Friday, April 8, 2011

Mamee major shareholders propose RM4.39 a share capital repayment, 22pct over last traded price

KUALA LUMPUR: MAMEE-DOUBLE DECKER (M) BHD []'s major shareholders ' who collectively hold 79.1% -- have proposed a selective capital repayment (SCR) of RM4.39 a share to the remaining shareholders under a corporate exercise to take it private.

At RM4.39, this was a premium of 79 sen or 21.94% above the last traded price of RM3.60 on Wednesday, April 6.

Mamee said on Friday, April 8 that it had received a letter from Tanah Subor Sdn Bhd, acting on behalf of the non-entitled shareholders, requesting for the SCR to be made to the entitled shareholders owning the remaining 20.9%.

The non-entitled shareholders would also waive their entitlements to repayment of capital under the SCR. They include Mamee directors Datuk Pang Chin Hin, Datuk Pang Tee Chew and Datuk Pang Tee Nam, who are acting in concert with Tanah Subor and the four hold a combined 63.95% stake in Mamee. The other parties acting in concert with the four parties own another 15.15%.

Mamee said as at April 6, its paid-up share capital was RM145.66 million comprising 145.66 million shares (excluding treasury shares). The paid-up would be reduced by cancelling the shares held by all entitled shareholders. This would reduce the paid-up by RM179.81 million or 179.81 million shares.

'In view that the number of Mamee shares to be cancelled is higher than the existing issued and paid-up share capital of Mamee, a bonus issue may be proposed and undertaken by MAMEE to increase the paid-up share capital of Mamee up to a level which is sufficient for the capital reduction,' it said.

Upon completion of the exercise, the non-entitled shareholders would own 100%of Mamee.

Mamee said the proposed SCR would be funded via an advance from the non-entitled shareholders and/or financing facilities to be obtained by Mamee from financial institution(s).

'The non-entitled shareholders have indicated that they do not intend to maintain the listing status of Mamee on the Main Market of Bursa Malaysia Securities Bhd upon completion of the proposed SCR,' it said.

Mamee said the board, had in its fourth quarter results announcement for FY10,'' expressed concern about the trend of increasing raw material prices as well as the foreign exchange volatility amidst the uncertain economic environment.

To maintain the group's competitiveness in the prevailing competitive market environment, substantial capital expenditure may need to be incurred to improve productivity and to expand production capacity.

To fund the capital expenditure, the Group may need to incur higher bank borrowings and this may result in higher borrowing costs which will then affect the dividend payment capability of Mamee in the immediate term.

Mamee also said its shares have been thinly traded. The daily average trading volume of Mamee shares over the past one year up to April 6 was about 88,696 Mamee shares, representing approximately 0.22% of Mamee's total free float of 40.059 million shares.

Given the challenging market environment and low trading liquidity of Mamee shares, the poposed SCR represents an opportunity for the entitled shareholders to realise their investments in Mamee at an attractive premium above the historical trading prices of Mamee.

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