TSH Resources to take Ekowood private at 40 sen per share

PETALING JAYA: Plantation firm TSH Resources Bhd proposes to privatise its 67.46%-owned subsidiary Ekowood International Bhd for RM21.87 million or 40 sen per share.

The offer price of 40 sen per share represents a premium of 21 sen or 110.53% over its five-day volume weighted average price up to Nov 28 of 19 sen.

Following the privatisation offer, Ekowood shares rose 13 sen or 68.42% to close at 32 sen yesterday, with some 4.88 million shares changing hands. Shares of TSH, meanwhile, closed one sen or 0.52% higher at RM1.92 on some 224,400 shares done.

The board of Ekowood is to revert to TSH no later than 5pm on Dec 19, 2016, with its decision whether to put forward the proposed privatisation, by way of a members’ scheme of arrangement under Section 176 of the Companies Act, 1965, to Ekowood shareholders for consideration.

Ekowood said the board will deliberate on the proposed privatisation and decide on the next course of action.

Ekowood, a solid hardwood flooring manufacturer, has registered losses for the past seven financial years with annual losses after tax ranging from about RM3.3 million to RM9.5 million. For FY2015, it recorded a loss of RM3.3 million.

In view of these losses, TSH proposes to undertake a review of Ekowood’s business to improve its financial performance, which may result in, among others, Ekowood’s operation being restructured and/or new capital being injected.

TSH noted that the proposed privatisation will facilitate such rationalisation plan of Ekowood. It also presents an opportunity for Ekowood shareholders to unlock their investment at a substantial premium whilst continue to participate in the future growth of Ekowood through TSH.

TSH believes the proposed privatisation is not expected to give rise of new risks to the group and that its prospects will not change materially.