GBH is RTO target in deal worth over RM600m

by **Cals** Wed 02 Jul 2014, 23:03

Business & Markets 2014

Written by Wei Lynn Tang & Siow Chen Ming of theedgemalaysia.com

Wednesday, 02 July 2014 09:57

KUALA LUMPUR: Ceramic ware manufacturer Goh Ban Huat Bhd (GBH), which saw trading in its shares suspended yesterday, will see a reverse takeover (RTO) by parties involved in the oil and gas (O&G) services industry in a deal worth over RM600 million, said sources.

According to the sources, businesses to be injected into GBH may include the provision of technical services for floating production and storage operator vessels, as well as those primarily related to the procurement and construction of heating, ventilation and air-conditioning systems in the O&G sector.

Upon the RTO, GBH will see a change in major shareholders. Its current owner Tan Sri Robert Tan Hua Choon, touted as the “small cap King”, is likely to bow out the company. Tan was GBH’s single largest shareholder as at May 8, with a 74.35% stake.

Meanwhile, Keladi Maju Bhd — of which Tan has a 16.8% stake — has also requested a suspension of trading in the stock today.

According to sources, Keladi’s suspension of trading may be linked to GBH’s exercise in which the latter may divest its development land of approximately 14 acres (5ha) in Segambut, Kuala Lumpur, to a “related party”, pursuant to its transformation into an O&G outfit. Keladi is involved in property development as well as oil palm plantation.

Based on its 2013 annual report, GBH’s properties including storage yards, factory, land and building in Kuala Lumpur have a net book value of RM116.5 million. These properties are presently utilised by the group’s ceramics ware business.

News reports had previously highlighted that Tan might seek to merge FCW Holdings Bhd — of which he owns 25.5% — and GBH together. However, this was dismissed by FCW’s management in March. FCW is involved in a 50:50 joint venture with IJM Land Bhd to develop a 16-acre land parcel in Segambut, said to be located beside GBH’s.

In its first-quarter results ended March 31, 2014 (1QFY14), however, GBH acknowledged that the operating environment within the ceramic building materials industry remains difficult and challenging, with intense competition from alternative products and imports sourced from lower- cost manufacturing countries.

Coupled with an increase in electricity tariff and impending higher cost of natural gas, GBH expects its profit margin to come under pressure.

As such, the group said it had taken measures to discontinue the manufacturing of low-margin sanitary ware and tableware products, and instead migrate to a trading business model. The group will also strengthen its core business in the clay pipes division.

Yesterday, Bursa Malaysia approved GBH’s request for a suspension of trading in its shares on the Main Market with effect from 2.30pm yesterday to 5pm today, “pending the release of a material announcement”.

Trading in the stock was suspended following a surge from its opening price of RM1.88 to a high of RM2.02, and thereafter to RM2 just before the suspension.

GBH saw 19 million of its shares valued at RM28.5 million transacted off-market yesterday afternoon. The transacted price of RM1.50 per share was 50 sen below the RM2 traded at the same time as the off-market transaction at 12.10pm and 12.25pm respectively.

The off-market transaction accounted for 10.2% of GBH’s issued share base of 185.8 million shares.

GBH was up 24 sen or 13.64% to RM2 before the suspension of its trading, giving it a market capitalisation of RM371.5 million. The stock was trading at a 52-week high of RM2.08.

This article first appeared in The Edge Financial Daily, on July 2, 2014.