Ireka privatisation bid foiled

PETALING JAYA (Feb 20, 2014): Builder Ireka Corp Bhd's majority shareholder, founder and managing director Datuk Lai Siew Wah, failed in his attempt to take the company private after the resolution was voted against in a landslide victory for minority shareholders yesterday.
More than 73% of minority shareholders voted against the majority shareholders' offer.
Siew Wah, together with parties acting in concert who collectively hold a 64.7% stake in Ireka, had in June 2013 offered to take the company private via a proposed selective capital reduction (SCR) and repayment exercise.
The parties reasoned that its thinly traded shares and market price which has been languishing below par value of RM1 made it impossible to raise funds in capital markets, negating the need to remain listed.
At the press conference after Ireka's EGM here yesterday, group executive director Monica Lai Voon Huey said for the time being, the major shareholders will not make a second attempt to take the company private.
"Firstly, we are not allowed to propose another SCR in the next 12 months. Secondly, judging from today's EGM result, it will be very difficult to launch a general offer as well," said Voon Huey, who is also the daughter of Siew Wah.
"It doesn't matter what form of privatisation (we choose), we will still be getting a lot of resistance from the (minority) shareholders. There isn't any plan on the table at the moment, as both majority and minority shareholders wish for the company to remain listed," she continued.
Worth noting is that in just less than a month ago, independent adviser Affin Investment Bank had opined that the proposal put forward by Ireka's majority shareholders is "not fair but reasonable", as the offer price of 90 sen was lower than its fair value of RM1.20.
Affin Investment however recommended the entitled shareholders to vote in favour, as the SCR offers an exit avenue for an investment which provided a negative return in the past five years.
Commenting on the voting result, Voon Huey said the minority shareholders see higher value in Ireka's shares than the offer price.
"The shareholders obviously have shown their confidence in Ireka as a listed company, the board is very grateful and we will continue to work hard to enhance shareholders' value," she said, adding that the meeting progressed well despite the unfavourable stance towards the resolutions.
Voon Huey said Ireka will look into various options to strengthen the group's financial position.
"We will find ways to enhance the capital base of Ireka and to bring the group back to profitability. We are very hopeful that Ireka will be able to raise fund in the next few months," she said.
Ireka posted a net loss of RM37.42 million in the financial year ended March 31, 2013 (FY13), compared with profit of RM11.1 million a year ago, largely due to a share of loss of its London-listed Aseana Properties Ltd and losses incurred by its construction segment.
On another note, Voon Huey said Ireka has three property development projects with a total gross development value (GDV) of betwee RM300 million and RM500 million to be launched this year. Those properties are located in Kajang, with another two in Nilai.
Ireka also has a construction order book of about RM1 billion, including Imperia Puteri Harbour serviced apartments and office in Johor, Solstice @ Pan'gaea mixed office and apartment development in Cyberjaya, KL Eco City Vogue Suites project, as well as the MRT subcontract work in Kajang, which will be all carried in the coming two to three years. The group is also bidding for construction works worth some RM1 billion.
Currently, the construction division contributes 90% to Ireka's revenue. From FY15 onwards, Voon Huey said, the group foresees higher contribution from the property division, targeting to hit 50% within five years.
Shares of Ireka yesterday closed up 2 sen at 0.895 sen yesterday, with 37,100 shares traded.