KUALA LUMPUR (March 3): Boustead Holdings Bhd is moving forward with its plan to privatise Boustead Heavy Industries Corporation Bhd (KL:BHIC), with the BHIC board set to table a proposed selective capital reduction and repayment exercise at 48 sen per share for shareholders' approval.

On March 3, BHIC’s non-interested directors resolved to present the proposal at an extraordinary general meeting (EGM) and specialised class meetings for preference shareholders.

DWA Advisory Sdn Bhd has been appointed as the independent adviser to assess the fairness and reasonableness of the offer.

The privatisation, first announced on Feb 10, involves a total cash payout of RM149.59 million to minority shareholders, covering 155.86 million BHIC shares held by the public, and 155.8 million preference shares — comprising 23.63 million redeemable convertible preference shares (RCPS A) and 132.17 million Islamic redeemable convertible preference shares (RCPS-i A).

Currently, Boustead Holdings and its parent, Lembaga Tabung Angkatan Tentera or LTAT, collectively control 74.7% of BHIC's ordinary shares. On completion of the exercise, Boustead Holdings will cancel the entitled shares and RCPS, leaving it with 408.42 million BHIC shares and 84.66 million RCPS B, making BHIC a wholly-owned subsidiary.

The 48 sen price tag represents 54.8% over BHIC's share price of 31 sen on Feb 6 — the last full trading day before the proposal was received — and a 76.41% premium over its five-day volume weighted average market price up to and including that date.

Boustead Holdings believes privatisation will provide the "greater flexibility" needed to manage BHIC’s long-term growth and core initiatives — including those that may require a longer time to realise their value — without the regulatory costs and pressures of a public listing.

BHIC said the proposal also provides an opportunity for entitled shareholders to exit their holdings, given the stock's low trading liquidity. Over the past year, BHIC’s average daily trading volume represented just 0.07% of its free float.

The exercise will be funded by advances from Boustead Holdings, which intends to use a mix of bank borrowings and internal funds. Affin Hwang Investment Bank, the principal adviser, confirmed that the group has sufficient financial backing to see the deal through.

The proposal, subject to minority shareholders' and relevant regulatory approvals, is expected to be completed in the third quarter of 2026, if all conditions are met.

Boustead Holdings itself was privatised in June 2023 via a voluntary takeover offer at 85.5 sen per share, valued at RM703.2 million. That same year, LTAT secured a government guarantee to raise RM2 billion for the privatisation of Boustead Plantations Bhd at RM1.55 per share. LTAT successfully privatised the latter in January 2024.

BHIC’s share price closed unchanged at 45 sen on Tuesday, valuing the company at RM253.9 million.