Frankly Speaking

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PKFZ probe must continueThe top brass at Kuala Dimensi Sdn Bhd (KDSB) has made some serious allegations against Transport Minister and MCA president Datuk Seri Ong Tee Keat.

Ong has to clear his name. But it must be emphasised that this should not derail nor stop the ongoing investigations into the multi-billion ringgit Port Klang Free Zone (PKFZ) fiasco, in which KDSB is a central player.

The two issues are clearly related. KDSB CEO Datuk Seri Tiong King Sing and deputy CEO Datuk Faizal Abdullah would not have come out in the open with their allegations if Ong had not supported efforts by the current Port Klang Authority (PKA) Board, led by its chairman Datuk Lee Hwa Beng, to get to the bottom of the country’s biggest scandal involving taxpayers’ money.

Ong must be given credit and support for doing what he has done. No other Cabinet minister in recent memory has dared to do what he has done, that is, to relentlessly pursue something involving very powerful Barisan Nasional (BN) leaders, past and current. At times, it does appear that other government leaders have no interest in supporting what Ong is doing.

Nonetheless, Ong now has no choice but to clear his name because these are serious allegations made against him.

The allegations have cast a dark cloud over Ong. But they have also raised questions about Tiong and Faizal — how money seems to come by so easily for them since they claim to regularly contribute millions of ringgit to people. It would be also good for them to explain how they and their companies accumulate that kind of money to have private jets like the Gulfstream and Learjet that Ong (and which other VIPs?) had used.

Tiong is also Member of Parliament for Bintulu, chairman of the BN Backbenchers Club in Parliament and treasurer of the Sarawak Progressive Democratic Party. Faizal is deputy head of the Umno Kapar division in Selangor.

The PKFZ project — as the findings of PriceWaterhouseCoopers Malaysia, Special Task Force reports and the ongoing Public Accounts Committee inquiry have shown — was carried out in a questionable manner.

Action must be taken against the wrong-doers, and we cannot believe that after all that had been unearthed no one did anything wrong. Efforts must also be made to recover money that should not have been paid. Remember, over RM12 billion of taxpayers’ money could go down the tube.

GBH shares at a discountAs expected, Goh Ban Huat Bhd last Wednesday said the period to accept Tan Sri Robert Tan Hua Choon’s mandatory general offer (MGO) has been extended by 21 days to Sept 2. After all, GBH shares are trading way above the RM1.25 offer price, and both the GBH board as well as independent directors had recommended that shareholders reject the offer.

Oddly enough though, there were actually people who were willing to part with their shares for about RM1.25 apiece despite the fact that GBH shares were going for as high as RM1.50 in the open market last week. According to a statement dated Aug 12 issued by CIMB Investment Bank on Tan’s behalf, shareholders holding 37,225 shares, or 0.06% of the company’s equity, accepted the offer. Tan also bought another 1.37 million shares or 2.22% of GBH on the open market on Aug 11 at an average of RM1.25 apiece. The acceptances and the open market purchase helped nudge Tan’s holdings in GBH to 35.39% as at Aug 12, from 33.11% when the MGO offer document was posted on July 22.

Interestingly, apart from Aug 11, the day Tan bought the 1.37 million GBH shares on the open market, stockmarket data showed that GBH shares had in the past three weeks traded well above RM1.30 apiece. Trading volume was also low on the open market, averaging only 32,000 shares a day, if one were to exclude the 1.37 million shares on Aug 11, the day Tan bought more shares at an average price of RM1.25 apiece, that being his offer price to other GBH shareholders. GBH shares traded at between RM1.36 and RM1.42 before closing at RM1.42 last Friday. So, who was selling GBH shares at a discount to market price last Tuesday?

Listing, delisting, relistingIt seems there is now a new trend emerging in corporate Malaysia — that of companies delisting and relisting on Bursa Malaysia whenever it becomes convenient to do so. Last week, Dunham-Bush Holding Bhd, which was taken private in June 2007, was reported to be looking at an initial public offering in 2012 to raise up to RM1.42 billion.

In 2007, Berjaya Corp Bhd sold its 56.75% stake in Dunham-Bush to Agromash Holding BV for RM180.5 million or RM3.50 per share. Following the purchase, Agromash made a general offer for all remaining Dunham-Bush shares at RM3.50 a share.

Last month, Maxis Corp Bhd was asked by Prime Minister Datuk Seri Najib Razak to list on the Malaysian stock exchange to increase the market’s liquidity and attract investors. Maxis was privatised in 2007 at close to US$5 billion. The company was first listed in 2002. The relisting is expected to raise US$2 billion.

Does this mark the start of a trend where majority shareholders list, delist and relist companies at their convenience? When it becomes cheaper to tap the debt markets, the owners take the company private and enjoy the profits generated by the company themselves but when the debt markets become expensive, it goes to the public for funds. It is also said that it is cheaper for a listed company to raise bonds compared to a private one. How convenient indeed.

Will these companies then delist again after relisting? What about minority holders who bought into the companies, sold on their future growth prospects, only to be told a few years down the road that the owners are taking it private? More often than not, minority shareholders who do not agree with the delisting have no choice but to accept the offer or be stuck with shares in an unlisted company.

This article appeared in Corporate page of The Edge Malaysia, Issue 768, Aug 17-23, 2009.