KUALA LUMPUR (Feb 10): Boustead Holdings Bhd (BHB) has launched a RM149.59 million privatisation deal for 72.38%-owned Boustead Heavy Industries Corporation Bhd (KL:BHIC) via a selective capital reduction and repayment exercise at 48 sen per share.

The entitled holders comprise ordinary shareholders with 155.86 million BHIC shares, together with preference shareholders holding 23.63 million redeemable convertible preference shares (RCPS A) and 132.17 million Islamic redeemable convertible preference shares (RCPS-i A), according to BHIC’s filing with Bursa Malaysia.

The offer price represents a 54.84% premium to BHIC’s last traded price of 31 sen on Feb 6, and a 71.18% premium to its six-month volume-weighted average price of 28.04 sen. BHB intends to delist BHIC from Bursa Malaysia once the exercise is completed.

BHB said the exercise will be funded through bank borrowings and/or internally generated funds, assuring that all entitled shareholders and RCPS holders will be paid in full cash. The group emphasised it has sufficient financial resources and that the proposal will not fail due to funding constraints.

BHB, wholly owned by Lembaga Tabung Angkatan Tentera (LTAT), was itself privatised in June 2023 through a voluntary takeover offer at 85.5 sen per share, valued at RM703.2 million. In the same year, LTAT received a government guarantee to take out a RM2 billion loan to privatise Boustead Plantations Bhd at RM1.55 a share. 

Upon completion, BHB will cancel the entitled shares and RCPS units, leaving it with 408.42 million BHIC shares and 84.66 million RCPS B units. This will result in BHIC becoming a wholly-owned subsidiary of BHB.

The rationale cited includes BHIC’s low trading liquidity, the opportunity for minority holders to exit at a premium, and greater flexibility to pursue long-term strategies and expedited corporate exercises under a privatised structure.

The board of directors of BHIC has until March 3 to decide whether to implement the proposed privatisation.

Non-independent non-executive directors Datuk Dr Ahmad Sabirin Arshad, Ahmad Farouk Mohamed and Fahmy Ismail, who are also deemed persons acting in concert, will abstain from all deliberations and voting on the proposal.

The proposed exercise is subject to approval from the Securities Commission Malaysia, disinterested shareholders at an extraordinary general meeting (EGM) and the High Court’s confirmation of the capital reduction.

The exercise requires approval from at least 75% in value of disinterested shareholders at the EGM and must not be opposed by more than 10% of them.

BHIC shares, which were suspended from trading on Monday for the announcement, have climbed 12.5% since the start of the year. The stock last traded at 31.5 sen, near multi-year lows, with a market capitalisation of RM177.75 million.

Based on AskEdge data, BHIC shares are currently trading at 1.9 times price-to-book value. The stock does not carry a price-earnings ratio as the group was loss-making over the trailing 12 months.