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From: AFP
Date: 05 May 1999
Time: 13:28:19
SINGAPORE, May 5 (AFP) - A Malaysian firm's offer to buy at a discount billions of dollars worth of frozen Malaysian shares held by investors here falls short of accepted standards, the Stock Exchange of Singapore (SES) said Wednesday. "The SES is of the view that the offer document falls short of generally accepted standards," it said in statement released at a news conference.
However, despite the SES' reservations, the exchange said it would distribute details of the offer to CLOB investors for them to study and left open the possibility of a resolution to the issue.
The offer by a company linked to Malaysia-based Singaporean businessman Akbar Khan was aimed at resolving an impasse over shares caught in limbo by the imposition of Malaysia's capital controls last September.
It has caused a stir in the market and triggered protests from the largely Singaporean shareholders.
"Whatever may be the outcome of this offer, investors really should not panic," said Lim Choo Peng, president of the Stock Exchange of Singapore.
"Certainly, we will try to find a solution which will meet the concerns of the Malaysians and our concerns," he told reporters.
Some 100 Malaysian counters were traded here over the counter under a system called Central Limit Order Book (CLOB) International.
The SES said Wednesday that the offer by Khan "does not provide evidence that the offeror can satisfy in full, acceptances by shareholders."
Khan's (EDS: correct) company, called Effective Capital Sdn. Bhd., is putting up 5.8 billion Malaysian ringgit (1.52 billion US dollars) to buy back shares at discounts averaging 45 percent of their market price on September 15, 1998, which was the last day of trading of CLOB shares.
But SES said the offer should include "independent confirmation that Effective Capital has secured the financial resources to meet the cash requirements for all the CLOB shares under the offer" as well as related costs.
"In addition, there is absent from the offer documents a responsibility statement from a financial advisor," it said.
The Singapore exchange also noted that the offer was not unconditional.
If Singapore shareholders accept the offer this would be considered "irrevocable," while the offeror can suspend "performing his obligations in the event of circumstances beyond his control," the Singapore exchange noted.
The exchange said that Effective Capital had yet to obtain the approval of the central Bank Negara Malaysia to pay in US dollars those who had accepted the offer.
The company's offer for the share prices represented on average "an approximate premium of 45 percent to the market price as at 15 September 1998," which was the last day of trading of Malaysian shares in Singapore's CLOB International.
But the Singapore exchange noted that Effective Capital failed to mention that most CLOB securities closed on the Kuala Lumpur Stock Exchange on September 15 at higher prices than the company was offering.
The prices were also on average 50 percent lower than their closing prices on the Kuala Lumpur Stock Exchange on April 30, 1999, the Singapore exchange said.
Many CLOB stockholders and dealers had said the offer prices were way too low from what they had initially invested.
As part of capital controls introduced in September last year, Kuala Lumpur moved to curb offshore trading of Malaysian stocks.
Reports from Kuala Lumpur said Effective Capital may make a second proposal in the form of a closed-end fund if its cash offer is rejected.
It would involve an exchange of CLOB shares for units in the fund, the Business Times daily cited Effective Capital Sdn. Bhd. chief executive Mohamed Moiz Ali Moiz as saying.
The Stock Exchange of Singapore said that a subsidiary of the Kuala Lumpur Stock Exchange which was to facilitate the transfer of the CLOB shares to the Malaysian central depository system.