Wilmar International Ltd said it plans to develop sugar plantation and sugar mill in Papua with an estimated investment cost of around US$2 billion, a company official said at the weekend.
M.P. Tumanggor, commissioner of PT Wilmar Nabati, a subdiaary of Wilmar International, was quoted by kontan.co.idon Saturday, said the company will conduct a feasibility study for investing in sugar plantation in Papua within the next six months.
"We don’t know for certain yet when the plan could be realized as the infrastructure in Papua is not sufficient," he said, noting the high transportation and distribution costs would make sugar price to be expensive and less competitive.
Tumanggor said Wilmar's management had been in talks with M.S. Hidayat, Industry Minister, as the company is proposing to get incentives for building roads and ports.
The cost to develop infrastructure alone in Papua could reach Rp2 trillion, he said.
Wilmar International operates in four business segments: merchandising and processing, consumer products, plantation and palm oil mills, and others.
The other segment includes the business of manufacturing and distribution of fertiliser products and ship-catering services.
The company sells 40 percent of its crude palm oil to its customers in Europe, China and India.
Yes, play on a level playing field such as that of the world Cup in South Africa where even giants like Brazil and Argentina can fall by the wayside.
Robert Kuok sold off his Malaysian sugar interest entirely. He did not want the nefarious 'Arab and Camel' strategy model to be used to boot him out unceremoniously out of his sugar monopoly. He knows about non-transparent rules, political pressure from the top and changing of goal-posts.
When the Malaysian authorities created a sugar duopoly, cutting off his sugar monopoly, Robert knew his days were numbered. So, he sold out the Malaysian sugar business, lock, stock and barrel. Great move, Bob Kuok!
Now he has brought into the Australian sugar business. Superb move.
Let us read the report from Reuters.
" SINGAPORE, July 5,2010 — Singapore’s Wilmar International Ltd on Monday struck a surprise deal to buy Australian conglomerate CSR Ltd’s sugar business for A$1.75 billion (RM4.75 billion), trumping China’s Bright Food Group.
Shares in CSR, the world’s fifth-largest sugar-refiner, climbed more than 4 per cent after CSR announced it had agreed to sell the sugar arm to Wilmar, the world’s largest listed palm oil producer.
Bright Food, which has been chasing CSR since January, was not expected to come back with a higher offer, according to two sources close to the transaction. CSR had also held talks with several other interested bidders, they said.
“The deal is done, there is no real opportunity for them (Bright Food) to come back to raise their offer,” one of the sources said.
Wilmar’s purchase price was A$1.347 billion for equity and A$403 million for debt, 6 per cent higher than a conditional A$1.65 billion offer Bright Food made to CSR’s board late last week.
The deal was a coup for conglomerate CSR which has spent more than a year working on plans to either spin-off the sugar business into a separately listed company, or sell the asset.
Until the Wilmar bid, the market was unaware of any other bidders looking at the asset.
WILMAR’S SUGAR PUSH
Wilmar said the deal was part of plans to expand its sugar business.
“This is positive news as it’ll help jump start their strategy to expand in the sugar business and (represents) the next growth driver for Wilmar,” said DBS Vickers analyst Ben Santoso.
He added that acquiring CSR’s sugar business would also give Wilmar expertise in cane-related research and development.
Santoso expected the new business to see synergies from capitalising on Wilmar’s extensive distribution to China and Asia.
In Singapore, Wilmar’s shares rose as much as 2.3 per cent.
CIMB analyst Ivy Ng said the deal was positive in the medium term because it gave Wilmar knowledge to expand to other parts of Asia.
“But in the short term, based on what they have so far it does not appear the acquisition will significantly increase their earnings,” said Ng.
“In the longer term, it would be good if they can replicate the business in other parts of Asia like China, India and Indonesia, but you won’t see that tomorrow.”
CSR said the deal was expected to be completed by the last quarter of 2010, and is conditional on approval by Australia’s Foreign Investment Review Board (FIRB).
In May, FIRB delayed its decision on the Bright Food bid for up to 90 days, which raised concerns the bid may be blocked.
CSR said net proceeds from the deal would be about A$1.6 billion, and it would consider a range of options for the funds.
Great news for Wilmar and PPB shareholders after the Indonesian supposed fiasco.
You will be given your chance to fight big business come the next GenM EGM to reject or endorse the UK casino buy-out from GenS soon. Do not squander this one-in-a -billion chance!
