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Tan Hua Choon gives up control of another PLC with sale of 51% in GBH

TheEdge Tue, Oct 10, 2017 04:00pm - 2 years ago


LAST Wednesday, businessman Tan Sri Robert Tan Hua Choon sold his 51% stake in ceramic product manufacturer Goh Ban Huat Bhd for RM1.40 per share, or RM133.25 million in total, to Paragon Adventure Sdn Bhd.

While the transaction triggered a mandatory general offer, the price tag was three sen below last Tuesday’s close of RM1.43. Paragon Adventure also acquired 31.32 million or 51% of GBH’s warrants at 40 sen apiece or RM12.53 million in total.

After the sale, Hua Choon is left with 12.82% equity interest in GBH.

“GBH had little in terms of business,” a source close to Hua Choon explains.

In the first quarter ended June 30, it registered a net profit of RM445,000 from RM4.78 million in revenue — an indication of how things have slowed down for the company.

Paragon Adventure is 65% controlled by Datuk Seri Edwin Tan Pei Seng and 35% by his brother, Datuk Seri Godwin Tan Pei Poh. They are the sons of Datuk Tan Eng Boon of Joland Group.

Joland is involved in property development and hospitality and leisure, among others. Its assets include the Grand Paragon Hotel and Kukup Golf Resort, both of which are in Johor. Its active subsidiaries are Amprojek Construction Sdn Bhd, Flagship Builders Sdn Bhd and Pekan Nenas Industries Sdn Bhd, to name but a few.

Interestingly, Joland is undertaking a number of development projects in Johor, namely the Paragon Residences @ Straits View, Paragon Suites @ CIQ, Bizhub Skudai 8, Paragon Square, Pekan Nenas Industrial Park-Phase II and a neighbourhood mall in Jalan Tampoi.

The group also has a mixed-use development in Kuala Lumpur — the Paragon City development — which comprises a retail shopping mall, two serviced apartments and a five-star hotel. Its other interesting assets include the Paragon Private and International School.

It is still unclear if Joland’s assets will be shifted to GBH or how such a move might take place. As at end-June, GBH had cash and bank balances of RM152.73 million and little in terms of debt, which indicates that it could gear up to take on Joland’s assets.

GBH has been cash rich since it sold its 13.93-acre parcel in Jalan Segambut, Kuala Lumpur. The parcel was sold to JKG Land Bhd — one of Hua Choon’s companies — for RM192 million in 2014. News reports stated that GBH realised a net gain of RM71.2 million from the sale.

In May 2015, GBH paid 12 sen in dividends after the sale.

To recap, Hua Choon first surfaced as a substantial shareholder of GBH in December 2006, after buying 6.68 million shares or a 10.79% stake through a married deal. Then, in January 2008, Ceremtec Sdn Bhd — the vehicle of the founding Goh family — sold 11.42 million shares or an 18.4% stake via an off-market transaction. Shares of GBH owned by Ceremtec were pledged to Alliance Bank to support a third-party loan, and the story then was that it was force sold.

This left Ceremtec with 9.87 million shares, or a 15.94% stake, which it eventually divested.

Sources close to the Goh family said that the family had not been aware of the sale by the bank until they found out that large blocks of shares had been transacted off market. The family, it seems, claimed that the notice was given in August 2005, which was 13 months — and too long a time — before the sale of the shares.

Hua Choon made an offer of RM1.25 per share after he accumulated a 30.45% stake in GBH. He subsequently increased his offer to RM1.50 two months later, and ended up controlling some 55% of the company.

GBH’s net asset per share then was RM2.50, largely due to the 13.93-acre parcel.

Hua Choon has always been said to have ties with former finance minister Tun Daim Zainuddin, which date back to the early 1990s.

In 1992, one Robert H C Tan (as stated by Josef Tosovsky, the Czech Republic’s then central bank governor) was said to have set up a bank in the Czech Republic called IC Bank, with a capital of US$13 million.

The bank later became part of Daim’s International Commercial Bank Financial Group (ICB), which was listed on the Alternative Investment Market, a sub-market of the London Stock Exchange.

ICB has since been privatised and many of its banks sold off.

The bank in the Czech Republic was not Hua Choon’s first foray into the banking business — he had a 21.3% stake in Malta-based Lombard Bank. Lee Chen Chong, the then executive director of French-Malaysia Bank Bhd, was sent to helm Lombard Bank.

France’s president, Francois Mitterrand, nationalised all banks in the early 1980s and since Malaysian banking regulations did not allow foreign government-owned banks to operate here, Daim snapped up French-Malaysia Bank from the French government in 1981.

Daim later injected his equity in French-Malaysia Bank for a smaller stake in United Malayan Banking Corp Bhd, which was taken over by Sime Darby Bhd and renamed Sime Bank Bhd. Sime Bank was hived off in 1999 after incurring mounting losses the year before.

Hua Choon’s UCM Industrial Corp Bhd (which became Kuala Lumpur City Corp Bhd) controlled stockbroking outfit KL City Securities Sdn Bhd, which was swallowed by Alliance Bank Malaysia Bhd. Back then, Alliance Bank was linked to Daim via Langkah Bahagia Sdn Bhd.

Although always denied by the former minister, Daim was said to control Langkah Bahagia, at least until April last year when his point person Lutfiah Ismail was said to have sold out of the private company.

 

Is Hua Choon slowing down?

Many are of the view that Hua Choon, who is 76 years old, is winding down as this is the third company he has given up control of — after PDZ Holdings Bhd and Malaysia Aica Bhd — since 2014.

However, a source familiar with him says this is not the case. “He (Hua Choon) is not winding down. He’s buying some [assets], selling others … if an offeror has plans and he can see value, then maybe [he will sell]. The rest [of his companies] he’s holding on [to],” the source says.

Another source familiar with Hua Choon says he had always wanted to get rid of PDZ, and the offer for Malaysia Aica (now Sunsuria Bhd) was good, so he let it go.

“He is still active. He still enjoys doing this,” the second source says.

Other companies, which Hua Choon controls, include FCW Holdings Bhd, Jasa Kita Bhd (which makes electric motors), JKG Land Bhd (a property developer), Marco Holdings Bhd (which sells Casio watches), GPA Holdings Bhd (which makes batteries) and Kilang Sawit Muar Bhd (an oil palm plantation and miller in Muar, Hua Choon’s hometown).

However, Hua Choon is perhaps best known for being one of the shareholders of Spanco Sdn Bhd, which has the mandate to manage the government’s fleet of cars for 25 years, starting from 1994.

His partners in the business are his close associates Datuk Osman Mohd Zain and Abdul Rasip Haron. The other shareholders are his son Tan Han Chuan and daughter Tan Ching Ching.

The privatisation exercise was deemed lucrative as many government departments, such as the police force, have thousands of cars.

However, in 2004, the Ministry of Finance ordered a review of the Spanco deal as it was believed that the government had overpaid for the services. Some reports say the contract sum was reduced to RM80 million per annum from RM100 million previously.

Interestingly, the decision to renegotiate the Spanco contract came after the then deputy prime minister, Datuk Seri Najib Razak, said the government would look into lopsided concessions. He added that the government would learn from its mistakes to ensure that it did not get the “short end of the stick” when negotiating deals with the private sector.

A couple of years ago, however, it was reported that the government was paying a total of RM221.6 million per year to Spanco, to rent a total of 10,963 Proton cars for official use.

Nevertheless, Spanco’s 25-year contract will end in about two years.

 






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