E&O G O: To be or not to be

Eastern & Oriental Bhd.

The Sime Darby acquisition of Penang-based property development company E&O has a new twist. Some parties are seriously pushing for a general offer (GO) by Sime Darby to the minority share-holders although this is not required by law.

And it is reported that some people with special interest in this deal is buying E&O shares and mopping them up from the open market

Wednesday October 5, 2011

ECM Libra raises stake in E&O to 6.51%

PETALING JAYA: When Eastern & Oriental Bhd (E&O) held its AGM last Friday, one of its bigger shareholders – ECM Libra Financial Group Bhd– also upped its stake to 6.51% from 6.3%.

In a filing with Bursa Malaysia, E&O stated that ECM Libra acquired an additional 2 million shares at RM1 each. A week before that, it had just adjusted its stake from 5.12% to 6.3%.

The impetus for this move is unclear and many are puzzled about it. An analyst suggested that ECM Libra “probably feels left out and this is the only way to preserve the value of its stake.”

He opined that ECM Libra could be looking to force a general offer fromSime Darby Bhd, after the group excluded ECM Libra from its shares buy-over from three other stakeholders.

Aside from that, ECM Libra could also be trying to have more sway through a bigger stake in the company.

ECM Libra first acquired 42.01 million shares, or 5.12% stake, in E&O at the end of April at RM1 per share.

Sime Darby bought a 12.2% stake from E&O managing director Datuk Tham Ka Hon, 11.9% from Singapore-listed GK Goh Holdings Ltd and 9.5% from Tan Sri Wan Azmi Wan Hamzah.

The three stakeholders sold their stakes for RM2.30 per share, or a 60% premium to market.

Tham, who was reappointed as managing director, still holds 5.1% stake and has committed to keep his position in the company for the next three years.

At the AGM last week, chairman Datuk Azizan Abdul Rahman and two other directors – Datuk Henry Chin Poy Wu and Vijeyaratnam V. Thamotharam Pillay – were reappointed.

In contrast, the shareholders rejected the two nominees put forward by ECM Libra, Mahadzir Azizan and Leong Kam Weng.


If Sime Darby had been affected by the pressures and did make a  general offer at the premium price of acquisition, then notorious Dark Lord of Media Kalimullah “Riong Kali” Hassan and ECM Libra would have pocketed about RM 155 million. This is if had Sime Darby paid them a premium similar to what was paid to Tham, Wan Azmi (via Halfmoon Bay Capital Ltd) and Goh.

Ruslan Kassim made a report to the MACC on the meeting which took place in Singapore during Lim Guan Eng’s visit on August 11-12. Unfortunately he got it wrong.  It was never about politics. It was about money. Reliable sources confirmed that the dinner meeting did take place.

Riong Kali wanted Lim to sit down with Mrs Brig. Gen. (NS) Lee Hsien Loong for this deal. He wanted to ask the Singapore authorities to pressure the substantial shareholders to sell the E&O shares to a ‘DAP friendly’ party, which is ECM Libra. Of late ECM Libra has been very active in doing financial and strategic services for the DAP-led Penang government.

It makes sense to have the meeting. Reliable sources say Riong Kali would do his utmost to convince the crown jewel property development of Penang to go to a DAP friendly party instead of the federal government controlled GLC like Sime Darby. The parcels they have in hand plus the 1,000 acres from a reclamation concession is very much Riong Kali’s avenue.

We can recall that during PM ‘Flip-Flop’ Tun Abdullah Ahmad Badawi’s tenure, Riong Kali was already going after something like this in Penang.

The failure to acquire substantial control of E&O never stopped Riong Kali from muscling his way but the two nominees of ECM Libra failed to be appointed. Thank god.

Saturday October 1, 2011

E&O shareholders vote against ECM Libra nominees


PETALING JAYA: Contrary to expectations, major Eastern & Oriental Bhdshareholder Sime Darby Bhd did not seek board representation at E&O’s AGM while a majority of shareholders voted against the appointment ofECM Libra Financial Group Bhd nominees to the property developer’s board.

“About 75% of the shareholders who attended the meeting voted against (ECM Libra’s) two resolutions,” E&O deputy managing director Eric Chan Kok Leong said after the group’s AGM.

He said the number of shareholders at yesterday’s meeting represented about 65% to 70% of E&O’s total shareholding.

Almost 80% of the shareholders voted for the re-appointment ofchairman Datuk Azizan Abd Rahmanmanaging director Datuk Tham Ka Hon, Vijeyaratnam V. Thamotharam Pillay and Datuk Henry Chin Poy Wu.

