MCT Consortium emerges as GW Plastics' white knight

by **Cals** Mon 13 Jan 2014, 02:11

Published: Saturday January 11, 2014 MYT 12:00:00 AM
Updated: Saturday January 11, 2014 MYT 7:04:28 AM
MCT Consortium emerges as GW Plastics' white knight
BY NG BEI SHAN
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The third phase of MCT Consortium Bhd’s One City development in USJ.

AFTER staying afloat for more than one year without its core business, GW Plastics Holdings Bhd has found its white knight in MCT Consortium Bhd. MCT will take over its listing status for RM1.21bil.
Speaking to StarBizWeek over the phone, chairman Tan Sri Barry Goh Ming Choonsays: “We were looking for ways for a flotation and came across GW Plastics, which is a clean company with zero gearing, so that is how the deal developed.”
As at Sept 30, GW Plastics had a net cash position of RM149.21mil of cash and cash equivalent.
He says the company was going to develop phase 3 of One-City, which it intends to keep about 70% to 75% as its investment holdings.
“As the property sits on prime land, it makes more sense for us to develop the retail portion that can provide us with rental income,” he adds.
The 31.16ha integrated commercial development is one of MCT’s crown jewels with an estimated gross development value of RM3.6bil. It boasts of components like retail space, entertainment centre, office suites, a hotel, services apartments and conferencing facilities.
This intention, however, requires the company to fork out extra capital and as MCT will be able to get 30% savings in funding for the investment by raising funds through the equities market, Goh says they decided on the reverse takeover (RTO) listing.
At the same time, the acquirer does not want to dilute the share base.
Recall that through the exercise, the initial share base of 235.6 million shares of 1 sen each will be consolidated into 2.36 million shares of RM1 each on a 100 to 1 basis.
On top of that, MCT will give one share for every two MCT shares as a sweetener. If an existing shareholder holds 200 GW Plastics shares, the person will get 3 MCT shares after the consolidation and renunciation.
Upon completion of the exercise, the buyers proposed to change its name to MCT Bhd.
Background
Back in 1999, Barry Goh, his brother Datuk Danny Goh and his former classmate Datuk Seri Tong Seech Wi from Setiawan, Perak started the business as a construction firm. Through a natural progression, the company morphed into a property player and today, it has an ongoing gross development value of some RM7bil mainly in Subang Jaya and Cyberjaya.
Previously, it has successfully completed projects worth about RM800mil. Some of its notable developments include mixed commercial projects Skypark and The Place as well as mixed residential project LakeFront at Cyberjaya.
Assuming that its offer price is about RM1 apiece, it will join a handful of the mid-to-big cap companies as a billion-ringgit market capitalisation property player.
What the deal means for minorities
Existing GW Plastics shareholders did not respond well to the announcement of the corporate exercise as they sold off the shares, sending it 15% lower to 63.5 sen yesterday.
Trading volume stood at 7.75 million shares.
A banking source says that is due to the speculative buying building around the company prior to the announcement of the exercise, thus, the correction.
“The market is adjusting to price in the transaction,” he comments on the reason of the fall.
The potential dividend from its cash and cash equivalent of RM149.2mil as at end-Sept, minus the exercise expenses of RM2mil and capital reduction of RM143.7mil works out to 1.5 sen per share.
The exercise valued at RM1.21bil will be satisfied via the issuance of 1.08bil new shares and 30-month zero coupon irredeemable convertible unsecured loan stocks with a nominal value of RM135.16mil.
After the proposed exercise, the new owners will own 99.8% of GW Plastics and to satisfy the public spread requirement, they intend to undertake a restricted offer for sale of 150 million shares as well as a private placement of up to 128 million shares to investor(s) to be identified at an issue price to be determined later. On top of that, it will also issue 172 million shares to bumiputera shareholders.
The exercise is expected to be completed in the fourth quarter this year.
RHB Investment Bank Bhd is the sole principal adviser for the deal.