PETALING JAYA: Rumours MBf Holdings Bhd will be taken private have begun to swirl again. The company was one the most actively traded stocks in October, with its largest shareholder and CEO Tan Sri Dr Ninian Mogan Lourdenadin acquiring MBf shares and warrants on the open market.
Lourdenadin had increased his shareholding in MBf to 84.55% as at Oct 21, just shy of the 90% threshold to compulsorily acquire the remaining shares and take the company private.
He had also raised his warrants holdings in MBf to 73.13% on that date. On Oct 27 though, he sold 10 million warrants, paring his stake in warrants to 69.36%
The stock was among the heaviest traded on the local bourse on Oct 3 with 72.1 million shares changing hands. On Oct 10 46.8 million shares changed hands, Oct 21 (57.3 million) and Oct 22 (56.9 million).
Its warrants topped the active list on Oct 26, with 81.18 million warrants traded. The price of the warrants closed at 18 sen last Friday, with 44.8 million units traded.
MBfs’ share price has been on an upward trend since Sept 23, gaining 53.6% to close at 86 sen last Friday, still close to its year high of 90 sen.
The recent purchases by Lourdenadin might have triggered interest in the stock and renewed speculation that he may be looking at privatising the company.
“He could make a general offer to mop up all the shares he does not own in MBf. However, the price must be right because minority shareholders would want a good price, and he needs to acquire at least 90% of the shares he does not own to compulsorily acquire the rest and delist MBf,” said a market observer.
The Edge weekly reported on Oct 10 that Lourdenadin was buying up MBf shares, which triggered the speculation that he might want to take the group private by acquiring shares until his direct and indirect shareholdings breach 90%, after which MBf could request a suspension of its shares and subsequently delist them.
However, MBf announced on Oct 10 that it had not received any proposal for privatisation by Lourdenadin. The announcement said Lourdenadin had also informed MBf’s board of directors that he had not initiated any move to privatise the company as at Oct 10.
Lourdenadin’s intention to privatise MBf is certainly not new. In January 2010, he attempted to privatise the company, offering 65 sen per share.
The offer was rejected by minority shareholders as they deemed the offer too low. At that time, he held 79.12% of MBf. He has since raised his stake to 84.55% on Oct 21. The shares are parked under different investment holding companies.
The bulk of the shares are parked under Tor Pvt Ltd, which was incorporated in Singapore with 40.74% of MBf’s shareholdings, followed by Nadin Holdings Sdn Bhd with 21.17%.
Impact Action Sdn Bhd holds another 13.82% of the group’s shares while Market Share Investment Ltd, an investment holding company incorporated in the British Virgin Island has 8.82% of the shares.
With such a tight float, MBf is in non-compliance with Bursa’s public shareholding spread requirements.
Bursa Malaysia has instructed MBf to rectify its public shareholding spread. It is estimated that around 13% of the group’s shares are currently free-floated on the open market, compared with 16.3% as at July 28, 2011 and well below the 25% required under Bursa’s listing requirements.
What is more puzzling is that no action has been taken against MBf so far by Bursa Malaysia as the market regulator. Despite rejecting MBf’s appeal to extend the deadline for the company to rectify its shareholding spread from May 31 to Dec 31 this year, Bursa has not taken any of the actions it can on MBf.
According to MBf, since Bursa has rejected its appeal to extend the deadline for it to rectify its public shareholding spread, the capital market regulator could either “take or impose a breach of paragraph 8.02(1) of the Main Market Listing Requirement (MMLR) any type of action or penalty pursuant to paragraph 16.19 of the MMLR,” or suspend the trading in MBf securities.
According to a merchant banker, Lourdenadin can keep on acquiring MBf shares through his investment holding companies as the obligation to rectify the shareholding spread lies with MBf the company, and not Lourdenadin as a shareholder, although he holds the majority of the shares.
As a mid-cap company with market capitalisation of slightly more than RM400 million, MBf has substantial assets. Apart from the profitable credit card business that is synonymous with the company, the group also has plantations, properties and retailing businesses in Malaysia, Fiji, Papua New Guinea, Tonga and China, among others.
Even after rallying to 86 sen, the stock is still trading well below its net assets per share of RM1.72 as at June 30.
For the six months to June 30, MBf’s net profit rose 91% to RM87.48 million, or 15.35 sen per share, from RM45.8 million previously.
This article appeared in The Edge Financial Daily, October 31, 2011.
