Tuesday, March 09, 2010

Something Is Up With MTD Capital

Their forays into property and other local projects pale into insignificance when its the South luzon expressway project that keeps taking all their time and resources. It is obviously an increasingly attractive asset with multitude of partners. It got litigious probably because it is so attractive now and they are being muscled out.

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Dec 23 2009 / The Edge: MTD Capital Bhd, which received a restraining order from taking over operations and maintenance of South Luzon Expressway (SLEX) by Manila Toll Expressway Inc (MATES) last week, said the court’s preliminary investigation conference on criminal charges against MATES has been postponed to Jan 14, 2010. In a filing with Bursa Malaysia yesterday, it said the courts had noted that the preliminary investigation conference scheduled on Dec 17 for criminal charges filed against all MATES personnel, drivers and securities guards charged with trespassing and grave coercion was cancelled and reset to Jan 14 next year.The criminal charges were filed by the Philippine National Construction Corp (PNCC), the partner with whom MTD is embroiled in a dispute over SLEX. MTD, PNCC, MATES, the South Luzon Tollway Corporation (SLTC), which is a unit of MTD, and the Toll Regulatory Board of Philippines (TRB) had entered into an agreement in 2006 for the construction, rehabilitation, expansion, operation and maintenance of SLEX. Under the agreement, MATES was to take over the operation of the expressway following the completion of the project. PNCC had previously owned a 30-year concession for SLEX, which officially expired in 2007. However, MTD’s chief executive officer Datuk Azmil Khalili Khalid and several others involved in the project have received an ex parte temporary restraining order (TRO) and a notice of raffle preventing them from forcibly taking over the operations and maintenance of SLEX last week.

There is only one house that follows MTD Capital, that's Affin Securities and they have always had a sell for the past 12 months. But the share price has been inching up over the last few weeks surreptitiously. Whats funny is the uptrend over the past few days was accompanied by few sellers. The company has also been buying back shares in recent weeks.



NTA RM2.37

The grapevine has it that they have finally found a way out of the South Luzon expressway. Its carried in the books at about RM1 billion, and naturally it is balanced on the debt side with an equally big loan for that. It is thought that they have managed to secure a decent price for exiting at around RM1.5bn. Sure, with just 300m shares that works out to be RM5.00 per share. Assuming they take RM1.2bn to pay down the debt, they still have RM300m to play with. If you add that to their cash in bank which is about RM400m, you have RM700m in cash.

If you also look at the controlling and substantial shareholders, they have been buying shares aggressively in recent weeks as well. I suspect most of them have the bulk of their net worth in the shares. It is also thought that the first thing they want to do after the sale is to do a big special repayment, possibly in the range of RM2.00 per share.

Thats the grapevine folks.

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NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

p/s photos: Julie Hoi

1 comment:

T816B said...

Been monitoring MTD for the past weeks. There are shares been bought into treasury almost daily. Could it be the substantial shareholders are "disposing" the shares back to the companies due to unsettled problems with the company, or the other way round which was mentioned in Dali's posting (controlling shareholders been buying shares aggressively in recent weeks as well. I suspect most of them have the bulk of their net worth in the shares)?