KUALA LUMPUR (July 31): Pinehill Pacific Bhd (KL:PINEPAC) said its controlling shareholder and director, Puan Sri Vivienne Ketheeswaran, intends to privatise the plantation company via a selective capital reduction exercise amounting to RM46.63 million.

Vivienne is the wife of PinePac’s former executive chairman Tan Sri K Ketheeswaran, better known as Kenneth Iswaran, who stepped down from the board in May 2023 due to health reasons.

Entitled shareholders will receive 46 sen per share under the capital repayment proposed by Vivienne and her family, who together control 32.33% of PinePac, according to a statement on Thursday.

The offer price represents a 64.2% premium to PinePac’s closing price of 28 sen on Thursday, and a 87.8% premium to the prevailing three-month volume-weighted average price of 25 sen.

However, the offer is at a 56.6% discount to the company’s net tangible asset per share of RM1.06.

The selective capital reduction exercise involves a capital repayment of 46 sen per share for 101.37 million shares, or 67.67% of PinePac’s issued capital which is not held by Vivienne and her family. She currently owns a 9.55% direct stake, while her family vehicle, Allgrow Capital Holdings Sdn Bhd, holds 22.78%.

To streamline the capital structure post-privatisation, PinePac will cancel 38.432 million shares held by non-entitled shareholders on a pro rata basis. This will result in Allgrow Capital holding 7.05 million shares (70.47% stake) and Vivienne retaining 2.95 million shares (29.53% stake).

Pinehill said the capital repayment is expected to be funded through its existing cash reserves and internally generated funds. As of end-March, the company had a cash pile of RM68.12 million with no material borrowings.

PinePac’s remaining plantation asset, located in Sintang, West Kalimantan, Indonesia, spans 8,022 hectares, including 3,288 hectares developed for smallholders.

Explaining the rationale, Vivienne noted that following the sale of PinePac’s plantation in Teluk Intan, Perak, to United Plantations Bhd (KL:UTDPLT), the company has been without a core business and was classified as an “affected listed issuer” under Bursa Malaysia’s Main Market listing requirements.

It was required to submit a regularisation plan within a stipulated time frame, but none of the proposed initiatives had materialised due to mismatched valuation expectations and lack of fit with PinePac's corporate objectives, risk appetite and available financial capacity, she added.

Additionally, PinePac’s remaining 8,022 hectares of plantation assets in Sintang, Kalimantan Barat, Indonesia, are undergoing rehabilitation. Progress has been hindered by pandemic-related disruptions and labour shortages.

Considering this, Vivienne said the selective capital reduction exercise offers entitled shareholders an opportunity to realise their investments ahead of a potential delisting.

PinePac shares closed up three sen or 12% at 28 sen on Thursday, valuing the company at RM41.95 million.