themalaysianinsider.com, Apr 23 2010

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“It appears that it is politically motivated for Samy Vellu’s exit plan because there are a lot of skeletons in the closet wherein they have not taken the interest of the shareholders seriously,” he said.

Nadarajah, representing the Maika Holdings Shareholders Good Governance Task Force, also repeated his claim that the buy-out is a bid to win back Indian support for the MIC and BN in the run-up to the Hulu Selangor by-election.

“He (Gnanalingam) claims that he’s doing social service. This doesn’t look like a social service. It looks like more like short-changing the shareholders.

“It reinforces further (the notion that) this is... politically motivated,” he stressed.

“We’re not very sure if Gnanalingam is very serious. Is he there to cium tangan the prime minister or taking the Indian interest at heart?”

Nadarajah said if Gnanalingam was really inspired by Prime Minister Datuk Seri Najib Razak, as the prominent businessman claimed, he should work closely with the government to make sure shareholders get the best deal.

“It might be even possible to get an interest waiver. Maybe they might save another RM10 million,” the activist suggested.

He said the government should provide projects from GLCs to assist the turnaround, like they did for KUB’s failed investment in Sime Bank.

“They can be more like a broker and make RM30-40 million. This will enhance the offer.”

Nadarajah pointed out that the detailed proposal will only be made after May 1 and asked if the government was going to keep its word if they lost the by-election.

He urged Najib to make a statement on the matter to reassure shareholders.

Nadarajah said that while he welcomed the move by Gnanalingam to buy out Maika, he felt the offer was too low.

“The price is grossly undervalued. We reckon the price would be RM1.10. We don’t know how he got his valuation because the main asset of the company is OCAB (Oriental Capital Assurance Berhad), [an] insurance company.”

Nadarajah pointed out that Ananda Krishnan, through Usaha Tegas Sdn Bhd, had been prepared to offer RM149 million in June 2008 for OCAB’s 74.6 percent stake in Maika.

He said this meant that Ananda had valued Maika at RM200 million.

“If the price is RM0.80 [per share]... I recommend the 1,500 shareholders in Hulu Selangor to vote for the opposition. If it’s RM1.00 or above, [they should] vote the candidate of their choice.”

Nadarajah further urged Pakatan Rakyat Indian MPs and state assemblymen to apply political pressure to ensure that Maika shareholders “are not taken for another ride.”

Maika was established in 1982 to enable Malaysian Indians to increase their market equity but has been plagued by underperforming shares from the start.

Most of its 66,000 shareholders are poor Indian estate workers, some of whom had withdrawn their life savings to invest in the company.

The relatively poor return on investment of Maika shares has been a nagging problem for MIC and the Indian community for the past 26 years.

Gnanalingam revealed yesterday that he was the “white knight” who will buy out troubled Maika Holdings Bhd to the tune of RM106 million.

The executive chairman of West Port already has a 12 percent stake in the troubled company and says he will complete the buy-out in three months.

He claimed it was his intention to return all monies invested by shareholders.

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Another Election Gimmick!

The RM64,000 question is why Samy Vellu, Vel Paari and the Maika board of directors appear to be not interested in maximising returns to their long-suffering shareholders which include themselves by supporting the lowest offer?

Is there a deal behind the deal?

By Donplaypuks

"I refer to the Malaysakini report New firm takes over Maika Holdings.

The salient facts about G Gnanalingam's recent offer to buy out all Maika shareholders are as follows:

1. Maika's paid up share capital - RM125 million.

2. Gnanalingam's offer price - RM106 million or RM0.85 per share.

3. Oriental Capital Assurance Bhd's (Ocab) paid up share capital is RM100 million and as at Dec 31, 2008 it's audited NTA was about RM103 million.

4. Maika's investment in Ocab's share capital is 74.165% or 74,174,640 shares, ie, Maika is Ocab's holding company as it has both more than 51% equity shares and control in Ocab. Maika's CEO Vell Paari a/l Samy Velu also sits on the board of directors of Ocab.

5. Prior to Gnanalingam's buyout proposal, there were two other offers to Maika as follows:

a. RM129 million or $1.75 per share by Salcon

b. RM149 million or $ 2.01 per share by Usaha Tegas, the holding company of tycoon Ananda Krishnan.

The Salcon offer was frozen by a court order taken out by Nesa Cooperative, Maika's single largest shareholder who had objected on the grounds that Maika's 74% investment in Ocab had not been independently valued.

Nesa had recommended the investment in Ocab be sold by open tender. Nesa also revealed there were two other parties interested in acquiring Ocab's shares, one from Europe and another from Australia.

As to the RM149 million offer by Usaha Tegas, apparently Maika rejected this offer as it could not accept certain pre-conditions insisted upon by Usaha Tegas. What these pre-conditions were have not been revealed by Maika's directors.

In the light of the above, I demand the board of directors of Maika explain:

1. Why do they think Gnanalingam's offer of RM106 million is suddenly acceptable to them when they unequivocally know there are local market players in the insurance business and foreign parties who are willing to pay more?

2. Why are they unwilling to offer the Maika or Ocab shares for sale by open tender with a reserve price of say, RM150 million, given the Usaga Tegas offer? If as Gnanalingam says, Maika's debts are RM30 million, the net minimum proceeds of RM120 million would be a fair and handsome reward to Maika's shareholders who for some 20 years have received no dividends while there was a period when their CEO was paid a remuneration of RM15,000 per month.

As to Gnanalingam being quoted as saying he's doing 'national service', he contradicts it by saying he will need six months to find another financier which suggests he is looking at flipping the Maika/Ocab shares for a quick gain. So much for national service.

Financiers may do charity work and make sizeable donations from their profits and gains, but their natural predatory instincts mean they will always squeeze out the juicy bits of the best deals for themselves.

It seems clear to me, and for the matter any sane person, that the Maika/Ocab shares are worth a hell of a lot more than Gnanalingam's RM106 million offer.

The RM64,000 question is why Samy Vellu, Vel Paari and the Maika board of directors appear to be not interested in maximising returns to their long-suffering shareholders which include themselves by supporting the lowest offer?

Is there a deal behind the deal?"

Thank you.

dpp
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