23 May 2012
Multi-Purpose Holdings (MPHB) to list its non-gaming business on Bursa Malaysia stock exchange
(MPHB closing price today (23.6.2012) was RM 2.93)
The Multi-Purpose Holdings Bhd (MPHB) group will demerge its gaming and financial services business into two independent entities.
It said on Wednesday the existing MPHB would hold the gaming business while a special purpose vehicle would hold substantially the financial services businesses and the group's other investments.
MPHB said the proposed demerger would see MPHB selling its assets and liabilities to another unit SPV Capital to be satisfied by new shares in the SPV and/or cash to MPHB.
Under the second stage, MPHB would sell all its SPV Capital shares to the MPHB shareholders.
SPV Capital would then be listed while MPHB would also remain listed.
MPHB would then change its name to incorporate the word "Magnum" to better reflect the core business of the new MPHB Group, which is gaming.
Updated on 24.5.2012- More information on the corporate exercise
Multi-Purpose Holdings Bhd (MPHB) will inject its non-gaming assets into a special purpose vehicle (SPV Capital) and list it on the Main Market of Bursa Malaysia.
The non-gaming assets include financial services business held under Multi-Purpose Insurans Bhd, stockbroking operated by A A Anthony Securities Sdn Bhd and hotel investments.
The assets' net book value are estimated to be RM941.4 million as at end-2011.
MPHB said in a statement yesterday it is planning to split its gaming business, operated by Magnum Corp Sdn Bhd, and its non-gaming assets to create two separate entities.
The gaming business will remain listed under MPHB, while the non-gaming assets will operate under SPV Capital.
MPHB managing director Datuk Surin Upatkoon said the non-gaming assets, including the liabilities, will be transferred to SPV Capital via the issuance of new shares and/or cash.
As part of the proposed demerger and listing, MPHB will make an offer for sale (OFS) for all its shareholdings in SPV Capital to entitled shareholders at a price to be fixed later.
MPHB will then distribute all the net proceeds from the OFS via a capital repayment.
Surin said the demerger will allow MPHB to position itself as a "gaming-dividend" stock with a sustainable dividend payment policy of at least 80 per cent of its profit annually.
This, however, is subject to the gaming business' prospects, growth or expansion, and adequacy of reserves.
He said the exercise will also provide a platform for both MPHB and SPV Capital to separately pursue different and more tailored business strategies.
"It offers MPHB's shareholders the choice to partake in the financial services and other investments by investing directly in SPV Capital while concurrently preserving their holding in MPHB, which would be dividend-centric," Surin explained.
At the group's shareholders meeting yesterday, director T. Vijeyaratnam said that with the assets demerger, MPHB will become a pure gaming player.
"Gaming is our principal business ... the direction of the group will be much clearer now," he said.
For its fiscal year 2011, MPHB posted a net profit of RM482.03 million on revenue of RM3.54 billion, of which Magnum had contributed around 75-80 per cent and more than 80 per cent, respectively.
Meanwhile, AmResearch Sdn Bhd said spinning off the non-gaming assets is a faster way of selling off the assets, compared to looking for a buyer and then negotiating on the pricing.
The firm has maintained its "buy" call on MPHB due to potentially higher dividend payouts.
MPHB closed two sen higher to RM2.93 yesterday.