MGO for SYF Resources after Hii’s exit

by **Cals** Fri 14 Mar 2014, 11:04

Business & Markets 2014

Written by Shalini Kumar of theedgemalaysia.com

Friday, 14 March 2014 10:08

KUALA LUMPUR: Businessman Tan Sri Clement Hii has sold his entire 20% equity interest in furniture maker SYF Resources Bhd to the company’s executive chairman and CEO Ng Ah Chai at 60 sen per share.

Ng’s shareholding rose to 50.27% in SYF Resources from 29.52% as at end-2013. Subsequently, he is obliged to make a mandatory general offer (MGO) to buyout all the shares he does not own in SYF.

Yesterday, Ng launched an unconditional MGO at 65 sen a share, a 4.84% premium to the five-day volume weighted average price.

Filings with Bursa Malaysia show that Hii sold his 54.48 million shares for RM32.69 million cash. The equity was held through his private investment vehicle HCK Equities Sdn Bhd.

In an email response to The Edge Financial Daily, Hii said the decision to let go of his stake was a result of a mutual agreement between him and Ng.

“Mr Ng made an offer and we agreed that he should have my stake,” he said without elaborating.

The cash proceeds will come in handy for Hii, who had recently raised his shareholding in SEG International Bhd (SEGi).

Between Feb 28 and March 6, Hii bought nearly 50 million SEGi shares, lifting his direct shareholding to 32.37% — close to the trigger point for a MGO. He also bought 24.3 million warrants in the same period, taking his total to 72.49 million or 90.7% of the outstanding warrants.

Hii’s recent purchase of SEGi shares and warrants fan speculation that he and the party acting in concert, Navis Capital Partners Ltd, are mulling on taking the private education group private.

Hii also emerged as a substantial shareholder in Golsta Synergy with a 27.27% stake in February, after buying over GS Capital Sdn Bhd in a share sale agreement.

Hii first emerged as a substantial shareholder in SYF in May 2012, after buying a 10.01% stake in the company. The company has been loss making since 2007, but returned to the black in 2012.

On the MGO for SYF Resources, it will be fully financed in cash by Ng, having confirmed that the “offer will not fail due to insufficient financial capability”.

Ng intends to keep SYF Resources listed after the MGO.

Apart from his holdings in SYF Resources, Ng is also a substantial shareholder in Inch Kenneth Kajang Rubber Public Limited Company, with a 12.47% interest.

SYF, which has a market capitalisation of RM175.7 million, posted a net profit of RM4.63 million for the first quarter ended Oct 31, 2013, up 5.36% from RM4.89 million in the previous corresponding quarter.

This article first appeared in The Edge Financial Daily, on March 14, 2014.