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Scomi to be taken private?
By Shahriman Johari
ashahriman@nstp.com.my
November 15 2006
SPECULATION is rife that major shareholders of Scomi Group Bhd may take the integrated oil services firm private in a bid worth as much as RM1 billion.
Sources said the main shareholders, who include the son of Prime Minister Datuk Seri Abdullah Ahmad Badawi, are considering this as an option as Scomi's market price does not reflect its true value.
Taking it private could also in a way address unwarranted criticism that the group was favoured in bidding for government contracts because its major shareholder, Datuk Kamaludin Abdullah, is the son of the Prime Minister.
Officials of Scomi, which makes drilling fluids that cool drilling heads and provides drilling waste management services, could not be reached for comment.
Scomi's chief executive officer, Shah Hakim Zain, did not answer calls made to his handphone.
Major shareholders could bid for the rest of Scomi at a price range of RM1.20 to RM1.50 a share, bankers said, citing swirling market speculation. The stock closed 6.2 per cent up at RM1.03 yesterday.
I am a strong believer that no corporate will embark on a corporate exercise if there is no monetary benefit to the corporation.
Is it profitable to take Scomi Group private? Have a look at this blog posting (scomi again )
Yes, Scomi made a remarkable record high earnings of 23.657 million for its last announced quarterly earnings.
But.....
look at the bottom-line.
This company is in a NETT DEBT position of 903.946 million.
Let's look at what the article said next.
"Scomi has a very strong cash flow. And based on what's been said about it, it makes sense for them to do it," said an executive close to the group.
The major shareholders of Scomi are Kamaludin and Shah Hakim. Both hold 34.66 per cent of the company through Kaspadu Sdn Bhd as at May 11 2006.
French insurance group AXA is the second biggest shareholder with 6.3 per cent, followed by the Employees Provident Fund with 5.73 per cent.
This means that if the main shareholders were to make a bid for the rest of the shares, they might have to fork out some RM976.6 million based on an offer of RM1.50 a share.
In September, Scomi said it expected to more than triple its sales to US$1 billion (RM3.64 billion) by 2009, helped by organic growth and new technology.
"We are growing at a very fast pace, and certain markets this year will have between 50 per cent and 80 per cent growth," Shah Hakim said at the time.
Strong cash flow said an executive close to the group???
Could this EXECUTIVE define STRONG CASH FLOW????
Remember, back in Scomi's fiscal year 20003 Q2, Scomi Group was a simple stock earning 4.037 million for the quarter. But it's net debt was a mere 7.515. Very manageable. Look at it now. In a nett debt position of 903.946 million!
Is this the STRONG CASH FLOW?
How very strange!
I wonder which EXCUTIVE said that statement.
In today's Star, there's an artilce entitled "Scomi up on privatisation talk".
"The possibility of Scomi being taken private is high as the group’s shares are grossly undervalued and, with all of its subsidiaries listed (]after the listing of its oil field services division (OSD) on the Singapore Stock Exchange next year), it makes sense to take it private,” TA Securities said in a note.
Grossly undervalued? LOL!!!
Meanwhile, sources said an announcement on a proposed privatisation of the group could be made soon.
The TA Securities note said based on an indicative price of RM1.20 to RM1.50 per share, the privatisation deal could cost the group’s major shareholders, Datuk Kamaludin Abdullah and Scomi chief executive officer Shah Hakim Zain, RM787mil to RM984mil.
As, I was saying earlier, "I am a strong believer that no corporate will embark on a corporate exercise if there is no monetary benefit to the corporation."
So do you think it make sense to partake in a deal worth rm787 to rm984 million to fully own a company that has a nett debt of RM903.946 million???
Like Warren said ma, (Benjamin too), if the bugger does not make money, (in Benjamin's time, give out ample dividends) it does not make money. Dont park your money there. (see page 158 The Intelligent Investor, .... unusually rapid growth cannot keep up forever.....)
And very inefficient use of money. Look at the turnover and compare it with what they are actually earning - a JOKE!
Advise to Shah Hakim, - ever tried our fixed deposits?
I think there is more to it than meets the eye on this privatisation. SH does not waht SCOMI to be listed when the big boys from their creditors come knocking on his door. I suspect he knows it is soon.
30% of the oil division listed in the SGX,.... I dunno, will u buy a car and not allowed to drive? (controlling interest?) The fact that most of us are in here and looking out for opportunities to invest/speculate means WE WANT FULL CONTROL. Right?
Sheeeeeeshh,...........
Scomi's market price does not reflect its true value.
Yes, I think its is not upwards bias but down ward bias,...........
I think there is more to it than meets the eye on this privatisation. SH does not waht SCOMI to be listed when the big boys from their creditors come knocking on his door. I suspect he knows it is soon.
I believe the issue is rather simple.
One of the benefits of being public listed is simply BEING PUBLIC.
Now which sane person would want to pay so much money (rm787 to rm984 million) so that they can fully own a PRIVATE company that IS IN A NETT DEBT of RM903.946 million??? Paying so much to be so in debt??
SCOMI GROUP BERHAD ARTICLE ENTITLED: "Scomi to be taken private?"
Reference is made to a query from Bursa Malaysia Securities Berhad dated 15 November 2006 in relation to the article appearing in The New Straits Times (Business Times, page 39) on Wednesday, 15 November 2006 and in particular pertaining to the statement which is reproduced as follows:
-"…major shareholders of Scomi Group Bhd may take the … firm private in a bid worth as much as RM1 billion."
The Board of Directors of Scomi Group Bhd wishes to advise that, the Company is not aware of any plan or intention by its major shareholders relating to the issues highlighted in the said article and has not received any notice from its major shareholders relating thereto.
In addition, the Company has made due enquiry with its largest shareholder, Kaspadu Sdn Bhd, and has been informed that although Kaspadu has received a number of preliminary proposals relating to its stake in the Company, no decision with respect thereto has been made that warrant announcement by the Company.
Exactly, no good smaritan invests so that a bunch of people can remain employed.
Alot of private companies are trying their best to get floated. This company is going reverse gear. Only triggering red flags in my mind.
Why seeking shelter from the money market? Can it be, he sees volatility of the worse kind?
In today's market why would someone lock up his money and have no control over it? (Liquidity?) Sounds like a pretty girl calling me to go with her into a dark alley to meet her four brothers.
