SHAH ALAM: Lembaga Tabung Angkatan Tentera – the Armed Forces Provident Fund (LTAT) is doubling down on Boustead Holdings Bhd, by offering to take the listed company private. LTAT in a statement said the offer will allow it greater flexibility to implement the turnaround plan for Boustead.
The statement:
NOTICE ON CONDITIONAL VOLUNTARY TAKE-OVER OFFER ON BOUSTEAD
HOLDINGS BERHAD
Kuala Lumpur, 02 March 2023 – Lembaga Tabung Angkatan Tentera (“LTAT” or the
“Offeror”) today announced that it has issued a Notice on conditional voluntary takeover offer (“Offer”) to the Board of Directors of Boustead Holdings Berhad (“BHB”) for
the remaining 822,510,779 shares in BHB or 40.58% which it does not hold for a cash
offer of RM0.855 per share.
BHB, as a 59.42% owned subsidiary of LTAT, is a diversified conglomerate with core
businesses spanning across various sectors including plantation, property, and
industrial, pharmaceutical, heavy industries as well as trading, finance and investment.
The Offer is not conditional upon any minimum level of acceptances as LTAT already
holds more than 50% of the voting shares in BHB.
However, the Offer is conditional upon the following: –
(i) Minister of Finance’s (“MoF”) approval upon Bank Negara Malaysia’s (“BNM”)
recommendation and BNM’s approval under Section 87 of the Financial Services Act
2013 (“FSA”) and Section 99 of the Islamic Financial Services Act 2013 (“IFSA”) to
allow the Offeror to acquire up to 100% equity interest in BHB; and
(ii) waiver from BNM from complying with Section 110 of the FSA and Section 122
of the IFSA in relation to the requirement for LTAT and/or its nominated company to be
approved as a financial holding company of Affin Bank Berhad and other relevant
licensed entities.
These conditions must be fulfilled within 21 days after the First Closing Date, as
stipulated in the Rules on Take-overs, Mergers and Compulsory Acquisitions issued
by Securities Commission Malaysia.
LTAT presently does not have any plan to dismiss or make redundant any of the
employees of BHB Group as a direct consequence of the Offer.
For clarity, the Offer will not result in a mandatory offer by LTAT to acquire all the
remaining voting shares in Affin Bank Berhad, Boustead Plantations Berhad, Boustead
Heavy Industries Corporation Berhad and Pharmaniaga Berhad that are not already
held by LTAT, whether direct or indirect, in view that LTAT already has statutory control
over BHB.
The notice came one day after Boustead announced losses due to the impairment suffered by its subsidiary, Pharmaniaga Bhd.
— Malaysian Defence
Basically a bailout
Taking private is not a bailout because LTAT has to buy the shares from other people. Taking private is good only if the LTAT management team can turn the business around. Taking private is bad if the LTAT management team cannot turn the business around because it drags down LTAT. The alternative is to restructure Boustead. Few ways to do it, such as selling pieces of the empire to raise capital, or break it into different companies like what happened to Sime Darby (1 broke into 3 companies – Property, Plantation, and Everything Else). But in the end its really whether the LTAT leadership will do the right thing in fixing the company. If business as usual / status quo, then in the future it will be bailing out LTAT instead of Boustead.
That would cost a total of RM703 million
Does LTAT have that much free cash on hand?
Will it be selling assets/companies to finance that?
“Taking private is not a bailout because LTAT has to buy the shares from other people.”
That is the essence of a bailout, as privatising means they won’t be answerable to external shareholders, they don’t have to go thru the scrutiny of Bursa due to it being PN17, and they could force a buyout of other shares at very low prices. LTAT being Govt funded meant they could get money from the Govt to fund the bailout and pumping money back in to resuscitate its operations. This is what the Govt did with Proton just before selling half its ownership to Geely. LTAT would do well to find another buyer for Pharmaniaga.