Billionaire Quek and related-parties buying into TH Heavy pushes up share price

PETALING JAYA: Parties linked to banking billionaire Tan Sri Quek Leng Chan have bought a sizeable stake in mid-cap fabricator TH Heavy Engineering Bhd (THHE) through a private placement announced on Monday, sending its stock up a sharp 15% to 53.5 sen.
Some
39.6 million shares changed hands at prices ranging from 47 sen to 54.5
sen, making it the fifth most active counter across Bursa Malaysia
yesterday. The stock has soared 24% from a trough of 43 sen on May 2.
It
is not yet clear what drove Quek to take up the placement at 45 sen a
share but THHE is seen to be on the mend, having recently exited its
PN17 status.
THHE managing director and chief executive officer Nor Badli Mohd Alias could not be reached for comment at press time.
The
firm, which fabricates offshore steel structures for the oil and gas
(O&G) industry, had billed 2012 as a “turnaround year”. It posted
earnings of RM24.2mil on a revenue of RM190mil last year, reversing
2011's dismal RM11.4mil net loss and RM23mil turnover.
The group is also said to be eyeing a risk service contract with Petroliam Nasional Bhd for marginal oilfields as well as the West Sepat gas field.
THHE is currently expanding its fabrication yard in Pulau Indah, Port Klang, by nearly five times to 104ha from 23.01ha.
It
also has fabrication yards in Pasir Gudang, Johor, with a capacity of
129,000 tonnes per annum, making THHE the country's largest fabricator
in terms of yard size and capacity.
The company, formerly known as Ramunia Holdings Bhd,
told the stock exchange two days ago that it would place out 92.8
million new shares, or 10% of its existing share capital, to GuoLine Capital Ltd and Quek Kon Sean.
GuoLine is a subsidiary of Hong Leong Co (M) Bhd, while Kon Sean is Quek's youngest son and the only one of his three children to have ventured into banking.
The London School of Economics-educated 33-year-old started his career as an analyst with Goldman Sachs, followed by another year-long stint as a debt markets analyst with HSBC, both in London, according to public records.
Thereafter, he joined the family business and assumed directorships in several of his father's listed entities, including Hong Leong Financial Group Bhd, Hong Leong Capital Bhd (HLCap) and Hong Leong Bank Bhd.
In
its filing, THHE said the placement shares were priced at a 0.64%
discount to the company's five-day volume weighted average market price
up to May 6. GuoLine and Kon Sean will subscribe for 65 million shares
and 27.8 million shares, respectively.
They would effectively
hold 9% of THHE's enlarged share base of 1.02 billion shares once the
placement, which is set to raise gross proceeds of RM41.8mil for working
capital and potential investments, is completed by June.
Following
the exercise, THHE's largest shareholder, pilgrim fund Lembaga Tabung
Haji, will see its interest diluted to 29.09% from 32%.
This is not the first time Leng Chan has dabbled in O&G. He had acquired stakes in Kencana Petroleum Bhd, Petra Perdana Bhd (since renamed Perdana Petroleum Bhd) and Singapore-listed subsea and drilling services provider Mermaid Marine Public Co Ltd during the latter's listing in 2007 together with Datuk Mokhzani Mahathir, who is now chairman of SapuraKencana Petroleum Bhd.
The
70-year-old Quek, at one time Kencana's No. 2 shareholder, ceased to be
a substantial owner of the fabricator in August 2009. He had bought
into Kencana and Petra Perdana when they were newly-listed and riding
high.