TimeDotCom/Time Eng: The latest restructuring undertaken by Time Engineering may end up making the company cash rich and less vulnerable to being a takeover target as it moves its 24.9% stake in TimeDotCom under Khazanah. The proposed offer for sale of its TDC stake will also benefit Khazanah. Time is expected to rasie RM300 million from the proposed exercise, which would enable Time Eng to divest its stake in TDC, in a manner that provides shareholders an opportunity to have a direct participation in the prospects and future performance at a discount to the market price. Furthermore, the divestment will allow Time Engineering to fully redeem its RSLS issued to Bank Pemb Malaysia Bhd, thus benefiting Time Eng in terms of interest costs savings, enable the company to generate additional funds for working capital purposes, expansion of existing businesses and for investment when such opportunities arises. It is expected to be completed by mid 2011.
Time Eng has proposed to undertake a renounceable offer for sale its 626.18 million shares in TimeDotCom (TdC) to TEB shareholders. The offer would be on the basis of eight offer shares for every 10 shares held in TEB, representing 24.51% equity interest in TdC. The offer price would be not less than 20% to the five-day volume weighted average market price up to the day prior to the price-fixing date. However, it shall not be less than 48 sen per offer share.
If TDC is the key attraction, why were all the past rumored takeover attempts focused on Time Eng? The answer could lie in the relative control to the acquirer given the large difference in market cap between Time and TDC. At 0.72, TDC has market cap of rm1.82 billion. Time at 46 sen has rm356 million market cap. To gain control directly in TDC, a potential acquirer will need to fork out rm453 million. On the other hand, if a potential buyer acquires a controlling 32% stake in Time Eng from Khazanah’s 45% block will cost only rm114 million. Thus by the same reasoning, Khazanah should be able to get more money by selling the TDC stake directly, rather than via Time Eng.
TimeDotCom: 0.95 (HLB)
WCT: WCT has fixed the warrants price for its bond cum warrant at 0.34 sen. The exercise price of the warrants has been fixed at rm2.75. As at Sept 30, 2010 the company had rm544 million in long term borrowings and rm517 million in short term borrowings and rm618 million in cash. That translates into a net debt of rm443 million against shareholder funds of rm1.22 billion.
WCT: 3.95 (AMResearch), 4.15 (HDBS), 3.45 (BIMB), 2.89 (OSK), 3.76 (TA), 4.24 (MIDF), 4.21 (CIMB), 3.75 (MBB)
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