April 24, 2010

ANOTHER ELECTION GIMMICK?

The following post was written by DPP who blogs HERE and he shared it in a comment to one of my posts in unplugged so I am reposting it here for more airing. Thanks DPP for sharing.

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Hi MWS

Would appreciate if you gave max publicity to my letter to Mkini published tpday at http://www.malaysiakini.com/letters/130103 and titled "Maika share sale an election gimmick?" It might help voters see straight at HS.

"I refer to the Malaysakini report New firm takes over Maika Holdings.

The salient facts about G Gnanalingam's recent offer to buy out all Maika shareholders are as follows:

1. Maika's paid up share capital - RM125 million.

2. Gnanalingam's offer price - RM106 million or RM0.85 per share.

3. Oriental Capital Assurance Bhd's (Ocab) paid up share capital is RM100 million and as at Dec 31, 2008 it's audited NTA was about RM103 million.

4. Maika's investment in Ocab's share capital is 74.165% or 74,174,640 shares, ie, Maika is Ocab's holding company as it has both more than 51% equity shares and control in Ocab. Maika's CEO Vell Paari a/l Samy Velu also sits on the board of directors of Ocab.

5. Prior to Gnanalingam's buyout proposal, there were two other offers to Maika as follows:

a. RM129 million or $1.75 per share by Salcon

b. RM149 million or $ 2.01 per share by Usaha Tegas, the holding company of tycoon Ananda Krishnan.

The Salcon offer was frozen by a court order taken out by Nesa Cooperative, Maika's single largest shareholder who had objected on the grounds that Maika's 74% investment in Ocab had not been independently valued.

Nesa had recommended the investment in Ocab be sold by open tender. Nesa also revealed there were two other parties interested in acquiring Ocab's shares, one from Europe and another from Australia.

As to the RM149 million offer by Usaha Tegas, apparently Maika rejected this offer as it could not accept certain pre-conditions insisted upon by Usaha Tegas. What these pre-conditions were have not been revealed by Maika's directors.

In the light of the above, I demand the board of directors of Maika explain:

1. Why do they think Gnanalingam's offer of RM106 million is suddenly acceptable to them when they unequivocally know there are local market players in the insurance business and foreign parties who are willing to pay more?

2. Why are they unwilling to offer the Maika or Ocab shares for sale by open tender with a reserve price of say, RM150 million, given the Usaga Tegas offer? If as Gnanalingam says, Maika's debts are RM30 million, the net minimum proceeds of RM120 million would be a fair and handsome reward to Maika's shareholders who for some 20 years have received no dividends while there was a period when their CEO was paid a remuneration of RM15,000 per month.

As to Gnanalingam being quoted as saying he's doing 'national service', he contradicts it by saying he will need six months to find another financier which suggests he is looking at flipping the Maika/Ocab shares for a quick gain. So much for national service.

Financiers may do charity work and make sizeable donations from their profits and gains, but their natural predatory instincts mean they will always squeeze out the juicy bits of the best deals for themselves.

It seems clear to me, and for the matter any sane person, that the Maika/Ocab shares are worth a hell of a lot more than Gnanalingam's RM106 million offer.

The RM64,000 question is why Samy Vellu, Vel Paari and the Maika board of directors appear to be not interested in maximising returns to their long-suffering shareholders which include themselves by supporting the lowest offer?

Is there a deal behind the deal?"

Thank you.

dpp
we are all of 1 race, the Human Race

2 comments:

donplaypuks® said...

Thanks MWS

Owe you a fancy lunch!!

Also, it's incredible that Gnanalingam is offering a measly 2.9% primium over OcAb's NTA of $103 million for a controlling stake!

That's not national service; that's highway robbery!!

dpp
we are all of 1 arce, the Human Race

masterwordsmith said...

Hi DPP

You are most welcome! There are many types of incidents which outrage many and we know that this one adds to the already long list..

Take care and keep blogging!!!

Cheers