Tell Kok Thay and his comatose BOD that enough is enough! Reject the deal! Save your coffer!
Let us read this report from the Malaysian Business Times.
"Minority shareholders may stymie Genting Malaysia Bhd's plan to buy Genting Singapore plc's casino business in the UK for £340 million (RM1.66 billion), analysts said yesterday.
This is the second largest related party transaction (RPT) involving the Genting group in a decade, following subscription of US$442 million (RM1.42 billion) Star Cruises shares, the 10 per cent purchase of Walker Digital Gaming for US$69 million (RM222 million) and the acquisition of Wisma Genting and Segambut property for RM284.1 million.
Genting Singapore is the biggest gaming operator in the UK with 44 venues under the Circus, Maxims and Mint brands.
"The purchase is a bit pricey, and delinquent shareholders are bound to raise the matter at the forthcoming EGM (extraordinary general meeting)," Affin Securities gaming analyst Chong Len Len told Business Times.
Genting, the country's sole casino operator, told the stock exchange on Thursday it will soon hold a special meeting to seek shareholders' support for the plan.
Since it is an RPT for Genting, Kien Huat Realty Sdn Bhd and Parkview Management Sdn Bhd, which collectively own 48.67 per cent of Genting, will not be able to vote at the meeting.
Likewise, Genting's chairman Tan Sri Lim Kok Thay, who is also the executive chairman and shareholder of Genting Singapore, will not be able to vote.
A slew of foreign funds such as Vanguard Emerging Markets Stock Index Fund, the Government of Singapore Investment Corp and Comgest Growth Emerging Markets own small chunks of Genting.
News of the planned purchase brought downgrades from research firms such as HwangDBS Vickers, OSK Research and Deutsche Bank. This took its toll on Genting shares yesterday.
The stock fell 12 sen to RM2.62 sen a share on heavy volume, just 11 sen higher than its lowest closing price in 52 trading weeks.
Elsewhere, Samuel Yin Shao Yang, a senior associate at ECM Libra, described the deal as value-destroying without accreting earnings.
"The fact that more than a quarter of Genting's net cash will be spent on an RPT, which is barely earnings accretive, does not sit easy with us," Yin wrote in the report. He recommended that investors sell the stock.
He reasoned that the Genting Group's rationale that only Genting Malaysia within the group has the financial muscle does not hold water.
"We beg to differ because as at December 31 2009, Genting Singapore's cash balance stood at S$2.8 billion (RM6.4 billion) and its net gearing was comfortable at 24 per cent," wrote Yin in the report.
He estimates that if Genting did not buy the casino assets from its sister company, the Malaysian outlet will have a cash war chest of RM6 billion by the year-end."
So say your piece at the EGM or forever hold your peace and suck on your thumbs!
Shares of Genting Malaysia Bhd fell as much as 10 per cent today [2 July 2010] over concerns that its proposed acquisition of casino operations in the UK from its Singapore affiliate was too risky.
Genting shares dropped 28 sen, the most in nine years, to hit a low of RM2.46 before recovering to RM2.62 as at 12.15pm.
OSK Research has also cut its fair value for Genting shares from RM3.15 to RM2.55 and downgraded the stock from “Buy” to “Sell”.
Malaysia's sole casino operator had proposed to acquire the casino operations in UK (Genting UK) from its affiliate company Genting Singapore Plc for about RM1.7 billion. It had also separately proposed to develop a video lottery facility at the Aqueduct “racino” which combines racing with casinos.
OSK Research said in a report today that it felt the acquisition and development cost was not compensated by meaningful earnings growth prospects. It also said that there was inherent risk of future “value destructive related party transactions” and as a consequence is attaching no value to the group’s net cash balance.
“We view these developments negatively as the relatively high acquisition and development cost is not compensated by meaningful earnings accretion to the group despite Genting UK casinos’ long established operating track record,” said OSK Research.
It said that it was “cautious” on the medium-term viability of the US racino project pending more details on the development expenditure of the Genting bid.
It also noted that the winning bidder has to pay an upfront US$300 million (RM971 million) in non-refundable payment, which could be deemed a licensing fee.
“As such, we think that the cost of development could easily exceed RM1 billion,” said OSK.
Genting said in a statement yesterday that the proposed acquisition of Genting UK complemented its long-term international expansion plans.
The acquisition however will have to be approved by Bank Negara and the British Gambling Commission.
Sophie had little choice.She had to sacrifice one child to the Nazi gas chamber.
