Monday, August 07, 2006

Landmarks Special Placement

On Aug 4, the company proposed to place out up to 29.53 million new shares to potential institutional investors to raise funds expeditiously to reduce the debt level. Assuming the issue price per placement share is RM1.54, or a discount of about 10% from the five day volume-weighted average market price up to and including Aug 3, of RM1.71, gross proceeds would be RM45.48 million. It is not the amount of money raised, but rather the tactic which will anger the other camp. There are now two camps, one is the North Symphony also controlling the board. The other camp involves Syed, possibly Ong Beng Seng, and possibly CMY. There was a listing of ESOS last week which saw NS buying most of the shares from employees. The strategy to do a special placement stems from another route taken to maintain control by either placing to parties close to North Symphony.

The Syed camp can either continue to mop up shares but is at a disadvantage really, as that would make the placement highly successful, and Syed may not be able to garner sufficient shares to get board seats or control, but will be left holding substantial shares at highish prices. Syed's camp can let shares go down, like they did today, to hopefully scupper the placements. Since the placement is at RM1.54 or thereabouts, further dips towards that level may make the placement unfeasible. Looking at the equation, the fact that NS has to resort to these tactics to maintain control shows that they lack financial firepower, as making a simple G.O. even at RM1.85 or RM2.00 would be justifiable financially.

Chances for the two camps to come to an agreement is unlikely as their corporate strategy to unlock value from Landmarks are also divergent. I suspect Landmarks will continue to be whacked lower by Syed's camp to scupper the placement. If that fails, Syed's camp would probably have to come in with a G.O., which the NS group will not have the financial resources to match. Syed's camp still does not have more shares than NS at the time of writing, judging from the available information. So, thats the gist of the matter, even when you are on a good thing, bad things can still happen. Price will tumble towards RM1.50 but for medium term view investors, that would be a good entry level as the story is far from over and the fat lady hasn't even hail her cab to the Petronas Philharmonik opera house yet.


doraiddd said...

hi dali,

this is from landmarks ann. to bursa:

2.2 Pricing of the Placement Shares

The issue price for the Placement Shares will be at a discount of not more than 10% from the five (5) day volume-weighted average market price of Landmarks Share prior to the date on which the issue price of the Proposed Placement will be determined by the Directors of Landmarks.

as i understand it, the issue date is not determined yet and it's determined by the directors and will only be determined after all approvals have been obtained.

so wouldnt a lower share price, especially if its a hit-down price, actually benefit NS? lower financial outlay to take up the placements?

ie. Incumbents'll set issue date after 5 days of low pricing? (assume all approvals obtained) and if the hit-down is done by the four-seasons, wouldnt that play into north's hands?

i'm on hols so my mind may not be up to speed. correct me if i'm wrong.

doraiddd said...

sorry, when i say issue date, i mean issue price. My blurness - even Issue is starting to not look like an english word at all.

Salvatore_Dali said...


lower price would benefit NS, but I think if you want to see real upside, you want Syed's camp to control Landmarks. NS lacks the firepower, and while their unlocking of value strategy is ok, I do not like their Bintan island project injection. For Syed's camp, there are numerous things that can take place, the ne Four Seasons in Kl or Concorde can be injected or packaged with the 30% stake in Shangril for a very nice REIT.

doraiddd said...'s been a while since my last hostile.. i'm becoming more of a peace-loving hippie in my old age...

BUT if syed and his other 3-seasons want control, then maintain price as high as possible (while still accumulating) and then spike it closer to announcement of issue price (not allowed to be more than 10% lower) then only hit the price down below the placement price after ann, continue to suppress it, then only make GO at a higher than market price (which of cors is still suppressed)

make sense?
and btw when the southern bank money coming back?

i agree - bintan angle suxs big time, and have you seen the size and scale of the unlicensed gambling dens there? who even needs licenses?

Salvatore_Dali said...

lets look at it his options:

1) call a G.O. now at RM1.75 or RM1.80 - danger as he does not have a controlling stake, the entry price for NS is supposedly btw 1.80-1.90, so they won't sell to him at G.O. level. Neither would the minority holder as they will be holding out for me in anticipation of a catfight. It would also allow the successful placement of the new shares at RM1.54.

2) No G.O. yet, need to create problems for the special placement as it is obvious the shares won't be going to NS but to friendly parties. The closer the mkt px is to the placement px, less chance of being a success. NS is treading on hot stones here as they rely on friendly parties to control the company. There are no friendly parties that last a lifetime, just as long as the present value of future cashflows is positive, you are my friend. You can always get a better friend if the present value of future cash flows is a bigger positive figure than your previous friend. I mean, election candidates change parties all the time, especially after the results are known .... unbelievable.

Hence I expected the price to drift towards the placement px, but the silly speculative article in NST on a potential G.O. killed a few people today.

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