The AGM, which was convened at 10am, dragged on till evening as some shareholders sought to get Sime Darby Bhd, which recently bought a 30% stake in E&O, to make a general offer for the rest of E&O shares.

Sime recently emerged as E&O’s single largest shareholder after acquiring the 30% stake from three substantial shareholders managing director Datuk Terry Tham (12.2%), Tan Sri Wan Azmi Wan Hamzah(9.1%) and GK Goh Holdings Ltd (9.5%).

The RM761mil price for the shares was a 60% premium at the market price then.

Tham has retained a 5.1% stake in E&O, while Wan Azmi owns 2.9% and GK Goh, 3.5%. After the sale to Sime, ECM Libra emerged as the second largest shareholder in E&O with a 6.3% stake..

At the time of the stake acquisition, E&O and Sime had signed a separate collaborative agreement, the details of which, Chan said, would be discussed with Sime at a meeting likely to be held this month.

Meanwhile, Chan is bullish on E&O’s long-term aspirations, saying the group would strive to become an internationally respected lifestyle brand.

“We will go ahead with three key strategic moves which involve improving our branding, having strategic alliances and collaboration with renowned partners, and also the development of new growth engines,” he said.


Nevertheless, it is his usual sinister corporate agenda that at least four lawyers were at the AGM as nominees for ECM Libra. They were there to try and seize the moment so that it could be manipulated for Riong Kali’s interest.

The question now is, can Sime Darby resist the pressure of having to make a GO? The trio’s holdings remain at 12% and ECM Libra’s is 6.51%. Let us not forget the various nominees of Nor Mohamed Yackop and friends. All in all, that comes up to about 28-30%, which will burn another RM 770 million in Sime Darby’s coffer.

It is doubtful that they would want to make another cash outright acquisition. The johny-come-lately who would benefit most in this undoubtedly is Riong Kali. ECM Libra would have walked away with a cool RM155 million on an investment which was only 40% of that four months ago.

In the final analysis, Sime Darby share-holders can manage without having control of E&O and probably they have faith in the current BOD and management to give them value for their investments estimated to be realised at RM 3.2 billion. In short, E&O shall remain an associate company of Sime Darby Bhd.

Opportunists should not be allowed to walk away with a ‘corporate molestation’, at the expense of 10.5 million bona fide Bumiputra investors.

*Updated 830pm

Published in: on October 6, 2011 at 16:36  Comments (9)  

Mincing Malaysia Airlines

The Malaysia Airlines-Air Asia share swap which was concluded almost two months ago is now moving into new chartered waters. The parties which benefited the most from the most unfair ‘share-swap’ deal in Malaysian corporate history is plotting to carve the carcass of the game they killed.

Even though many could not see the ‘beef for Malaysia Airlines’ for the share-swap and giving so much power to Air Asia CEO Tan Sri Tony Fernandes in Malaysia Airlines, Deputy Finance Minister Dato’ Dr Awang Adek Hussin told Dewan Rakyat this morning the Government had no choice but to go ahead with the merger.

Ministry: MAS, AirAsia share swap only option

By Minderjeet Kaur

THE Finance Ministry said the government had no choice but to go ahead with the share swap between AirAsia and Malaysia Airlines (MAS) to allow the national carrier to move forward.

Deputy Finance Minister Datuk Dr Awang Adek Hussein said it was part of efforts to improve the financial standing of MAS which was moderately successful, but needed a boost to face new challenges.

Furthermore, he said, MAS lost RM770 million in the first half of this year.

“We had no choice. If it makes more losses, the government will have to inject funds and we will face more anger,” he said in reply to a question from Datuk Ismail Kasim (BN-Arau).

Awang Adek said the share swap was based on the guiding principle that both parties would benefit. He said AirAsia had proven to be a success in other developing countries such as Thailand and Indonesia.

“MAS can learn from their experience to move forward.”

He said the deal would also see both airlines expanding their businesses.

Awang Adek said state investment arm, Khazanah Nasional, was undertaking due diligence before deciding whether to take a stake in AirAsia X.

The deal on Aug 9 involved Khazanah Nasional swapping a 20.5 per cent stake in MAS for 10 per cent in the budget carrier.


On the contrary. Malaysia Airlines did learn from their school of hard-knocks. They decided to go for the ‘hybrid-model’ instead of ‘legacy airline’ when they set up FireFly and managed to convince Ministry of Transport to allow them to go for flexible fare model, despite Fernandes-benefited-Level-Four ‘Airline Rationalisation’ plan which was shoved down Malaysia Airlines’ throat in 2005. That was when Malaysia Airlines surrendered many prized-routes for AirAsia, which include the Sabah-Sarawak Rural Air Service which helped to build their business to what it is today.

