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| The rats leaving the sinking ship Posted: 19 May 2013 05:24 PM PDT So they are now embarking on an asset-stripping exercise. Chua Soi Lek, Tan Chai Ho, Vincent Lee Fook Long, Kat Swee Sang, and a few other MCA taikos are shifting MCA's assets so that they can eventually bury an empty shell that was once the second-most powerful and richest political party in Malaysia. They will then ride out into the sunset and all live happily ever after while the Malaysian Chinese continue to argue about who should hold power and who should be represented in the government. THE CORRIDORS OF POWER Raja Petra Kamarudin
While the Malaysian Chinese are arguing over whether MCA should be closed down, whether there should be any Chinese representation in the Federal Cabinet, whether Paul Low Seng Kuan should or should not be in the government, and so on, the MCA leaders have been quietly planning to abandon ship since a couple of years back. MCA knew back in 2009, soon after Najib Tun Razak took over as Prime Minister, that the 2008 general election was the signal that MCA and Gerakan were finished. The writing was already on the wall. MCA is a sinking ship. Hence, as is normal in all sinking ships, the rats had better leave the sinking ship or else drown. The early life of MCA in the pre-Merdeka days was as a grouping of wealthy Straits Chinese, some who did not even know how to speak Chinese but spoke just Malay at home. Over time, MCA has become an economic giant and is considered wealthier than Umno by far. Remember what happened to Umno back in 1988? The Registrar of Societies deregistered Umno and all its billions in assets got frozen. That was when Umno decided to change its strategy. Instead of parking all its wealth under the name of Umno, it embarked on an asset-stripping exercise and transferred all the party's assets into the names of nominees. Now you can no longer tell which of those billions belongs to Umno and which belongs to certain individuals who are allegedly mere nominees of Umno. The demarcation between what belongs to the party and what belongs to certain individuals behind the party is very blurred. Most likely it is the other way around -- the party is actually the 'nominee' of certain individuals. Now MCA is going to suffer the same fate as Umno in 1988, with a slight twist, of course. Umno of 1946 died but from the ashes of the old Umno arose the new Umno (Umno Baru). But the new Umno no longer owned the assets of the old Umno. The new Umno was as poor as a church mouse although certain key people in the new Umno may be wealthy like hell. MCA has learned from this Umno episode of 1988. (So who says the Chinese cannot learn from the Malays?) The 'old' MCA is in its death throes. But there is not going to be a MCA Baru à la Umno Baru. For all intents and purposes, MCA Baru, if there ever were going to be one, would be DAP. Hence they need to do some asset stripping because MCA, without a doubt, is a sinking ship. The plan is: they need to bail out of the sinking ship with all the assets. Let the ship go down but it must be an empty ship, not a ship laden with wealth. So they are now embarking on an asset-stripping exercise. Chua Soi Lek, Tan Chai Ho, Vincent Lee Fook Long, Kat Swee Sang, and a few other MCA taikos are shifting MCA's assets so that they can eventually bury an empty shell that was once the second-most powerful and richest political party in Malaysia. They will then ride out into the sunset and all live happily ever after while the Malaysian Chinese continue to argue about who should hold power and who should be represented in the government. I thought the Chinese voter was one sharp cookie. Apparently they are not any smarter than the Umno supporter in the rural kampongs of Malaysia. They quarrel over nothing while the taikos rob them blind in broad daylight. I suppose with a guru like Umno how can MCA go wrong? And while Umno's slogan is 'Ketuanan Melayu', MCA's slogan is 'Just Duit' -- or is it 'Just do it', à la Nike? *********************************************************** Tan Chai Ho MCA's Huaren Holdings sells stakes in MCIL (Bernama, 24 September 2010): Huaren Holdings Sdn Bhd, the investment arm of the MCA, has sold its entire 3.6% equity in the Media Chinese International Ltd (MCIL). Huaren chairman Datuk Seri Tan Chai Ho said the Huaren board had in August disposed of 60,394,191 ordinary shares of 10 HK cent per share for a total cash consideration of RM47.88 million. Huaren's 3.6% equity in MCIL was the result of a merger and a scheme of arrangement undertaken in 2008 by Ming Pao Enterprise Corp Ltd, Sin Chew Media Corp Bhd and Nanyang Press Holdings