Kayin to privatise Selangor Properties

> Proposes selected capital reduction and repayment at RM5.70 a share

PETALING JAYA: Kayin Holdings Sdn Bhd, a 68.23% shareholder of Selangor Properties Bhd (SPB), has proposed to privatise SPB via a selective capital reduction and repayment exercise (SCR) at RM5.70 a share.

In a filing with Bursa Malaysia, SPB said Kayin’s request was premised on the subdued property market and illiquidity of its shares.

Quoting data from Bank Negara Malaysia, Kayin said the property market is expected to remain subdued due to the prevalent oversupply of unsold residential properties, office spaces and shopping complexes.

“The number of unsold high-rise residential properties, combined with the oversupply of commercial properties and new developments such as Damansara City and Pavilion Damansara Heights around SPB group’s existing properties would not only drive vacancy rates high and depress effective rental rates of its existing investment properties but will also limit the group’s development activities, especially on its landbank in Damansara Heights in the short to medium term,” it said.

In addition, the trading liquidity of the shares has been low, with an average daily trading volume of about 57,617 shares and a total number of 37.91 million shares traded for the past three years up to Oct 24 being the latest practicable date (LPD). The average daily trading volume represents 0.05% of the free float.

The cash repayment represents a premium of between 19.62% and 40.45% above the prevailing market price of the shares. Note that the shares have not traded at or above the SCR offer price since March 2016. They closed trading at RM4.06 on Wednesday.

The privatisation of SPB will give it greater flexibility to manage and develop their existing businesses and undertake corporate exercises which may otherwise require lengthy shareholders’ and regulatory approvals and eliminate administrative efforts and reduce costs associated with being a listed entity.

Kayin and persons acting in concert hold a combined 68.25% stake.

The proposed SCR will be funded via internally generated funds and/or bank facilities and the acceptance period ends on Dec 17 at 5pm.

SPB said it will deliberate on the proposed SCR and decide on the next course of action.