QL sells off Lay Hong stake

by **Cals** Sun 13 Sep 2015, 19:28

QL sells off Lay Hong stake
Saturday, 12 September 2015
By: TEE LIN SAY

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Top egg producer: QL is the largest egg producer in the country with about 3.5 million eggs produced each day.

AN off-market transaction of 19.87 million shares or a 38.8% stake in poultry player Lay Hong Bhd, believed to be the block belonging to QL Resources Bhd was crossed yesterday at a price of RM3.05, according to sources.
This crossing is a strong indication that QL Resources, the country’s largest egg producer has finally thrown in the towel after almost a year of attempting to wrest control of Lay Hong. The crossing price is at a discount of 85 sen or 22% to Lay Hong’s closing price of RM3.90 yesterday. At RM3.90, this is also Lay Hong’s 52-week high.
Sources say three parties took up the shares. One of them is believed to be Kenanga Investment Bank Bhd, which took up some 15% or 8 million shares of Lay Hong.
Lay Hong has been under the spotlight over the last few months after its single largest shareholder QL Resources, which owns a 38.8% stake, launched a conditional takeover offer at RM3.50 on Sept 23, 2014.
The founding Yap family has an effective stake of 42.7% in Lay Hong. Of that, 37.18% is held via the Yap family’s private vehicle, Innofarm Sdn Bhd.
Prior to the takeover bid, Lay Hong was trading at the RM2.30 level, Following the bid, the stock has been on an upward trajectory to the RM3.80 level.
QL Resources has since failed to wrest control. Following that, Lay Hong has proposed a 15% share placement which will reduce QL’s current 38% stake in the company.
The private placement will see Lay Hong’s public shareholding spread increase to 26%. The company is expected to raise gross proceeds of up to RM23.1mil based on the issue price of RM3.03 per placement share.
Of the amount raised, Lay Hong intends to use RM22.75mil as working capital, with the remaining going towards expenses in relation to the proposals.
Lay Hong is now in the midst of identifying suitable parties for its private placement.
Presently, Lay Hong has yet to comply with the 25% public shareholding spread requirement by Bursa Malaysia as its spread currently stands at 16%. The company has until Sept 30 to comply with this requirement.
On Sept 6, Yap Hoong Chai, the managing director of Lay Hong was redesignated to executive chairman. He is the brother of Yeap Weng Hong and Yeap Fock Hoong, who are also directors of the company.
QL emerged in Lay Hong after it acquired a 23.29% stake in the latter for RM11.5mil in 2010 from London Biscuits Bhd. After buying that initial block, QL has been slowly accumulating shares in Lay Hong until it reached 38.8%.
QL may be the largest egg producer in the country with a production of 3.5 million eggs per day, but Lay Hong has been in the egg farming business since the 1960s and is currently producing 1.8 million chicken eggs per day and 1.5 million chickens per month.
For its first quarter ended June 30, 2015, Lay Hong’s net profit was up 66% to RM2.58mil on the back of a 1.04% drop in revenue to RM154.55mil.