Berhad. "The board of directors is of the opinion that the disposal is in the best interest of the company," Tan, who is also the MCA treasurer-general, said in a statement today. Huaren had earlier owned up to 72.3% in Nanyang, paying RM230 million or RM5.50 per share, for the stake which was approved by the MCA at its extraordinary general meeting on 24 June 2001. Later, it sold off 15.4 million Nanyang shares (a 21% stake then) in March 2007 for RM67.7 million to Ezywood Options Sdn Bhd, a vehicle controlled by timber tycoon Tan Sri Tiong Hiew King. After the disposal, Huaren was left with 17.1 million shares or a 23.1% stake in Nanyang, which were exchanged for new shares in MCIL following a merger between Tiong's Sin Chew Media Corp Bhd, Hong Kong-based Ming Pao Enterprise Corp Ltd and Nanyang in early 2008. After the exchange, Huaren ended up with 3.6% stake in the enlarged media group called Media Chinese International Ltd (MCIL) which currently owned various Chinese newspapers in Hong Kong and Malaysia -- Ming Pao (Hong Kong), Sin Chew Daily, China Press, Nanyang Siang Pao and Guang Ming (Malaysia). *********************************************************** Menara Multi-Purpose, which is 99% occupied, has rental income of RM2.1mil per month MPHB sells Menara Multi-Purpose to MCA for RM375mil The Menara Multi-Purpose office tower in Kuala Lumpur will be sold to the MCA for RM375mil cash. In a filing with Bursa Malaysia, Multi-Purpose Holdings Bhd (MPHB) said it had entered into a sale and purchase agreement with MCA for the sale of the 17-year-old office tower together with 414 car park bays within the Capital Square development. The office tower has a total net lettable area of 541,424 sq ft, and is 99% occupied with a rental income of RM2.1mil per month as of July. The net book value of the office tower and car park bays was RM175.4mil as of Dec 31, 2010, based on the audited financial statements of MPHB. However, a valuation by Henry Butcher Malaysia Sdn Bhd on April 20 deemed the office tower and car park bays to have a market value of RM384mil. MPHB said its original cost of investment in the office tower from 1993 till 1996 and car park bays in 2004 was RM289mil. Proceeds from the sale, which is due to be completed by the end of this year, will be utilised to repay MPHB's bank borrowings. MPHB said the rationale for the sale was part of the group's asset rationalisation exercise to dispose of its non-core assets. The group's gearing would drop to 0.88 times from 1.1 times (as of April 28) after the sale is completed. *********************************************************** Chua Soi Lek Matang, Scope agree on deal (The Star, 20 November 2012) - Matang Holdings Bhd has entered into a business merger agreement with the Bursa Malaysia ACE market-listed Scope Industries Bhd to transfer its entire business and undertaking including assets and liabilities to the latter for RM145mil. Scope Industries is an electrical and electronics manufacturer. In a press statement released here, the company said the transfer would be satisfied with the issuance of 580 million new ordinary shares of 10 sen each in Scope at an issue price of 25 sen per share. This would path the way for the a proposed merger of the business of Matang with the businesses of Scope. Upon receiving approval for the merger, Matang would carry out a capital reduction and repayment exercise under Section 64 of the Companies Act 1965 to distribute the shares to its shareholders. *********************************************************** Press Statement 20 April 2013: Proposed Business Merger Agreement between Matang Holdings Bhd and Scope Industries Bhd. The reason for this Press Conference is to publicly appeal to Huaren Holdings Sdn Bhd, the controlling shareholder of Matang Holdings Bhd with 10.72% of the share capital to refrain and abort the Business Merger Agreement with Scope Industries Bhd dated 19 November 2012 failing which we would request all existing Matang Holdings Bhd shareholders to be present and vote against the proposal during the EGM to be convene in due course. The Minority Shareholders are of the opinion that: (i) The Board of Directors of Matang has in disposing off the Matang landed assets including cash at a grossly undervalued amount of RM145,000,000.00 has acted in bad faith and has failed to discharge diligently their fiduciary duties to the shareholders. (ii) The value of RM145,000,000.00 is inclusive of CASH held by Matang and to date the CASH so held is more than RM25,000,000.00 which effectively means that the landed assets is disposed off at only RM120,000,000.00. A valuation done by Henry Butcher in July 2012 valued the landed