Kulim fails to acquire additional 20% stake in PNG company

Kulim fails to acquire additional 20% stake in PNG company
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com  
Friday, 06 September 2013 10:00

KUALA LUMPUR: Kulim Bhd’s plan to acquire an additional 20% stake in New Britain Palm Oil Ltd (NBPOL), which would have raised its stake to 68.97% if successful, is now off.

This follows the decision of the National Court of Papua New Guinea (PNG) to dismiss Kulim’s application against the Securities Commission of Papua New Guinea (SCPNG) which had ordered the Malaysian company to stop acquiring any additional shares in NBPOL.

Kulim had recently commenced legal proceedings against SCPNG, after the latter stopped the long-time major shareholder of NBPOL from increasing its equity interest in the PNG-based company on Aug 20.

In a filing with Bursa Malaysia yesterday, Kulim said its application was dismissed by the National Court of PNG on Wednesday.

“As such, Kulim was unable to declare the partial offer unconditional and which has since lapsed.”

Kulim said 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.

As at Aug 28, Kulim had received acceptance for 4.9 million shares or approximately 3.26% of NBPOL, which is listed on the London and Port Moresby stock exchanges.

Kulim had in June this year launched a partial general offer for the 20% stake in NBPOL, or about 30 million shares, for £165 million (RM833 million) or £5.50 per share.

NBPOL is a big palm oil producer in PNG with over 78,000ha of oil palm PLANTATION []s. A further 10,000ha are currently being prepared for oil palm plantations, its website shows.

It also owns over 7,700ha of sugar cane and 9,200ha of grazing pasture; 12 oil mills; two refineries (one in PNG, and one in Liverpool, UK) as well as a seed production and plant breeding facility.

SCPNG, in opposing Kulim’s move, had stated a number of reasons for its stand. These included NBPOL’s inconsistent shareholding records and Kulim’s failure to advise the commission of its takeover intentions as well as to serve the takeover notice on the commission.

The PNG regulator also pointed out that the partial takeover is not in the national interest of PNG as it would have “significant consequences to the country”.

Kulim’s partial offer was also strongly opposed by NBPOL’s independent directors and its CEO Nick Thompson.

The independent directors had said Kulim’s offer was neither fair nor reasonable, and apart from seeking a better valuation, the partial offer would also deprive shareholders who wish to exit their investments.

The independent directors had also said if shareholders accepted Kulim’s offer, they would be deprived of the company’s exposure to growth opportunities including benefits from any future palm oil price increases.

They were also concerned the proposed partial offer will reduce the liquidity of NBPOL on the London Stock Exchange (LSE), which would subsequently result in the delisting of the company in the event it fails to meet the 25% free float requirement.

Kulim had, however, argued that its offer was fair and reasonable, and that it will not vary or extend its offer to buy up to 30 million ordinary shares in the NBPOL.

It added that the offer price of £5.50 per NBPOL share represents  a premium of 25.3% and 36.1% to the volume weighted average price of depositary interest on the LSE for the 30- and 60-day trading periods ended June 19 this year.



This article first appeared in The Edge Financial Daily, on September 06, 2013.