When FireFly introduced jet service this year, they started to be a serious threat to AirAsia. The new low cost carrier is proven to be likeable and started to become very popular, especially from those who used to travel to Sabah and Sarawak on AirAsia. So part of the purpose of Fernandes making the kill in the ‘share-swap’ is to kill FireFly.

As soon as he got in, the Sapphire Airlines was announced. Fernandes was zest to launch Sapphire Airlines on 11 November 2011. Despite its business model not yet made clear, it received a very strong opposition from the employees. It was rumoured that 80% of Malaysia Airlines employees would be transfered to the new airlines. The Malaysia Airlines Employees Union (MASEU) threatened to go on industrial strike.

However, after a face-off with Malaysia Airlines Chairman Tan Sri Mohd. Nor Yusoff, they decided to put on hold their intention to strike.

Star Biz reported that Sapphire Airlines might not happen after all. Within this week, sources within shared the info that Malaysia Airlines would continue to be a premium intercontinental carrier using all their wide body aircrafts (A380-800s, B747-400s, B777-200s, A330-2oo/300s) where else all narrow body aircrafts (B737-400/800s) would be operated by FireFly as a regional premium airlines.

The announcement which took many to the feeling of ‘The rug being yanked from under our feet’ is when Fernandes was quick to announce his personal involvement in acquiring mediocre English Premier League Queens Park Rangers and swift as lightning, Malaysia Airlines sponsorship of RM 18 million to QPR’s home games.

12 September 2011 Last updated at 14:44 GMT

QPR sign sponsorship deal with two Asian airlines

QPR's new sponsored shirts
The new sponsored shirt will be worn for the first time against Newcastle

Premier League team Queens Park Rangers (QPR) has announced a new shirt sponsorship deal with carriers Malaysia Airlines and Air Asia.

Malaysia Airlines will appear on the home kit, while Air Asia features on the west London side’s two away kits.

Both airlines are connected with club owner, Malaysian businessman Tony Fernandes, who took over in August.

QPR had been without a shirt sponsor after a three-year-deal with Gulf Air ended in the summer.


The club returned to the top flight of English football this year for the first time since the 1995-96 season, and they currently sit 15th in the Premier League table.

The new sponsored home shirt will be worn for the first time against Newcastle United on Monday evening.

The club did not reveal the financial figures behind the new deal, except to say it was “a multi-million pound shirt sponsorship”.

“We are extremely positive about building a thriving relationship with both businesses in a bid to broaden our exposure,” said QPR chief executive Philip Beard.

Malaysia Airlines’ executive director, Mohammed Rashdan Yusof, said: “Malaysia Airlines is elated to be associated with QPR’s ascendancy to the Premier League.


So many questioned why Malaysia Airlines bought into the sponsorship of QPR. The wittiest remark from this really bad deal is “If they really felt QPR sponsorship is commercially good decision, why for jersey of the home stadium games? Why not away games? Wouldn’t more British footies would see Malaysia Airlines in Old Trafford, Stamford Bridge, Anfield, Emirates Way, White Hart Lane and St James Park?”.

Another chap was quick to remark, “I thought Malaysia Airlines is having a serious problem with profitability to a point where they brought Fernandes in and gave away 20% shares for a song, so why are they spending this money?”.

The most important question about this sponsorship deal of QPR is now that Fernandes and his partner Dato’ Kamaruddin Meranun are on Malaysia Airlines BOD, were they present when the decision to give away the RM 18 million? Isn’t that a conflict of interest?

If it is, then Khazanah had sold away Malaysia Airlines to very unscrupulous businessmen. Needless to remind that these were the same men who used most of Malaysia Airports Holdings Bhd’s 39 airports but refused to pay even though they collected the airport tax from the passengers, up front.

So believed the QPR sponsorship was a red herring. The week they announced the deal is when Malaysia Airlines agreed at Tolouse to form a special purpose vehicle (SPV) for maintenance, repair and overhaul (MRO) operations where Airbus would be a joint venture partner. This is very much neccessary for AirAsia as the low cost carrier been farming out their MROs and now their earliest batch of the A32o should need heavy MRO work. Sending it abroad would eat into their profitability.

Coming back to MASEU. The employees grievances have been taken notice by International Transport Workers’ Federationwhere MASEU is an affiliate. This global level attention is coupled by the fact AirAsia is a company without workers’ union. This would prove to be a thorn for both airlines’ expansion program into certain sectors. And now Fernandes is a director to both companies’, especially with executive powers at both.

Not only we fail to see the ‘Beef for Malaysia Airlines’ and even if there actually was some, in has not been minced away.

Published in: on October 6, 2011 at 02:00  Comments (10)