KUALA LUMPUR: Cycle & Carriage Bintang Bhd (CCB) major shareholder Jardine Cycle & Carriage Ltd’s (JCCL) plan to privatise the Malaysian company hit a roadblock as shareholders voted against a resolution on the corporate exercise today.
The proposed privatisation was to be done through a selective capital reduction (SCR) and a repayment exercise at RM2.20 per share.
The special resolution tabled at CCB’s EGM was not carried as 53.78% of disinterested shareholders present carrying a voting value of 42.06% rejected the offer.
Any privatisation exercise has to be approved by at least a majority in number of the disinterested shareholders and 75% in value of the votes attached to the disinterested shares.
Trading in CCB shares was halted from 2.32pm to 3.32pm today following the outcome of the EGM, which lasted more than 2½ hours.
CCB’s share price closed 4 sen lower at RM1.58 today, well below the RM2.20 offer price. Recall that after the privatisation exercise was announced in November last year, the stock had surged 63.57% to RM2.11.
CCB minority shareholder Muar Ban Lee Group Bhd (MBL), which owns a 1.02% stake in CCB, was reportedly against the SCR as the offer price was not fair.
Independent adviser Affin Hwang Investment Bank had recommended CCB shareholders to vote in favour of the offer, which it deemed not fair but reasonable.
CCB CEO Wilfrid Foo Tsu-Jin said the group is still running the business for the benefit of Mercedes-Benz owners in Malaysia and remains committed to delivering “exceptional value” for customers and employees.
“We’ll continue to invest in our systems, sites and people to make sure that they are of good standards for Mercedes-Benz customers,” he told reporters after the EGM.
On whether it will go through another round of privatisation, Foo said the JCCL offer was the only one on the table, which has been decided upon.
CCB, a Mercedes-Benz dealer in Malaysia with a network of 13 outlets, posted a net loss of RM16.95 million for the nine months ended Sept 30, 2019 compared with a net profit of RM17.82 million a year ago, primarily due to lower unit sales and margins.
On its volatile performance, Foo reiterated that investing in its sites, systems and people helps the company to be sustainably profitable in the longer term.
“This is a capex-intensive segment of the market, the kind of business which auto retailing is like that. It does go through very volatile market cycles and fluctuations. We’re investing in sites because we own space for retail outlets; systems to make it seamless and painless for customers ; and people because we’re a people business. That’s the strategy,” he said.
Foo said over a period of time, “significant investments” will still continue to be invested in the business.
