So Khazanah Nasional Bhd is finally selling its 42.7% equity interest in automaker Proton Holdings Bhd — at RM5.50 per share or almost RM1.3 billion. This time around minority shareholders get to partake in the offer and sell their shares as well at RM5.50, as the transaction will trigger a mandatory general offer (MGO).
The fact of an MGO was explicitly stated in Khazanah’s statement about the transaction. The disposal by Khazanah should be lauded, as after all, the strategic investment arm of the government has experienced much heartache dealing with a company it doesn’t have proper control of, which makes up for a small percentage of its portfolio but a big proportion of its problems.
However, there are some issues that need explaining.
For starters, Khazanah should disclose if there were other bids and what the parties were prepared to offer. Were there any worthy offers that were higher than RM5.50 per share? And if there were, why were they turned down?
Such disclosure would be most welcome as there are some who feel that DRB-Hicom Bhd got Proton cheap as the latter’s net assets per share as at end-September last year stood at RM9.81.
Some clarity on this aspect of the deal would put things in better perspective and quash market speculation that there were higher offers for Proton.
Apart from DRB-Hicom, among those interested in Proton were its chairman Datuk Seri Mohd Nadzmi Mohd Salleh and the Naza group. Did any of these parties put in a proposal with a firm financial package? If so, what was the price offered and the reasons for rejection?
While the deal is subject to DRB-Hicom forking out the cash for the corporate exercise, without some clarity if RM5.50 was the best price on the table, the question will always remain if Khazanah, as the custodian of the Proton shares, got the best out of its investment in Proton.
There is also a need for DRB-Hicom to make some clear statements for the sake of the minorities.
For instance, DRB-Hicom says, “There are no liabilities, including contingent liabilities and guarantees, to be assumed by DRB-Hicom pursuant to the proposals. The existing liabilities of Proton will be settled by Proton in its ordinary course of business.
“There are no additional financial commitments by DRB-Hicom in putting the assets/businesses of Proton group onstream as Proton group already has ongoing businesses,” DRB-Hicom said in its announcement to Bursa Malaysia.
Does this mean Khazanah is exiting at RM5.50 and the minorities had better follow suit and exit as well, as DRB-Hicom is not going to fork out funds to improve things at Proton?
Also, by not assuming any contingent liabilities, would this affect the guarantees given by Proton for Lotus International’s turnaround programme? Lotus last year embarked on a £480 million (RM2.31 billion) 10-year turnaround plan and the loan is backed by Proton.
If DRB-Hicom is not prepared to fork out more money to be pumped into Proton, why is it the chosen one to take over the national car manufacturer. After all, Proton’s adviser Tun Dr Mahathir Mohamad had said that one of the reasons why Khazanah was selling was because it was not prepared to pump any more money into the national carmaker.
If DRB-Hicom is not going to incur any additional financial commitment on Proton, there should be some clarity on how exactly it is going to make a difference in the national car manufacturer.
Then there is also the issue of DRB-Hicom, which is controlled by Tan Sri Syed Mokhtar AlBukhary, again coming up tops as Khazanah embarked on an asset disposal. Last year DRB-Hicom bagged a 32% stake in Pos Malaysia Bhd after a competitive and lengthy process. It edged out the Scomi group.
Now, it has landed Proton.
Already Syed Mokhtar has extensive interests in a sprawling empire consisting of ports, power, plantations, hotels, engineering, construction, airports and even rice distribution.
We have in the past experienced and seen what happens when so much privatised national assets are placed in the hands of a single group controlled by an individual.
The question is how come there are no other groups or individuals joining the fray? Can anybody please explain?
This article appeared in The Edge Financial Daily, January 17, 2012.
The fact of an MGO was explicitly stated in Khazanah’s statement about the transaction. The disposal by Khazanah should be lauded, as after all, the strategic investment arm of the government has experienced much heartache dealing with a company it doesn’t have proper control of, which makes up for a small percentage of its portfolio but a big proportion of its problems.
However, there are some issues that need explaining.
For starters, Khazanah should disclose if there were other bids and what the parties were prepared to offer. Were there any worthy offers that were higher than RM5.50 per share? And if there were, why were they turned down?
Such disclosure would be most welcome as there are some who feel that DRB-Hicom Bhd got Proton cheap as the latter’s net assets per share as at end-September last year stood at RM9.81.
Some clarity on this aspect of the deal would put things in better perspective and quash market speculation that there were higher offers for Proton.
Apart from DRB-Hicom, among those interested in Proton were its chairman Datuk Seri Mohd Nadzmi Mohd Salleh and the Naza group. Did any of these parties put in a proposal with a firm financial package? If so, what was the price offered and the reasons for rejection?
While the deal is subject to DRB-Hicom forking out the cash for the corporate exercise, without some clarity if RM5.50 was the best price on the table, the question will always remain if Khazanah, as the custodian of the Proton shares, got the best out of its investment in Proton.
There is also a need for DRB-Hicom to make some clear statements for the sake of the minorities.
For instance, DRB-Hicom says, “There are no liabilities, including contingent liabilities and guarantees, to be assumed by DRB-Hicom pursuant to the proposals. The existing liabilities of Proton will be settled by Proton in its ordinary course of business.
“There are no additional financial commitments by DRB-Hicom in putting the assets/businesses of Proton group onstream as Proton group already has ongoing businesses,” DRB-Hicom said in its announcement to Bursa Malaysia.
Does this mean Khazanah is exiting at RM5.50 and the minorities had better follow suit and exit as well, as DRB-Hicom is not going to fork out funds to improve things at Proton?
Also, by not assuming any contingent liabilities, would this affect the guarantees given by Proton for Lotus International’s turnaround programme? Lotus last year embarked on a £480 million (RM2.31 billion) 10-year turnaround plan and the loan is backed by Proton.
If DRB-Hicom is not prepared to fork out more money to be pumped into Proton, why is it the chosen one to take over the national car manufacturer. After all, Proton’s adviser Tun Dr Mahathir Mohamad had said that one of the reasons why Khazanah was selling was because it was not prepared to pump any more money into the national carmaker.
If DRB-Hicom is not going to incur any additional financial commitment on Proton, there should be some clarity on how exactly it is going to make a difference in the national car manufacturer.
Then there is also the issue of DRB-Hicom, which is controlled by Tan Sri Syed Mokhtar AlBukhary, again coming up tops as Khazanah embarked on an asset disposal. Last year DRB-Hicom bagged a 32% stake in Pos Malaysia Bhd after a competitive and lengthy process. It edged out the Scomi group.
Now, it has landed Proton.
Already Syed Mokhtar has extensive interests in a sprawling empire consisting of ports, power, plantations, hotels, engineering, construction, airports and even rice distribution.
We have in the past experienced and seen what happens when so much privatised national assets are placed in the hands of a single group controlled by an individual.
The question is how come there are no other groups or individuals joining the fray? Can anybody please explain?
This article appeared in The Edge Financial Daily, January 17, 2012.
