Market Talk Perwaja up, may be privatised

by **Cals** Tue 23 Jul 2013, 20:23

Market Talk Perwaja up, may be privatised
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Tuesday, 23 July 2013 17:54

KUALA LUMPUR (July 23): Word through the grapevine is that Tan Sri Abu Sahid Mohamed is ruminating to privatise Perwaja Holdings Bhd as the beleaguered steelmaker has depressed valuations.

This speculation had led to the rise in Perwaja share today despite news that Abu Sahid has quit as chairman of Perwaja and its parent company KINSTEEL BHD [], which was traded unchanged at 27.5 sen per share.

Perwaja’s latest reported book value per share came in at 67 sen. Its one-year average share price was 47.7 sen.

The stock was pushed up by as much as 2.5 sen or 6.02% to settle at 44 sen today. A total of 2.08 million shares were transacted.

Some steel sector analysts told theedgemalaysia.com there is speculation that Abu Sahid’s privately-owned Maju Holdings Sdn Bhd, which is the controlling shareholder of Perwaja, is looking for an opportunity to privatise the latter.

“Of course, just like any other steel companies, Perwaja’s valuations are depressed. Also, Abu Sahid has enough money to buy all the remaining shares in Perwaja, for sure,” said an analyst.

With a 0.9% direct interest and a 69.22% indirect interest in Perwaja, Abu Sahid will require about RM73.62 million to buy off other outstanding shares based on its current market capitalisation of RM246.4 million.

“I’ve also heard that Abu Sahid might bail out Perwaja by taking a loan on his personal capacity,” said one analyst.

But Abu Sahid might face roadblocks in raising funds to pay off Perwaja’s debts.

As at March 31 of this year, the company had RM338.13 million in long-term borrowings and RM985.54 million in short-term borrowings.

However, another steel analyst expressed doubts over the possibility of a privatisation exercise. To do so, Abu Sahid needs to offer minority shareholders with a price that is satisfactory.

“Frankly, that has always been the biggest problem (for privatisation exercises). The shareholders might not agree with the offer price. Long-time shareholders who had earlier bought the shares at a much higher price might want higher returns on their investments,” the analyst told theedgemalaysia.com

This privatisation talk came following news yesterday that Abu Sahid has “retired” as chairman of both Perwaja and Kinsteel.

Appointed to the board to replace him was his right- hand man Ravi Manchanda, a 54-year-old Singaporean who is currently the group chief executive officer of Maju Holdings Sdn Bhd.