A reverse takeover in the offing for GPA?

TheEdge Mon, Aug 17, 2020 06:00pm - 1 year View Original


PUBLICLY traded battery manufacturer GPA Holdings Bhd could be the subject of a reverse takeover (RTO) by data centre operator Regal Orion Sdn Bhd, sources familiar with the company tell The Edge.

It is understood that ongoing talks for Regal Orion to take over GPA via an RTO were stymied by the Covid-19 lockdowns, which resulted in the former’s owner, Ryuichi Shimokawa, being stranded in his country of domicile, Japan.

Shimokawa wholly owns Regal Orion, which in March 2018 had acquired a data centre in Techpark @ Enstek, Labu, Negeri Sembilan through KPMG, which was acting as a receiver and manager for Affin Bank Bhd, on an “as is where is” basis, for RM69 million.

Investments into the data centre since then have been substantial, but its real worth is not known. News reports say investments of up to US$300 million (RM1.2 billion then) have been, or are in the process of being, made.

“There were talks [for an RTO between GPA and Regal Orion], but from what I gather, Covid-19 brought everything — the talks, the negotiations — to a standstill,” a merchant banker with knowledge of the RTO says.

“I am not sure if the talks have started again,” he adds.

GPA’s executive chairman James Poh Weng Chion did not reply to a query from The Edge on the possible RTO by Regal Orion. A question to Regal Orion’s general email went unanswered as well.

A search on CTOS did not turn up any information on Regal Orion’s financial details, making it difficult to find out the company’s worth. Other than Shimokawa, the company’s directors are Mimie Suraya Samani, Koichiro Hara and Yoshihiro Kiguchi. Checks online show that Mimie could be a commissioner of oaths.

Interestingly, one of Regal Orion’s two addresses is at Menara JKG in Jalan Raja Laut, Kuala Lumpur. Menara JKG is owned by JKG Tower Sdn Bhd, which in turn is wholly owned by Inai Daya Sdn Bhd, a private company controlled by Tan Sri Robert Tan Hua Choon.

Tan is the controlling shareholder of GPA, with a 28.32% stake. He is also GPA’s non-independent non-executive chairman.

Tan stepped down from the board of GPA in May 2016. However, last December, Tan — now 79 — and his long-time lieutenant, Datuk Anderson Thor Poh Seng, who was a merchant banker, were reappointed to the board. Thor is a non-independent non-executive director at GPA.

Other than GPA, Tan controls several other listed companies, including property firm JKG Land Bhd, Casio watch distributor Marco Holdings Bhd, diversified company FCW Holdings Bhd and tool manufacturer Jasa Kita Bhd.

Another company controlled by the low-key Tan is Spanco Sdn Bhd, which has a very profitable leasing business, supplying cars to the government. Spanco is competing with a consortium, made up of auto players Naza group and Tan Sri Vincent Tan’s Berjaya, for a new auto leasing contract that is up for grabs.

There was talk that Tan was thinking of retiring as he had over the past few years divested three of his companies. In 2017, he sold 51% of ceramic ware company Goh Ban Huat Bhd, which has since morphed into property company Paragon Global Bhd.

He also sold shipping outfit PDZ Holdings Bhd and Sunsuria Bhd, which was known as Malaysia Aica Bhd when under his control.

Talk of Tan looking to hive off some of his other companies, including GPA, had surfaced in the past, but there were no reports of anything substantial materialising.

For its financial year ended March 2020, GPA suffered a net loss of RM1.03 million on the back of RM29.34 million in revenue. The company has incurred losses in the past three financial years. Nevertheless, for the 12 months ended March 2020, it had positive cash flow of RM4.71 million.

As at end-March, GPA had cash and bank balances amounting to RM63.48 million, and little in terms of borrowings, meaning it had a clean balance sheet. Its net asset per share as at end-March was 11 sen.

According to GPA’s latest annual report for FY2019, its main assets are two pieces of land in Klang — a 6.1-acre parcel housing an office and warehouse, and a 3.03-acre parcel that is rented out as a warehouse. Collectively these two parcels had a net book value of RM43.14 million as at end-March 2016.

Last Friday, in intraday trading, GPA’s stock hit a multi-year high of 14.5 sen, which translates into a market capitalisation of more than RM142 million. Since mid-May, its shares have gained more than 80% in value, buoyed by a pickup in trading volume in July.

 

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