Thursday, June 04, 2009
A Timely Look At B-Toto & B-Land
Generally, I would not look at both shares. However, due to a confluence of factors, both B-Toto (4.74) and B-Land (3.26) are attractive for a short term hold.
Corporate Developments, B-Land:
On 4 February 2008, the Company announced that its interest in BToto has increased from 48.76% as at 21 January 2008 to 48.96% as at 4 February 2008 due to BToto’s share buy back exercise and the acquisition of BToto shares by the Group.Hence, the BCorp Group in aggregation with B-Land Group’s interest in BToto had exceeded 50% and accordingly, BToto is deemed a subsidiary of the Company as well as of BCorp.
On 14 February 2008, the Company announced its intention to place out up to 200 million ICULS from time to time and upon such terms and conditions the Board deems fit.On 19 February 2008 and 28 March 2008, the Company announced that ICSB had placed out a total of 150 million ICULS at RM5.00 per ICULS for a total cash consideration of RM750 million. The placements resulted in a total gain of about RM600 million.
On 28 March 2008, the Company announced the proposed cancellation of all the RM492 million ICULS held by the B-Land Group. The cancellation was completed on 23 April 2008.
On 18 April 2008, the Company announced its intention to purchase more shares in BToto from time to time from the open market, upon such terms and conditions as the Directors deem fit, for a total consideration of up to RM250 million.
On 19 August 2008, the Company announced that it had purchased RM18 million of the 5-year 8% secured Exchangeable Bonds (“Exchangeable Bonds”) at RM1.0192 per Exchangeable Bond with internally generated funds. These
Exchangeable Bonds shall be cancelled in accordance to Clause 8 (h) of the terms and conditions of the Exchangeable Bonds as set out in the Second Schedule of the Trust Deed dated 8 August 2006 constituting the Exchangeable Bonds. Consequently, the outstanding Exchangeable Bonds in issuance is RM882 million after the purchase and cancellation.
The Exchangeable Bonds were issued on 15 August 2006, with an Exchange Price set at RM5.19 per ordinary share of RM0.10 each of BToto. The purchase and cancellation will mitigate the potential dilution of the B-Land Group’s shareholding in BToto by 3,468,208 BToto shares representing 0.28% equity interest of the voting rights shares of BToto of 1,256,000,000. As at 18 August 2008, the B-Land Group holds 631,446,998 BToto shares representing 50.27% equity interest of the voting rights shares of BToto of 1,256,000,000.
B-Toto should be announcing results sometime middle of June. If it is going to issue a special dividend, it should do so during or immediately after the results. The special dividend is likely as parent company Berjaya Land Bhd would need cash if investors were to redeem the RM882mil exchangeable bonds. The put option date for the bonds is 15 August 2009. Thus for B-Land to get the funds, and taking into account the logistics, B-Toto will have to make the special dividend announcement by end-June. B-Toto is a low-beta stock which is likely to be overlooked in a rising market. I would like to hold both shares now in anticipation of the above developments. If the special dividend does not eventuate, I am unlikely to lose much in those shares anyway - the risk-reward ratio for both shares are attractive to me. I would be holding them till mid-July 2009.
p/s photos: Zhang Xin Yu