Proposal to privatise UAC
Boustead offers RM4.30 per share, 50% above 5-day average price
PETALING JAYA: Boustead Holdings Bhd has proposed to privatise its 65.21% subsidiary UAC Bhd at RM4.30 per share, which is 49.9% above the latter’s five-day volume weighted average market price of RM2.87 on May 18.
In its filing with Bursa Malaysia, Boustead said the privatisation would be via a proposed selective capital reduction (SCR) and repayment exercise, and a proposed dividend by UAC.
This confirmed Star Bizweek’s report last week about the proposed privatisation exercise.
Excluding Boustead, UAC’S shareholders who hold the remaining 34.79%, will receive Rm111.3mil in cash, or RM4.30 per UAC share.
Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said: “The Boustead Group has performed consistently well over the years and has been fortifying its earnings potential. Wehave ensured organic growth and when appropriate, as it is in this case, we have undertaken corporate exercises with the sole view of strengthening shareholder value.
“We believe that the proposals represent a very compelling opportunity for the shareholders to realise a cash payment for their UAC shares at a level that would not have been possible on the share market based on the historical share price trend of UAC.
“This is also an apt opportunity to reward the many long-term shareholders of UAC who have supported UAC over these past years with an attractive rate of return on their investment in UAC. Another factor leading to our privatisation was the fact that trading in UAC Berhad shares have been relatively illiquid on the stock market.”
Analysts deem the offer price of RM4.30 per UAC share fair and said it is a good deal as it is higher than the share price, which closed at RM2.82 last Thursday.
UAC’S share price has not reached that level since the global economic crisis in 2008. The proposed dividend would act as a sweetener for UAC’S shareholders.
Under the proposed SCR, all minority shareholders will receive a total cash payment of Rm85.431mil, which represents a cash amount of RM3.30 per UAC share.
As at May 17, 2012 UAC had an issued and paid-up share capital of Rm74.408mil, comprising of 74.4 million UAC shares. The issued and paid-up share capital will be reduced via cancellation of UAC shares held by all minority shareholders, excluding one million UAC shares which are held by Boustead. This will result in the reduction of the issued and paid-up share capital of UAC by Rm85.431mil, comprising 85.431 million UAC shares. In view that the UAC shares to be cancelled are more than the existing issued and paid-up capital of UAC, UAC has proposed to capitalise its share premium account via a bonus issue in order to facilitate the proposed SCR.
The bonus issue comprises of up to 12 million new UAC shares or approximately 0.16 bonus share for every existing UAC share held. This will bring UAC’S issued and paid-up share capital to 86.431 million shares. The bonus shares will be then cancelled under the proposed SCR.
Once the proposed SCR is complete, UAC will become a whollyowned subsidiary of Boustead. In its filing with Bursa, Boustead said it did not intend to maintain UAC’S listing status on the Main Market.
Under the proposed dividend UAC’S minority shareholders will receive a RM1 net dividend per UAC share, amounting to Rm25.9mil. The dividend payment is to be funded through internally generated funds.