But not Genting Berhad!!
First it nonchalantly sacrificed the GenM minority shareholders' billion RM hoard to a transfer payment of buying some buildings from itself. This is somewhat tolerable and grudgingly accepted by minority shareholders as assets are gained on the balance sheet.
Now this, the hiving of GenS's loss making ventures in UK to the poor minority shareholders of GenM again!! Kok Thay-what happened?.
Isn't this culling of the diminishing cash horde that could be used to reward the loyalty of the GenM shareholders?
Aren't the minority shareholders being culled too?
We do not know the real reason behind this left hand to right hand move. To the laymen, it is a dead loss as we have to carry these dead ducks in UK.
Unless GenBhd can provide a positive basis for thsi move, I think minority shareholders should question Kok Thay for his bird-brain scheme against GenM minority shareholders.
The stock took another meeting to fall more than 30 sen at one point. It lost 12 sen at the noon close today.(2 July 2010)
Mulpha International (Mulpha), an old horse of the Bursa, expects the listing of its subsidiary, Manta Holdings Co Ltd (MHCL), on the main board of Stock Exchange of Hong Kong Ltd in July to raise HK$50mil (RM21.2mil)
.
CEO Chung Tze Hien said the funds raised would help MHCL expand its crane business.
“The listing status allows the MHCL group to have greater financial flexibility when pursuing its growth plans,” he told reporters after Mulpha International’s AGM and EGM yesterday.
There are four companies under the MHCL group - Manta Engineering and Equipment Co Ltd, Manta Equipment Rental Co Ltd, Manta Equipment Services Ltd and Manta Equipment (S) Pte Ltd.
Period
High
Low
Prices 1 Month
0.430 (17 June)
0.390 (17 June)
Prices 3 Months
0.525 (30-Apr-10)
0.390 (17-Jun-10)
Prices 12 Months
0.585 (14-Aug-09)
0.390 (17-Jun-10)
Volume 12 Months
282,099 (28-Jan-10)
2,375 (24-Dec-09)
The companies all serve the crane business, from sale and leasing to servicing of crane-related construction equipment.
Chung said proceeds from the listing exercise would be used to purchase tower cranes and construction equipment for rental purposes, general working capital, expansion and improvement of storage facilities, service and maintenance workshops.
He said there was continued strong demand for cranes, especially from the Hong Kong, China and Singapore construction sectors.
Currently, Mulpha International owns 88% of MHCL, while the balance is held by Pan Ocean International.
“Upon MHCL being listed, the 12% held by Pan Ocean would be acquired by Mulpha International,” Chung said.
On the impact of MHCL’s expansion plans on Mulpha International, he said MHCL’s current earnings contribution to the group was not substantial. “But, with MHCL’s planned business expansion going forward, the contributions to the group could be more significant.”
As part of the proposed listing, Mulpha International will undertake an internal restructuring and re-organisation exercise following which it would issue 50 million new MHCL shares, representing 25% of the enlarged issued and paid-up share capital of the company.
The new shares would comprise five million issue shares that would be made to the Hong Kong public and 45 million shares to professional, institutional and other investors.
None of the directors of Mulpha International and MHCL group would be offered shares in MHCL pursuant to the proposed listing.
Chung said the group was confident its financial performance would be better this year.
On the reason for Mulpha Land Bhd’s par value reduction exercise, Chung said it would place the company in a better position to raise capital.
“The exercise allows us to raise capital when conditions are more favourable. There is a misperception that a par value reduction exercise is negative. In fact, there is now a trend for companies in the developed world to have a low par value or not at all,” he said.
Mulpha Land lowered its par value from RM1 to 10 sen.
“A lower par value will make it easier for Mulpha Land to go to the market to raise funds. It is also not possible to raise new shares at below par value,” he noted, adding that the exercise would not result in any adjustment to the share price of Mulpha Land or the number of shares held by shareholders.
He said the exercise would give rise to a credit of RM82.19mil which would be offset against Mulpha Land’s accumulated losses, and the balance credited to its capital reserves.
Mulpha International has a 55.56% stake in Mulpha Land.
In journeying through life, many things will happen to us. We are amused by many things. We sober up on others. Oftentimes,we reflect on the more important ones and we meditate deeply on some of them.
Journaler 0203 will chronicle the milestones of the author's life in 2009, the crossroads where decisions had to be made, times when he reflected on things past and his vision for the immediate future. So come; journey with him and have fun reading his entries!