assets at RM168,000,000.00 The difference in valuation alone is RM48,000,000.00. If the cash sum of RM25,000,000.00 is taken into consideration, the amount of difference is RM73,000,000.00 (iii) The consideration for the disposal as stated in the Business Merger Agreement is for an exchange of shares in Scope Industries Bhd and not for cash is in total disregard of the fact that the shares received in exchange by the shareholders of Matang Holdings Bhd is subject to a moratorium of 4 years and cannot be sold off immediately but only over a period of 4 years The Minority Shareholders have appointed Messrs Lau Kok Guan Liana & Associates to act on their behalf. We would like to appeal to all shareholders regardless of their shareholdings to take the appropriate action to stop the proposed Business Merger with Scope Industries Bhd based on the facts above. You have only yourself to blame if you do not take action to protect your own investment. *********************************************************** Highlights of the disadvantages of Scope Industries Bhd shares in exchange for Matang Holdings Bhd shares 1. Moratorium i. The shareholders of Matang cannot immediately dispose of all of the Scope shares received. ii. For the 1st six months after the shares are listed, none (0) of the Scope shares can be sold. iii. From the 7th month to the end of the 12th month, only 15.4% of a shareholder's Scope shares can be sold. iv. From the 13th month to the end of the 24th month. only 28.2% can be sold. v. From the 25th month to the end of the 36th month, only 28.2% can be sold. vi. From the 37th month to the end of the 48th month, only 28.2% can be sold. In addition to that, bear in mind that at the same time Scope is also issuing up to 126,880,000 shares for the acquisition of Benua Mutiara Sdn Bhd. These shares are not subject to moratorium. Share capital of Scope No. of Shares Amount(RM) Existing Issued share cap 384,382,000 38,438,000 Issue to Matang for merger 580,000,000 58,000,000 Issue to Benua Mutiara for acquisition 118,118,000 11,812,000 Assuming full exercise of all o/s warrants 118,598,000 11,860,000 Enlarged Issued & paid up 1,201,096,000 120,110,000 Also note that, except for the 580,000,000 Scope shares issued to Matangs' shareholders, all the rest of the Scope shares can be freely traded and are not subject to moratorium. The moratorium is imposed on Matang because after completion of the merger but before the Scope shares are distributed to the Matang individual shareholders, Matang has temporary control of Scope Industries Bhd holding more than 50% of Scope paid up capital. However, even though Matang has more than 50% of Scope the BOD of Matang has failed to seek for control of the Board of Scope as Matang can only appoint three Board members whereas the existing number of BOD in Scope is five. (2) Value of Scope Industries Bhd Share. Scope's audited FYE 30 June 2012 Earnings per share 0.21 sen Net Assets per share 12 sen Matang's audited FYE 30 June 2012 Earnings per share 4.3 sen Net Assets per share 118.9 sen The value of RM0.25 as used by Scope to value its shares in exchange for Matang shares is at a Price Earnings Ratio of 119.0 times. The price used cannot be fundamentally supported and is grossly overvalued. As its net assets is only 12 sen, it is also not justifiable to value its shares at RM0.25 which is 2.1 time to its book value. Scope will be highly dependent on Matang's earnings to support its business for the forseable future. Matang shareholders is much better off not taking part in the business merger as Matang shareholders do not enjoy any synergy benefit but is actually contributing its profit to the enlarged group. Conclusion (extracted from circular sent to Scope shareholders). Availability of Land for Cultivation. The availability of agricultural land that possesses suitable soil and terrain characteristics for oil palm cultivation is critical in the supply of oil palm and ultimately palm oil products. Without land oil palm cannot be cultivated and hence FFBs cannot be harvested. Plantation companies wishing to expand their operations will also need to secure suitable and arable land. However, globally, land is becoming scarce and expensive. It is reported that Malaysia is left with 800,000 hectares of land suitable for further oil palm cultivation, and that the country will run out of available oil palm land by 2015 or 2016. *********************************************************** Vincent Lee Fook Long, Executive Deputy Chairman, Star Publications (M) Bhd No buyout plans, says Star Publications (The Star, 16 May 2013) - Star Publications (M) Bhd has denied talk that there are plans for a management