Kulim fails in bid for extra 20% stake in New Britain Palm Oil

by **Cals** Fri 06 Sep 2013, 08:49

Published: Friday September 6, 2013 MYT 12:00:00 AM
Updated: Friday September 6, 2013 MYT 7:40:24 AM
Kulim fails in bid for extra 20% stake in New Britain Palm Oil
BY JOHN LOH
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PETALING JAYA: Kulim (M) Bhd’s bid for an extra 20% in its Papua New Guinea-based unit New Britain Palm Oil Ltd (NBPOL) has crumbled after the company failed to undo a restraining order imposed by the regulators there.
The firm told Bursa Malaysia yesterday that the National Court of Papua New Guinea had on Sept 4 dismissed Kulim’s application to lift the Securities Commission of Papua New Guinea’s (SCPNG) orders.
“As such, Kulim was unable to declare the partial offer unconditional and the partial offer has since lapsed.
“All acceptances received pursuant to the partial offer are automatically void as outlined under Section 11.4 of the offer document dated July 23, 2013 and will be returned to the respective shareholders of NBPOL,” Kulim said in a filing.
This is an apparent victory for NBPOL’s management, who had been opposed to the deal from the beginning.
Despite its run-in with the Papua New Guinea regulators, Kulim had secured acceptances for an impressive 18.75 million shares, or a 12.5% stake, in NBPOL when its £5.50 (RM28.44) offer closed on Aug 28.
At the time, Kulim was still restricted by SCPNG’s order and had commenced legal proceedings to set that aside.
Still, analysts see this as a non-event. Kulim had, in fact, been recently allowed to consolidate NBPOL in its books as a subsidiary under the FRS10 accounting standards because its 49% interest was deemed a controlling stake, given NBPOL’s fragmented shareholding.
“The situation remains status quo. It makes no difference at this point whether Kulim increases its holdings in NBPOL, as its earnings would have already been consolidated in Kulim’s books, which has the same effect,” a local analyst toldStarBiz.
Industry observers said the attempt to partially buy out integrated palm oil player NBPOL – long considered Kulim’s most prized asset – was troubled from the start.
The first hurdle that came its way was the rejection by London and Papua New Guinea-listed NBPOL’s independent adviser, which contended, among other things, that the transaction was neither fair nor reasonable and significantly undervalued NBPOL shares.
Kulim then shot back by saying its offer had valued NBPOL at a premium to its market price, and even challenged the independent adviser’s methods, making Kulim possibly the first Malaysian-listed entity to publicly spar with an independent adviser’s report.
In an unexpected twist, SCPNG slapped a restraining order on Kulim’s offer that also compelled it not to make any statements to the media – be it print, electronic or social – about the takeover.
The order was to be enforced until Sept 10, past the offer’s Aug 28 closing date.
SCPNG had informed Kulim that it was late in providing the relevant disclosures, arguing also that the transaction was not in the country’s “national interest.”
“NBPOL is the pride of Papua New Guinea and the West New Britain Province, and a renowned flagship that floats their name on the international financial and commodity markets. By far, it is the gold mine on the island that provides income for (a) vast number of families in the county. It is an integral and significant asset of this country.
“The Commission sees that Papua New Guinea and its shareholders will be marginalised by a foreign company on their own land,” the regulator said.
Kulim was last seen down three sen to RM3.47, with 162,000 shares changing hands.