Offer for Ireka ‘Not Fair’ but ‘Reasonable’
The group has continued
to suffer losses via its
23.07% stake in Londonlisted Aseana Properties
Ltd, which has resulted
in a loss amounting to
RM19.07 million for the
financial year ended
March 31, 2013.
Landscape of Sandakan town with Harbour Mall in sight
Minority shareholders
of Ireka Corp Bhd
are advised to vote in
favour of its controlling
shareholder and founder
Datuk Lai Siew Wah’s
proposed offer to take
the company private
via a selective capital
repayment (SCR) and a
corresponding capital
repayment exercise of
90 sen per share totaling
RM36.19 million.
This was despite its
independent adviser
Affin Investment Bank
Bhd (Affin IB) deeming
the cash repayment
sum as “not fair” as it is
lower than the sum-ofparts valuation per Ireka
share of RM1.20 as well
as below the prevailing
market price of Ireka
shares of RM1.07 on Jan
21 of RM1.07.
“(However,) entitled
shareholders should
monitor the market
price of Ireka shares
before arriving at the
decision as to whether
to vote in favour of
or against the special
resolution pertaining to
the proposed SCR to be
tabled at the forthcoming
EGM,” said Affin IB in a
circular to shareholders
yesterday.
Nevertheless, Affin
IB found the cash
repayment sum
“reasonable” as it is
offered at a premium
that is above the
average premiums
paid for completed
SCR transactions since
January 2011 up to the
last practicable date.
“We are of the opinion
that the proposed SCR
is reasonable, taking
into account Ireka’s low
trading liquidity and the
opportunity for entitled
shareholders to exit
their investment in the
company which provided
a negative rate of return
on investment of 0.26%
over the past five years,”
said Ireka.
It also noted the
uncertainties the
construction and
property development
group has to face given
the prevailing challenges
in the construction
industry, and the absence
of an alternative offer
and/or higher bid for
Ireka shares.
Accordingly, it is
recommending that the
entitled shareholders
vote in favour of the
proposed SCR at the
forthcoming meeting.
To recap, on June 2013,
Ireka announced that
it has received an offer
from Olymvest Sdn Bhd,
which is Lai’s specialpurpose vehicle for
the deal, to take Ireka
private via the SCR and
repayment exercise.
Lai’s investment vehicle,
Ideal Land Holdings
Sdn Bhd, is the single
largest shareholder with
a 43.02% stake, followed
by Magnipact Resources
Sdn Bhd with 13.52%.
Lai and his parties acting
in concert collectively
control 64.7% of Ireka.
The loss incurred in
Aseana is due to the
decline in fair value
of Aseana’s 16.32%
investment in Ho Chi
Minh Stock Exchange
listed Nam Long
Investment Corp, and
operating losses of
Four Points by Sheraton
Sandakan Hotel and
Harbour Mall Sandakan.
“As Aseana’s projects
require a long gestation
period to achieve
profitability, it is likely that
Aseana will incur losses
in the near term and that
future profitability, if any,
would depend on the
level of patronage and
occupancy for the mall
and the hotels,” Affin IB
noted.
Lai and parties acting
in concert intend to
continue with Ireka’s
existing business and
operations and have no
plans to liquidate Ireka
in the next 12 months
following the completion
of the proposed SCR.
Upon completion of the
proposed SCR, Ireka
will be 100% owned by
Lai and parties acting
in concert, who do not
intend to maintain the
listing status of Ireka on
the Main Market of Bursa
Malaysia.
MIEA Thinks Focus Shift From
Primary to Secondary Market in
2014
priced ridiculously higher – at
say RM1,500 per sq ft – than an
existing project, with property
tagged at RM1,000 psf. That is
what speculation has done to
the property market. If we are
not careful, Siva believes, this
could lead to a bursting of the
property bubble, if not a market
crash.
Malaysian Institute of Estate
Agents president Siva Shanker
The Malaysian property market
has arguably been in a tailspin
since late last year, after
property curbs announced
in Budget 2014 and cooling
measures implemented by
Bank Negara Malaysia.
About the 2014 property
outlook, Siva believes the
market will maintain its
resilience as long as local
household incomes remain
intact, the Malaysian property
market being driven by
domestic demand.
Many investors, speculators
included, who had bought
properties from developers and
had wanted to flip them two or
three years after completion
are in a bind, having to deal with
measures such as the revised
real property gains tax (RPGT)
announced in the most recent
budget.
Supported by a young
demographic, the country
should continue to form new
households to support property
demand. O F