Wednesday, September 28, 2011

CHHB

Tan Sri Lee Kim Yew is said to be moving closer privatizing CHHB a property developer. Sources say local bankers have drawn up preliminary proposals to help fund Lee’s bid to take CHHB private, bit the plans are said to be undergoing some revision.

It is learnt that local banks are prepared to finance a substantial chunk of the privatization costs but Lee would have to come up with the rest.

Lee maintains that he has no immediate plants to privatize CHHB. Lee and his family collectively control about 53.52% stake in CHHB.

In the even that Lee launches a takeover bid, he would need to make an offer fro the remaining 46.48% stake or about 128.15 million shares that Lee family does not own.

Another substantial shareholder of CHHB is Lee’s long time Taiwanese partner Chinghaw Picture Tubes Sdn Bhd, which holds a 13.93% stake and is said to be looking to exit the company.

It remains to be seen what Lee’s offer price for the remaining shares will be if he decides to privatize the company. CHHB’s net assets per share stood at rm2.57 as at Dec 31, 2010. Lee is unlikely to fork out that amount or more considering CHHB’s share price has not traded at those levels in the last 10 years.

CHHB’s net asset per share or book value understates the actual value or the group’s assets, such as its landbank, as they were acquired many years ago. Most of its landbank and properties have not been revalued since the early 1990s.

It is no secret that Lee has been toying with the idea of taking CHHB private for a while now. Could some of Lee’s personal landbank be injected into CHHB or could the group enter into a JV with its founder? In July 2011, Tan Sri Lee said he was scouting for a strategic partner to grow CHHB.

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