Frankly Speaking: CCB’s free float in question

This article first appeared in The Edge Malaysia Weekly, on June 7, 2021 - June 13, 2021.
Frankly Speaking: CCB’s free float in question
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The major shareholders of Cycle & Carriage Bintang Bhd (CCB) — Jardine Cycle & Carriage Ltd (Jardine CCL) — received an acceptance of 88.04% at the close of its offer to take the company private last Friday.

The second largest shareholder of CCB, Open Road Asia Sdn Bhd, has 5.44%, based on the last announcement on May 24. This means the two substantial shareholders jointly hold 93.48% of the company.

For a company to avoid being suspended, it needs to have more than 10% of its shares as free float in the hands of minority shareholders. The regulator would then give more time for it to fulfil the free float requirement of 25% of the total shares outstanding.

In CCB’s case, based on the published shareholding, it does not meet the minimum free float requirement of 10% to avoid being suspended, unless one of the two substantial shareholders reduced its stake last Friday. This could be the case as close to three million CCB shares were traded then — the last day of the offer. There are only two parties with that amount of shares. One is Jardine CCL and the other is Open Road.

It is highly unlikely that the former would have sold its shares. Hence, did Open Road reduce its stake to avoid seeing the counter being suspended?

This is the second time in less than 18 months that Jardine CCL is attempting to take CCB private. It needs 90% acceptance of the shares it does not own at the point of making the privatisation offer to take the company off Bursa.

Or it needs to cross the 90% shareholding threshold for the stock to be suspended from trading. Once suspended, most minorities would sell out, paving the way for its privatisation.

Jardine CCL has not achieved either, so far.

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