In the history, big company such as Public Bank come out with Right Issue too to expand their business. In terms of doing business, in short terms there are some reverse effect on share price, but in long terms, this is a good plan for L&G to increase their land bank and Earning by tapping directly in to the market that already developed by the acquisition.
We always say L&G has not enough landbank like ECOWORLD, TAMBUN & others and thus the company earning not stable and EPS not as good as others. I guess this is a very good plan for biggest shareholders to release value of L&G.
Mayland dare to take most of the ICULS & maybe right issue in in future, they are not stupid coz their share is same with ours too. They will have thought of reverse effect of the company share price. But i think they will have great plan in future to increase value of their share on their hand.
For avoidance of doubt, the Company has the intention to acquire all Target Companies irregardless of the actual proceeds to be raised from the Proposed Rights Issue. In the event that the Company does not raise sufficient proceeds from the Proposed Rights Issue to acquire all Target Companies, the L&G Group will utilise its internally generated funds and/or bank borrowings
It depends on whether it is good deal to take over the companies. If they are short of cash and offered at discounted price, then it might be good thing.
The share price may go down in the short term because this is a related party transaction and some people think that the major shareholder is trying to take advantage of the company. However, the share price should go up in the longer term since the main shareholder is actually prepared to use this opportunity to increase its shareholding significantly to 60% in the event that all the minority shareholders choose not to subscribe their entitlements. Similarly, the major shareholder actually used the previous ICULs issuance exercise to increase its shareholding in the company and the share price rallied not long after the completion of the previous ICULs issuance.
The major shareholder knows the hidden value of the company in the longer term, like its undervalued land bank at Sri Damansara Club.
In short and long term sure a good point for L&G to expand their landbank and development project as everyone know their project is so less compare other property players.
Many investors was enticed into L&G due to the net cash on the balance sheet. Now the cash is going to be walloped by the major shareholder and I guess net cash no more? So whats next for L&G value investors, explosive earnings growth for the company after acquiring developments in semenyih? Gawd bless L&G. No wonder the stock is undervalued. The market is so efficient.
Acquisition fund by using rights issue for L&G and only if the right issue not being fully subscribe by public, the company only seek fund from internal / bank borrowing. So they still have net cash of 500mil. For this plan they will save a lots of bank interest.
Mayland may take up most of the right issue and reach the 33% and touch the mandatory general offer. But since they have propose exemption from the obligation to undertake a mandatory take-over offer, there is no issue such as PRIVATIZATION.
All investors please carefully read the Multiple Proposals Announcement notes that can be download from BURSA MALAYSIA. There are a lots of useful information regarding the company they acquisite, what landbank L&G will hold after the acquisition, how much the price, how the right issue work, about the relationship in L&G and Mayland, their future prospect for the acquisition, etc....
Total land size acquired 446 acres Land total market value is 964m (by valuer), Estimated GDV is 4,200m estimated gross development profit of approximately RM1,931.78m.
just to point out some of the important points (in fine print) most people ignore.
1. most of the companies acquired are currently loss making (including those with on-going development projects), reasons unknown 2. RM4.2b GDV is misleading. 2 of the companies or about RM1.8b GDV is 45% associate stake and one of the plot is almost fully developed anyway. the rest is still not starting anytime soon. 3. same for land value, if excluding Plot A and take Plot B and Rawang at 45%, total market value is closer to RM550m 4. acquisition cost already exclude a compensation amount of RM40m which L&G has to bear in the future, so effective acquisition cost is more like RM380m instead of RM340m
not to say that the deal is not good, but just not as good as it seems on the surface once you dig into the details
The main purpose of right issue is to discourage the retailers to take up, so Mayland can increases its stake to above 50% at low cost, and they had done it before through LA right issue a few years ago
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Eric Fong
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