LTAT may take Boustead private

Fund considering move following company’s weak share price

PETALING JAYA: The Armed Forces Fund Board (LTAT) is considering taking its main investee company Boustead Holdings Bhd private at 80 sen per share, following the weak performance of the company’s share prices recently.

In a statement yesterday, LTAT said it is finalising the funding for the deal which required regulatory approvals.

LTAT, which has Rm9.5bil in assets under management, owns a 59% stake in Boustead.

The share price in Boustead has been on a decline for years even before the coronavirus (Covid-19) crisis hit the global economy.

On March 23, Boustead’s share price fell to an all-time low of 35 sen in line with the overall weakness of the broader market.

The conglomerate, which is in real estate, financial services, plantations and manufacturing businesses, saw its share price surge by almost 31% over the past five days to 63 sen.

LTAT, however, cautioned that the potential privatisation may not go through as it is still working on the deal.

“We wish to highlight that this notification does not amount to a firm intention that we will undertake the proposal.

“Accordingly, there can be no certainty that we will proceed with the proposal,” it said.

“If we decide to proceed with the proposal, we expect to make an offer price of 80 sen per ordinary share in Boustead,” LTAT said.

The fund said it will make subsequent announcements on any material development in relation to the proposed privatisation of Boustead in accordance with the rules on take-overs, mergers and compulsory acquisitions.

Boustead is an umbrella holding company for LTAT, which controls several companies including

Boustead Plantations Bhd, Boustead Heavy Industries Corp Bhd (BHIC), Affin Holdings Bhd and Pharmaniaga Bhd.

In 2019, LTAT posted a lower net profit of Rm91.7mil compared with Rm221mil for the financial year 2018 (FY18).

LTAT said its performance was affected due to zero dividends from two key subsidiary companies, namely Boustead Holdings Bhd and Affin Bank Bhd, compared with Rm124.2mil in dividends received in FY18. Investments in Boustead and Affin constitute 47% of LTAT’S total fund size.

For the financial year ended Dec 31, 2019, Boustead posted Rm1.28bil loss compared to a loss of Rm554.3mil a year earlier due to kitchen-sinking exercise that involved Rm1.3bil impairment and amortisation for its heavy industries, plantation and pharmaceutical divisions.

Revenue for the period grew 1.45% to Rm10.33bil from Rm10.19bil in FY18 as higher contribution from the pharmaceutical segment more than offset weaker revenue from the plantation, heavy industries, property and trading segments.

Boustead, which is one the key contributor to LTAT’S income, did not declare any dividend for FY19.

“If we decide to proceed with the proposal, we expect to make an offer price of 80 sen per share in Boustead.” The Armed Forces Fund Board