buyout from the MCA, the majority shareholders of The Star. Star Publications chairman Tan Sri Dr Fong Chan Onn said neither the management nor the staff had initiated such a plan. "I have received calls from the media making enquiries as to whether there are plans for a management buyout. "I regard such talk as malicious and speculative in nature. "It also appears to be politically motivated as it comes at a time when the MCA is undergoing a difficult period. "Such rumours are not helpful and serve no purpose. "I do not intend to elaborate on such rumours as such baseless talk does not deserve to be given credence," he said in a statement. *********************************************************** ADDENDUM Head Investor Affairs and Complaints Department Securities Commission Malaysia No 3 Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur
PRIVATE AND CONFIDENTIAL
28 December 2012 Dear Sir/Madam Re: Proposed Merger of the Businesses of Scope Industries Bhd and Matang Holdings Bhd through the transfer of the entire Business and Undertakings, including all assets and liabilities of Matang to Scope for a total consideration of RM145,000,000 as announced on 19 November 2012. Introduction Matang Holdings Bhd was established some 36 years ago and most of its members consist of MCA members from the state of Johor. Currently the paid up capital of Matang Holdings Bhd is RM60,000,000 made up of 120,000,000 shares of RM0.50 per share, with 19,984 shareholders as at1 October 2012, of which the largest shareholder is Huaren Holdings Sdn Bhd with 12,864,000 shares or 10.72% of the share capital. A copy of the latest Annual Report of Matang Holdings Bhd is enclosed. Questions to be posed to the Board of Directors of Matang Holdings Bhd 1. As the chief financial officer of Matang Holdings Bhd, I was not allowed to be engaged in the negotiation of the terms and conditions of the Business Merger Agreement with Scope and I was also kept in the dark as to the signing of the Business Merger Agreement until it was signed. The act has resulted in that I was not able to carry out my fiduciary duty to the shareholders. Needless to say the BOD has also failed in its fiduciary duty. 2. In my opinion, the Business Merger Agreement is detrimental to the shareholders of Matang Holdings Bhd because: A the valuation of the assets of Matang is grossly undervalued. A valuation performed by Henry Butcher on 23 July 2012 (certificates enclosed) had valued all the 3 properties of Matang at a total value of RM168,000,000. A subsequent valuation was performed by KGV on 10 November 2012 (certificates enclosed) which had valued all the 3 properties at only a total value of RM119,550,000. My guess is that this second valuation was done in order to be in line with the offer price proposed by Scope. B the cash in hand as at 30 June 2012 held by Matang was RM22,732,000. This amount will form part of the assets to be taken over by Scope. Matang has been paying dividends for the past 10 years and because of the proposal, the BOD has for that financial year not declared a dividend. Shouldn't all the cash be returned to the shareholders rather than be part of the proposal? As of the date of this writing, the cash in hand has increased to RM24,698,986. C Matang's assets are all income generating and its business has always been profitable. Why should any right thinking shareholder wants to exchange his Matang shares for shares of Scope based on an exchange price of RM0.25 per Scope share and for paper only. Scope's exchange share price of RM0.25 cannot be fundamentally supported. In an earlier exercise, in June 2012, Scope shares was only valued at RM0.15. D the moratorium to be imposed by Bursa on the Matang shareholdings in Scope will not allow Matang shareholders to dispose of their Scope shares as and when the proposed merger is completed. Matang shareholders will be better off finding a suitor listed on the Main Board. E the composition of the BOD after the completion of the proposed merger does not reflect the controlling shareholdings of Matang in Scope after completion, as the existing number of directors in Scope is 5 whereas in the Business Merger Agreement, Matang is only to nominate 3 directors. Based on the above information, I sincerely hope that the Securities Commission would look into the proposed merger as the existing shareholders of Matang are being oppressed and has nothing to gain but a lot to lose if the proposed merger in its current form is allowed to proceed. Please do not hesitate to contact me should you require further information. Thank you. Yours faithfully
Wong Pang Nam Chief Financial Officer
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