Tuesday, June 21, 2011

The Perils Of Trading MAA

Sigh ... you can be wrong or wronger. No, there was no assumption of the liabilities which might have added RM200m to the deal.

MAA Holdings will sell its entire stake in Malaysian Assurance Alliance Bhd (MAAB), Multioto Services Sdn Bhd for RM344m cash, valuing its assets at 1.36x book value, considerably lower than the recent transactions in the industry.

The bomb exploded when you read how the funds will be used, don't even think of getting a RM1.00 dividend:

The Company intends to utilise the cash proceeds from the Proposed Disposal in the following manner:
Purpose Notes Estimated timeframe for utilisation
- Repayment of medium term notes programme (“MTNs”). Immediately upon the date of
receipt of the proceeds from the Proposed Disposal (RM144m)
- Repayment of borrowings and payment of restructuring fees. Immediately upon the date of receipt of the proceeds from the Proposed Disposal (RM40m)
- General working capital requirements . Within 24 months from the date of receipt of the proceeds from the Proposed Disposal (RM164m)

TOTAL RM 344,000,000

So, to even get a 50 sen special dividend would be tough. Considering the company would technically be in PN17, any buyers or holders will have to wait and see what business will be injected to maintain its listing status.

When the cards are dealt this way, in poker, its best to fold and cry.

10 comments:

Jeff said...

Bro thats TY. May he rot in hell for selling MAA cheap. I hope the shh at the AGM reject the sale & kick him out of the Company.

KC said...

If you know the tract record of the major shareholder manage their group of Companies, from Cash rich to high gearing company, then it's not surprise to see how they cash out MAA.

clearwater said...

TY is consistent, if nothing else. Upholds his reputation. Minority shareholders get screwed once again.

Jeff said...

Bro....the NSTP report killed MAA. THey said .......
The company will be an “affected listed issuer,” which means it will need to “regularize” its financial condition or risk being delisted.

The word "financial" caused the public to panic & sell. The correct word was that MAA need to regularise its Listing Condition as MAA will be a cash rich company with about RM176.5m (344-176+18.5 upward adjustment as per SPA)

Guys the deal date is 30 sept 2010 & completion date should be 30 sept 2011 hence there will be upward adjustment as MAA business has improved as provided for per SPA

That bloody NSTP must have collusion with TY for that monkey to play games.

山下聖人 said...

Dear all,
If you all don't know,it's actually not his idea to sell at 340m, he has no choice and no says because the company has not been meeting the CAR ratio required by BNM for very long time. And seems like BNM don't want to see that any longer. So no choice, die die must sell away.

Now selling away the company left with the money, minority shareholders will just have to pray both Takaful and MAAKL can grow much bigger from now.

tiongys said...

Shaking off the monkey from the tree & see how many monkey will remain on the tree...

ronnie said...

Dali. You cannot be right all the time. Soros states that if you are right 70% of the time in investment, you can be considered an investment guru. You call it as you see it.

Why blame TY for the low price for the assets? He is the largest shareholder and stands to benefit the most. He could have been a better manager. Enhancing the value of the assets. A warning to those who leave their businesses to be managed by their children. And investors of PLCs managed by children of the founders, caveat emptor.

Unknown said...

My sources says TY was forced to sell cheap to Zurich coz BNM refused to give him time to look for other buyers. Also Zurich got special approval to buy 100%, not 70% under the rules. something's not right at the bank...

ronnie said...

The buyer needs to inject about RM650mill into the insurance business to shore up the balance sheet. If MAA were to fall into insolvency, BNM would have to rescue the company.

limko said...

See how Maruichi performs under their hands, from a profitable and cash rich company to a lousy and high geared company.