09 February 2011

MPHB seeks 100% ownership in Magnum

After much speculation on the reason of suspension since yesterday 2.30pm, Multi-Purpose Holdings Bhd (MPHB) finally unveil its answer. An memorandum of understanding (MOU) was signed with two parties (as elaborate further below) seeking to take over its associate Magnum Holdings Bhd. This would cost MPHB around RM1.65 billion to complete the exercise.

MOU with CVC Capital Partners Asia Pacific group
  • To acquire the remaining 49% stake in Magnum
  • To acquire RM674.65 mil nominal value RCULS-C
  • Total costing RM1.627 billion
  • Acquisitions via 343.82 mil new MPHB shares at RM2.30 each and RM 809.20 mil cash
MOU with Management of Magnum
  • To acquire 2 mil magnum shares or 2% equity interest
  • To acquire RM4.86 mil nominal value of RCULS-C together with all accrued interest remaining unpaid
  • Total purchase costing RM37.20 mil
  • Acquisitions via 16.17 mil new MPHB shares at RM2.30 each
What is the rationale behind?
MPHB said the proposed acquisition will enable MPHB to have 100% ownership in Magnum, thus making gaming as the core business of the group. "It would further improve and strengthen the future profitability and cash flow position of the MPHB group via the higher share of Magnum's earnings and cash flows," it said. The stock was last traded at RM2.68 before suspension.

Bloomberg: Past 6 months share price of MPHB
However, Finance Malaysia reckon that the said corporate exercise was to facilitate the exit of CVC Capital, in order to path the way for the re-listing of Magnum on Bursa Malaysia, 3 years after it was privatized. At RM2.30 per new share to be issue, it was deemed fair for CVC Capital to cash out. Reportedly, MPHB believes that the re-listing of Magnum could fetch a high valuations, given the only listed number forecast operator (NFO) was BJTOTO currently. Another NFO under the umbrella of Tanjong (Da Ma Cai), was privatized last year.

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