SILVER ... Jun11

Its tie up with KPFM as part of the national food stockpile agenda has stirred interest in the company. The question now is how significant this venture will be for Silver Bird, which currently earns most of its income from confectionery products and prepaid cards.

The national food stockpile, or GMN was mooted to boost the income of FELDA settlers and is expected to constitute between 10% and 18% of national consumption.

KPF Quality Foods Sdn Bhd (KPFQ), in which Silver Bird owns 30% stake via its unit Stanson Marketing Sdn Bhd, was established for this purpose.

KPFM’s wholly owned subsidiary KPF Holdings Sdn Bhd holds a 60% stake in KPFQ, while the remainder 10% is held by little known Consortium Fresh Food Quality Bhd (CFFQ).

Under the deal, KPFQ will purchase, process, package and sell agri food products and other related food products from GNM and other suppliers.

It has been reported that the Federal Land Development Authority (FELDA) has committed rm750 million to the GNM project over the next 10 years. Will Silver Bird et a big slice of this cake?

The venture is a boon to the company it will have to access to KPFM’s more than 30000 retail outlets and FELDA’s community of more than one million settlers and their families, and FELDA staff. Silver Bird currently has 20000 participating retail outlets.

More importantly, the collaboration also gives Silver Bird the opportunity to grow beyond Malaysia and Singapore, as it plans to ride on Felda Golobal Ventures Holdings Sdn Bhd’s network abroad. The group’s international businesses are held under FCVII, which is owned by FELDA.

This tie up with FELDA will definitely give Silver Bird a quantum leap and the distribution of the agri food products will start as early as July 2011.

Furthermore since the venture will leverage on Silver Bird’s fleet of more than 300 trucks, the company can fully utilize its asserts and hence, generate a higher return on assets. While FELDA group has its own distribution channels, Silver Bird’s agenda of distributing agricultural products. Silver Bird’s confectionery products have a shorter life span, similar to that of agri food products.

Silver Bird attributes the collaboration with FEDLA to Daud Yunus, the MD of Perkasa Nomandy. The fund management company is the adviser for CVC Ltd, which in turn owns more than 9% of Silver Bird. While Daud controls CEFQ, which has a 10% stake in Silver Bird, its MD has more than 15% stake in it, which Berjaya Corp Bhd’s Tan Sri Vincent Tan holds a 21.59% stake.

As KPFM has a 13.36% stake in Silver Bird, it makes sense for it to undertake the project with the latter. Additionally, KPFM can leverage on Silver Bird’s brand name and network to market the products.

Silver Bird’s tie up with FELDA could be a catalyst for the company’s shares.

Meanwhile Silver Bird Group Bhd has proposed a private placement exercise of new ordinary shares of up to 10% of its issued and paid-up share capital. The actual proceeds to be raised from this would be dependent on the issue price and actual number of placements shares to be issued.

Proceeds from the proposed private placement should be utilised for repayment of bank borrowings as well as to defray the expenses in respect of the proposed private placement.

The group's total outstanding borrowings stood at RM130mil as of June 6 2011.