Bhd — for the acquisition of Central Cables Bhd (CCB), which is involved in the manufacturing of power cables and wires.
The purchase consideration of RM119.42 million for the 86.65% equity interest in CCB will no longer be satisfied by the issuance of 199.035 million new ordinary KUB shares at an issue price of 60 sen, but will instead be settled fully by the issuance of RCPS with a five-year maturity at the same issue price. These RCPS can be converted into new ordinary KUB shares on a one-for-one basis.
KUB will then extend a mandatory general offer (MGO) to acquire the remaining CCB shares at RM2.60 per share in cash or in new RCPS of 60 sen per RCPS — instead of in cash or in new KUB shares — at the same RM18.4 million in total, which would value CCB at RM137.82 million.
The changed mode of settlement was announced by Maybank Investment Bank Bhd in a statement, on behalf of KUB, following a supplemental agreement inked between KUB and JAG Capital on Monday.
The initial announcement of the deal was made in November last year. At the time, KUB said the acquisition was to enable it to venture into the manufacturing power and cables, which integrates well with its existing power business.
On completion of the acquisition under the new arrangement, JAG Capital's stake in KUB will remain at 32.96% — instead of rising to over 50% according to the previous mode of settlement — hence the 33% shareholding threshold for an MGO to be undertaken for KUB shares that JAG Capital does not own will not be triggered.
Nevertheless, JAG Capital will still undertake a conditional voluntary take-over offer for those KUB shares it does not own and those that may be issued after the conversion of the RCPS, to provide shareholders of KUB an "equal opportunity to exit and realise their investment", said Maybank, at a cash offer price of 60 sen per share and a cash offer price of 60 sen per RCPS. The same 60 sen per RCPS will be offered for those who opt for RCPS as payment under the proposed MGO for CCB shares.
The voluntary offer is made because JAG has considered that certain expectations might have been created due to the previous announcement of the proposed MGO for KUB shares. All other terms of the deal remained the same, Maybank said.
KUB shares slipped half a sen to close at 59 sen on Monday, for a market capitalisation of RM325.58 million.
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