HLA/Tasek ...Dated May2008

What’s Up?

A minority shareholder of Tasek Corp Bhd has written to the authorities, voicing his dissatisfaction over the company’s proposed purchase of Hong Leong Asia Ltd’s (HLA) building materials business for S$323.5 million (RM773.6 million) to be satisfied by new Tasek shares.

The shareholder complained to the company’s independent directors, major shareholders such as Lembaga Tabung Haji and the regulators, seeking a better deal for the minorities.

Describing himself as a long-time value investor, the shareholder said he does not question the value of HLA’s assets but reckons Tasek’s shares are “worth much more” and should be issued “at a much higher price” than the proposed RM3.54 per share.

The transaction is tied to a 54-sen special dividend, which means the Tasek shares are valued at RM4.08. The value was based on the average market price when the deal was proposed. The net tangible asset per share of RM4.29 as at March 31 2008, is higher than the proposed issue price.

A higher issue price for the new Tasek shares would mean that HLA gets fewer Tasek shares in exchange for the assets it is selling.

Both HLA and Tasek are companies under the Hong Leong Group which is controlled by Tan Sri Quek Leng Chan.

Based on the proposed issue price of RM3.54, 212.25 million new Tasek shares, or 53.5% of its enlarged share capital, are to be issued for the purchase. This would more than double the HLA group’s stake in Tasek from 31.92% to 68.34%, making the latter its subsidiary.

HLA is seeking a waiver from undertaking a mandatory general offer.