Mulpha Land shareholders told to reject offer

PETALING JAYA: The mandatory takeover offer for Mulpha Land Bhd (MLB) from entrepreneur Datuk Fakhri Yassin Mahiaddin, via his private investment vehicle Teladan Kuasa Sdn Bhd, at 49.7 sen per share has been deemed "not fair" and "not reasonable" by independent advisers MainStreet Advisers Sdn Bhd.
"Based on the realised net asset value (RNAV) computation, we wish to highlight that the offer price represents a discount of 20.3 sen or 29% to the RNAV per MLB share of 70 sen."
"Therefore, we are of the opinion that the offer price is not fair as the offer price is lower than the RNAV of MLB share," MainStreet said in its independent advice circular. Non-interested directors have also advised shareholders to reject the offer based on MainStreet's opinion.
MainStreet also pointed out that the offer was also not reasonable due to uncertainty surrounding MLB's listing status should the offerors manage to secure more than a 75% stake in the group and fall short of the public spread requirement.
MLB's take-over offer was triggered after Teladan Kuasa exercised a call option to acquire 75 million option shares, representing up to 32.85% equity interest in MLB, at 47 sen apiece or RM35.25 million.
Upon completion of the call option, Fakhri Yassin, together with the persons acting in concert including Mulpha Land's group managing director Ghazie Yeoh Abdullah, its director Datuk Low Keng Siong, substantial shareholder Lim Chee Khang and Pasukan Sehati Sdn Bhd, own 115.03 million shares or a 50.38% stake in Mulpha Land.
Mainstreet noted that MLB has confirmed projects worth RM1.2 billion in gross development value (GDV) for the period between 2015 and 2018.
The projects in-hand are mixed-developments located in the Klang Valley and in the northern states of Kedah and Penang.
In terms of earnings, MLB recorded unaudited revenue of RM45.08 million and unaudited profit after tax of RM9.62 million for FYE Dec 31, 2014.
It had also restructured the group's property business by focusing its operations in the central and northern regions, whilst exiting from the southern states.
"Moving forward, MLB's business is focused on four key areas which are property development, property investment, facility management and hospitality and lifestyle.
It acquired two parcels of land worth RM116.12 million and RM42.79 million that will contribute in excess of RM1 billion in GDV for the next three years.
"Despite the property market outlook and sentiments seeing a softening amid financial institutions credit tightening measures and volatile economic environment, MLB remains optimistic as its development projects are situated at strategic prime locations such as Tropicana and Section 13, Petaling Jaya to be launched in the second half of 2015 and second half of 2016 respectively. These proposed projects are expected to contribute positively to its performance," MainStreet said.