KUALA LUMPUR (Sept 23): Shares in MMC Corp Bhd struggled for traction as the counter fell 2.82% or five sen to RM1.72 this morning, its lowest in almost two months, ahead of the group's extraordinary general meeting (EGM) slated for next Thursday (Sept 30) on the proposed selective capital reduction (SCR) and privatisation of MMC by its controlling shareholder tycoon Tan Sri Syed Mokhtar Albukhary. 

Shortly after the stock opened flat at RM1.77 this morning, it lost strength before dipping to its lowest since July 29 this year.

At noon break, the stock pared some losses at RM1.73, still down four sen or 2.26% compared to yesterday's closing price of RM1.77. 

The stock has been on a downtrend this week so far. Compared to last Friday's closing price of RM1.85, the stock cumulatively shed 12 sen or 6.48% to RM1.73 as of writing.

Nonetheless, the stock has rallied 73% since the announcement was made on June 3.

At RM1.73, it had a market capitalisation of RM5.27 billion. 

The company is seeking to obtain shareholders' approval for the proposed SCR and privatisation of MMC as well as a bonus issue during its upcoming EGM.

In June this year, Syed Mokhtar said he is looking to take MMC private via an SCR at RM2 per share.

Syed Mokhtar's vehicle Seaport Terminal (Johore) Sdn Bhd (STJSB), which owns 51.76% or 1.58 billion shares in MMC, announced that it would be conducting the exercise for the 1.47 billion shares or 48.24% stake it does not own in the company.

In total, STJSB would be spending RM2.94 billion for the privatisation bid. MMC's latest issued share capital stood at 3.05 billion shares.

At RM2 per share, the SCR values MMC at RM6.08 billion. Under the SCR, it aims to cancel 1.47 billion shares. MMC’s latest issued share capital stands at 3.05 billion shares.

As a result of the exercise, MMC would then become a wholly-owned subsidiary of STJSB, which does not intend to maintain MMC’s listing status.

The announcement confirms The Edge’s earlier report that MMC would be privatised via an SCR at RM1.80 to RM2 per share.

However, its independent adviser Alliance Investment Bank Bhd said the SCR was "not fair" as the offer price of RM2 per share is lower than the estimated value of between RM3.32 and RM3.41 — ultimately placing Alliance's estimated value of MMC at between RM10.1 billion and RM10.37 billion.

However, the adviser is of the view that the proposal is "reasonable" on the grounds that MMC shares had not traded above the offer price for three years before the proposal was announced on June 3, Alliance said in the company's circular on the exercise dated Sept 8.

A quick check showed that the last time the stock's closing price rose beyond RM2 was during January 2018, and has never returned to that level since then.

Meanwhile, to facilitate the implementation of the proposed SCR, MMC has proposed to undertake a bonus issue of 1.59 billion new shares. 

“All MMC shares to entitled shareholders including the new MMC shares to be issued pursuant to the proposed bonus issue will be cancelled pursuant to the proposed SCR," said MMC in its June 3 filing.

Notably, the other substantial shareholder in MMC is Permodalan Nasional Bhd, with a 20.97% stake in the port operator.

MMC is mainly involved in the ports and logistics, energy and utilities, engineering and industrial development sectors. It holds 38.45% in Malakoff Bhd.