Capital markets executive summary | Tue 5 Sep 2023

Capital markets executive summary | Tue 5 Sep 2023

FGV gets 5th extension from Bursa on public spread

The Federal Land Development Authority (Felda) initiated the privatisation of FGV Holdings Bhd in Dec 2020 at RM1.30 per share. When it closed in Mar 2021, Felda was short of the 90% shareholding to trigger compulsory share acquisition because minority shareholders rejected the offer. Felda’s owns 81.9% and on 22 Aug, the public spread was 13.09%, which is below the 25% minimum. FGV received the 1st extension in Mar 2021 to Aug 2021, which was postponed to Feb 2022, then to Aug 2022. Bursa Securities afterwards rejected another extension until the company proposed on 30 Jun 2023 a bonus issue of 364.82m Islamic redeemable preference shares (RPS-i) on the basis of 1 RPS-i for every 10 existing shares. Felda will reduce its stake after the completion of the bonus issue to comply with the shareholding spread requirement. The bonus issue should be completed in 4Q2023 after the shareholders’ approval at an extraordinary general meeting. FGV closed at RM1.37.

reNIKOLA Solar’s ASEAN Green SRI Sukuk AA3 rating affirmed

RAM Ratings affirmed the rating of the RM390m ASEAN Green SRI sukuk. The 3.996 MWac plant in Arau, Perlis commenced operations on 3 Mar 2018. The 29.916 MWac plant in Gebeng, Pahang started operations on 22 Jan 2020. The 30 MWac plant in Pekan, Pahang became operational on 29 Jun 2021. Under the power purchase agreements (PPAs), Tenaga Nasional Berhad must purchase a specified amount of electricity from the plants, which mitigates the absence of capacity payments. The plants consistently exceeded the minimum 70% declared annual quantity (DAQ) in the PPAs, with the net energy output (NEO) in 2022 at 85%-96% of the respective DAQs. Cumulative electricity output was 2.7% above P90. In 1H2023, the cumulative energy output was 1.3% above P90. Long-term fixed fee operation and maintenance agreements and the budgetary limit for operating and capital expenditure help maintain strong cashflows. RAM’s stress case with lower NEO and higher operating expenditure results in minimum annual finance service coverage ratios (with cash balances, post-distribution) of 1.61 times and average of 1.89 times, commensurate with the AA3 rating.
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EATech gets 6-month extension to submit regularisation plan

The oil tanker and port marine services provider turned Practice Note 17 (PN17) in Feb 2022 when its RM5.96m shareholders’ equity at 31 Dec 2021 was less than 25% of its RM179.76m share capital. Bursa Securities previously granted EA Technique a 6-month extension until 24 Aug to submit a regularisation plan. In Jul, the company aborted the plan it submitted to Bursa in April following the mutual termination of the share subscription agreement it signed in Mar with Eco Offshore Services Sdn Bhd (EOSSB), Tan Sri Abdul Halim Ali and Khiruddin Ibrahim Said. EOSSB is an investment vehicle owned by Eco World Development Group Bhd co-founder Tan Sri Abdul Rashid Abdul Manaf. The completion of the subscription agreement would have made Abdul Rashid the controlling shareholder with 53%. EATech obtained another 6-month extension to submit its regularisation plan by 23 Feb 2024. The counter closed at 26 sen.

Comintel to exit PN17 today

The classification will be lifted after Bursa Securities approved that Comintel Corp Bhd’s regularised financials no longer meet PN17-related criteria. The company’s businesses include construction, information technology, telecommunications, manufacturing and research and development. On 28 Mar 2019, the company triggered the PN17 criteria after its shareholders’ equity fell below RM24 million or less than 25% of its issued capital. In 1Q ended 30 Apr 2023, Comintel’s net profit jumped 89% from RM3.04m to RM5.73m. Revenue more than doubled from RM27.37m to RM59.55m primarily due to new projects contributed by wholly-owned Binastra Builders Sdn Bhd. Last week, the company won a RM161.28m contract from Exsim Jalil Link Sdn Bhd for the construction of 2 data centre building blocks in Bukit Jalil. The counter closed at RM1.17, up 39% since the beginning of 2023.

US’ Albemarle to start due diligence in takeover of Australia’s Liontown

Perth-based lithium mining company Liontown Resources Ltd will support the revised AUD6.6b (RM19.97b) takeover offer from Albemarle Corp, the world’s biggest producer of the battery metal. Albemarle has been granted due diligence after raising its cash offer by 20% from the AUD2.50 per share it proposed in Mar to AUD3 in the best and final proposal. Liontown owns one of the most promising early-stage lithium projects in Australia. It has supply agreements with Tesla and Ford. Albemarle already has interest in lithium mines and owns a processing plant in Australia. As lithium prices halved from a peak late in 2022, the value of shares for some mining companies fell, thereby attracting deals. Analysts suggest that the Liontown takeover supports the sound fundamentals of the lithium sector and that recent share price weakness presents buying opportunities.