MEASAT:Another One Goes Private

Ananda Krishnan is going for his third major corporate exercise in less than a year, this time involving the privatisation of Measat Global Bhd – at a cash offer price of RM4.20 or about RM668mil.

In a statement to Bursa Malaysia yesterday, Measat said Measat Global Network Systems Sdn Bhd, the entity controlled by Ananda, intended to undertake a conditional takeover to acquire all the shares in Measat not already held by Measat Global Network Systems for RM4.20 cash per share.

“The board has deliberated on the notice of the takeover offer and does not intend to seek an alternative person to make a takeover offer of the shares,” Measat said.

It received the notice of the takeover offer from CIMB Investment Bank and Maybank Investment Bank Bhd yesterday.

Trading in Measat, which last traded at RM3.80, and another of Ananda’s companies, Tanjong plc, was suspended yesterday ahead of the announcement.

Based on Bloomberg data, as at April 26, 2010, Ananda owned 59.56% of Measat Global through Measat Global Network Systems.

Based on the offer price of RM4.20, the proposed deal works out to about RM668mil for the remaining 40.44% equity Measat Global Network Systems does not own in Malaysia‘s sole licensed regional satellite system.

Sources said the decision was made after considering the huge capital that needs to be ploughed into Measat going forward, estimated at some US$1bil over the course of the next two to three years.

Said a source close to the proposed deal: “Things are changing so fast. Once the company puts up the infrastructure and builds the satellite, it takes about eight to nine years to repay the debt.

“About three to four years after, those satellites need to be replaced. It’s a high capital-intensive business and these days, we need more powerful satellites.

“The company still needs to bring in new capital and find ways to activate and synergise the orbital slots. It’s a wonderful opportunity for Measat to emerge as a global satellite entity which is substantially Malaysian-owned,” said the source.

With emphasis on that, it is believed that the company may be considering a possible equity tie-up with a foreign strategic partner.

“There are so many opportunities to create huge capacity. It’s not just about consolidation for capital requirement but expansion of business opportunities,” said the source.

Measat said the offer was conditional upon it being accepted by shareholders of not less than nine-tenths or 90% in the nominal value of the shares not already owned by Measat as well the consent or approval of relevant parties, if required.

The offer is valid for 60 days from the date of posting of the offer document, failing which the offer shall lapse and all acceptances shall be returned to parties who have accepted the offer.

The posting of the offer document would be within 21 days from the date of yesterday’s notice, Measat said.
Measat Global Network Systems does not intend to maintain the listing status of Measat in the event it is unable to comply with the required 20% shareholding spread of Measat’s issued and paid-up capital as a result of acceptances received pursuant to the offer.

When Astro All Asia Networks plc’s privatisation plans were revealed in March, Measat’s share price surged on expectations that it would be taken private.

I guess Ananda has found a willing buyer or strategic partner that will provide the funding for development while he reaps off his profit.

As usual,the minority share-holders are not given the benefit of the Section 108 tax credits.

What a shame.