This article first appeared in The Edge Malaysia Weekly on January 13, 2025 - January 19, 2025

NPC Resources Bhd has not met Bursa Malaysia’s shareholding spread requirement since October last year. While this problem has yet to be rectified, the percentage of shares held by the public has actually shrunk.

Based on a filing with Bursa, NPC’s public shareholding spread was 23% in October last year, falling short of the 25% requirement under listing rules. A month later, the public shareholding spread reduced further to 11.7%.

Interestingly, NPC announced last Thursday that it had received notice from its major shareholder Jubilant Ventures Sdn Bhd and NPC co-founder Datuk Loo Pang Kee that they were exploring a possible privatisation of the company at RM2.82 per share or higher.

Given the company’s shrinking public shareholding spread, this does not come as a surprise.

The announcement states that if the privatisation materialises, the offer price will not be less than RM2.82 per share, which values the plantation company at RM338 million. Based on its net asset value per share of RM5, the offer price should rightfully be way above the envisaged figure of RM2.82 per share.

Will the minority shareholders, who collectively hold less than 12% of the company, get a fair deal?

NPC, which owns plantations in Sabah and Indonesia, has been performing below market expectations despite the higher crude palm oil prices. In its 2023 annual report, its external auditor expressed doubts about the company as a going concern because its current liabilities exceeded its current assets by RM104.8 million.

Subsequently, NPC sold 7,500 acres of land for RM165.1 million, a transaction that was completed in December last year, to address the concerns of the external auditor. According to the company, the plantations that it sold, at an average price of RM22,360 per acre, were the least performing of its assets. It still has 19,121 acres in Sabah and 111,000 acres in Indonesia.

In 2021, IOI Corp Bhd offered to buy NPC’s plantations in Sabah for RM23,000 per acre. The offer was rejected as the price was considered “unacceptable” at the time, but it did set a benchmark.

Surely, Loo, who holds close to 55% of NPC, should come up with a superior offer as plantation land is getting scarce these days.

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