KUALA LUMPUR (Aug 6): Bolts and nuts manufacturer Tong Herr Resources Bhd (KL:TONGHER) has received a proposal from its major shareholders Allrich Corp and Richard Holdings Ltd — controlled by members of the Taiwanese Tsai family — to privatise the company through a selective capital reduction and repayment exercise (SCR) at RM2.55 per share.
Allrich owns a 39.618% stake in Tong Herr, while Richard Holdings holds a 31.715% stake.
Executive chairman Tsai Ming Ti and his son, managing director Tsai Ming Ti, hold interests in Richard Holdings, while his nephew and company director Tsai Hung-Chuan and his sister Tsai Jane-Rong hold stakes in Allrich.
The offerors and other members of the extended Tsai family together own a 74.50% interest in Tong Herr.
Shares of Tong Herr have gained nearly 32% this year. The offer represents a 34.2% premium to its closing price of RM1.90, its highest since September 2024, before the trading suspension for the announcement.
The proposed exercise will be funded through internal funds and bank borrowings. The offerors do not intend to maintain Tong Herr’s listing on Bursa Malaysia.
The deal values the company at over RM401 million, compared with its latest market capitalisation of RM299.1 million.
It also represents a 52.55% to 75.79% premium over the company’s five-day to one-year volume-weighted average prices.
Tong Herr said the privatisation would give the company greater flexibility to manage and grow its business by reducing listing-related costs and enabling faster decision-making. It also provides shareholders an opportunity to exit their investments amid the stock’s low trading liquidity.
The board has until Sept 4, 2026 to decide whether to put the proposal to shareholders. The SCR is subject to approval from shareholders, the High Court and other relevant parties.
The special resolution must be approved by a majority of non-interested shareholders in number, with at least 75% of votes cast, and must not be opposed by more than 10% of total votes held by non-interested shareholders.
Tong Herr reported a 20% decline in net profit to RM4.8 million for the first quarter ended March 31, 2026 from RM6 million a year earlier. Revenue fell 22% to RM120.5 million from RM153.8 million due to lower sales volume and selling prices in the fasteners segment.
However, gross profit margin improved to 8.81% from 7.77% due to lower stainless steel raw material costs. As at March 31, 2026, Tong Herr was in a net cash position with RM163.7 million in cash and RM10.4 million in borrowings.
Founded by the Tong Group in 1989, Tong Herr manufactures stainless steel fasteners used in machinery, food processing, telecommunications and construction industries. The company serves markets across Asia, Europe, Africa, Oceania and the Americas, and was listed on the Main Market of Bursa Malaysia in 1999.