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Monday April 25, 2011
By JEEVA ARULAMPALAM
jeeva@thestar.com.my
PN16 firm has signed MoU to buy property firm Sagajuta
PETALING JAYA: Jerneh Asia Bhd, which essentially announced a proposed reverse-takeover (RTO) exercise as part of its regularisation scheme last Thursday, can now seek to reward existing shareholders with a special dividend payout from the sale of its general insurance unit last year.
The company had previously said that its cash and short-dated securities, including the sale proceeds of Jerneh Insurance Bhd, was placed with a custodian and would not be withdrawn except for the purchase of a new core business or pro rata distribution to shareholders if it failed to regularise its condition as a cash company.
It added that any form of an earlier dividend would be subject to the submission and approval of a regularisation plan to the regulators.
However, Jerneh Asia's existing shareholders have been awaiting a special dividend payout since company officials had said it would do so following the completion of its 80% stake sale in Jerneh Insurance to US insurance ACE INA International Holdings for RM523.2mil last December. The disposal of the general insurer resulted in a pro forma gain of about RM302.9mil with Jerneh Asia's cash and cash equivalent standing at RM645mil as at Dec 31.
With the loss of its core business, Jerneh Asia was declared a Practice Note 17 (PN17) company and had until this December to seek a new core business under a regularisation plan. It was also declared a PN16 cash-rich company a company with assets on a consolidated basis consisting of 70% or more of cash or short-term investments.
Since Jerneh Asia said last Thursday that it had signed a memorandum of understanding (MoU) with Generasi Cipta Sdn Bhd to buy the latter's 60%-owned property firm Sagajuta (Sabah) Sdn Bhd for an undisclosed value as part of Jerneh Asia's regularisation plan, it can push for a dividend payout to shareholders, pending regulatory approval.
Jerneh Asia was a top loser in last Friday's trade, its share price shedding 16 sen to end at RM3.17, following the company's announcement.
The MoU, which is effective for a three-month period starting April 21, will see Jernih Asia and Generasi Cipta discuss the possible participation of Sagajuta's shareholders in Jerneh Asia's restructuring scheme.
The restructuring scheme entails several corporate exercises including a capital reduction and share premium reduction of Jerneh Asia, the disposal of all its existing business and assets, the capital distribution of the company to its shareholders, the proposed acquisition of Sagajuta and restricted offer for sale of shares in Jerneh Asia's capital by Sagajuta's shareholders and/or placement to placee(s) to be identified at a later date.
If the MoU turns to a definitive agreement, it will pave the way for a backdoor listing of the Sabah-based property developer, which is behind the RM1.2bil 1Borneo development located in Kota Kinabalu. The development mainly consists of a hypermall, four condominium buildings, a seaworld and an amusement centre.
A local daily quoting Companies Commission of Malaysia data reported that other Sagajuta substantial shareholders include executive chairman and managing director Datuk Raymond Chan Boon Siew (8.71%), Chu Li Tan (6.77%), Bumivesa Sdn Bhd (3.76%) and Sagajuta director Tan Tiang Lai (2.96%).
It added that Sagajuta posted a net profit of RM59.28mil and revenue of RM293.71mil for financial year ended Dec 31, 2008, with liabilities of RM208mil and assets of RM343.2mil.
This reverse takeover exercise looks to be a short-cut listing or backdoor listing of a private company where a listed company acquires unlisted assets (or businesses) by way of cash and/or issue of securities, resulting in a significant change of business direction of the listed company since it has disposed of its core business.