Update
I have been informed (but cannot verify) that Mr. Rajalingam resigned to concentrate on other matters. Whatever it is, we wish him well.
End Update
It's called a retirement but for higher managerial position the notice period can be 3-6 months for a retirement/resignation so that a replacement can be found.
I believe Mr. Rajalingam was hired to shake up the company and improve its operations. I think he has/was been doing that, judging by the company financials. The question is, why did he resign/retire so soon?
Change in Chief Executive Officer
Reference No CP-080829-35134
Company Name : PREMIUM NUTRIENTS BERHAD
Stock Name : PREMIUM
Date Announced : 29/08/2008
Date of change : 31/08/2008
Type of change : Retirement
Name : RAJALINGAM A/L RVR SINGAM
Age : 57
Nationality : MALAYSIAN
Qualifications : CA (M) FCCA
Working experience and occupation : MORE THAN 30 YEARS IN FINANCE, AUDIT OR GENERAL MANAGEMENT
Directorship of public companies (if any) : NONE
Family relationship with any director and/or major shareholder of the listed issuer : NONE
Details of any interest in the securities of the listed issuer or its subsidiaries : NONE
Remarks
Mr. Rajalingam a/l RVR Singam retires as Chief Executive Officer of the Company with effect from 31 August 2008. He has been appointed as Advisor of the Company effective 1 September 2008. The powers, roles and responsibilities vested in him as Chief Executive Officer will be passed on to Mr. Tharumarajah a.l Thillarajh, Managing Director of the Company effetive 1 September 2008.
© 2008, Bursa Malaysia Berhad. All Rights Reserved.
From the 2006 Annual Report
Mr. Rajalingam a/l RVR Singam, a Malaysian, aged 55, was apponted as Chief Executive
Officer of the Company on 1st January 2007. He has more than 30 years of experience in
the areas of auditing, accounting, financial management and business entrepreneurship.
Mr. Rajalingam is a Fellow of The Chartered Association of Certified Accountants (FCCA),
a Chartered Member of the Malaysian Institute of Accountants (MIA) and a Chartered
Member of the Institute of Internal Auditors (CMIIA). He has experience in the plantation
and property sector having had served in two public listed companies at senior positions
prior to his present appointment.
The new CEO, also from the same annual report
Tharumarajah a/l Thillarajah, a Malaysian, aged 60, was appointed to the Board and
assumed the position of Managing Director with effect from 2nd May 2007. He did the
external professional course in mechanical engineering, Council of Engineering Institute
(U.K.) at University Technology Malaysia. He commenced his working career with Sime
Darby Plantation in 1971 as Trainee Engineer and held several senior management positions
within this company before retiring in 2001 as General Manager of Kempas Edible Oil,
a leading manufacturer of edible oils and fats. He has extensive experience in General
Management and internal marketing of edible oils and fats. From 2001 to date of joining
the Board, he was employed as Chief Executive Officer of local Engineering Company who
were the exclusive agents of Silikel Germany specializing in industrial flooring system.
They were both hired to clean the company up after the travails of the previous managing director. It is sad/disappointing to see one of them go after 1 year 8 months. Does anyone know why he resigned/retired?
As I mentioned is a post script in my previous post, the just released cumulative quarterly result is a big improvement over last year, especially in a tough economic climate as we are all currently facing.
P.S - And of course we wish him well.
Friday, August 29, 2008
Wednesday, August 27, 2008
Related Party Transactions between Premium Nutrients and Status Point (or it looks like Status Point is insolvent).
This is going to be a long post since there are a number of lengthy announcements/info to include.
I suggest reading the summary first.
Status Point is a 100% subsidiary of NLFCS while Premium Nutrients is a public listed company and a 32% associate of NLFCS.
Prologue
This really goes back to
http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html
and this
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
and a little bit of this
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
and this bit
Status Point Sdn Bhd
Latest Accounts as at 31-12-07
Paid Up Capital : 8,000,000
Operating Revenue : 17,438
Profit After Taxation : 1,151,623
Net Profit Margin : ?
Unappropriated Profit Brought Forward : -11,601,737
Unappropriated Profit Carried Forward : -10,450,114
Not sure how they made such a profit with such a low Operating Revenue Figure. If I can surmise, it is likely from extraordinary gains from the sale of an asset.
from here
http://reform-nlfcs.blogspot.com/2008/06/look-at-nlfcs-subsidiaries-and.html
I mentioned back in
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
About the related party transactions and how they were suddenly turning up in the 2007 accounts for 2006. Basically backtracking on previous information/annual report without any explanations.
(If you look here http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html you can see other differences like interest income receivable from subsidiaries at the company level)
end of prologue
I will try to structure this the most informative way possible, highlighting key points.
First lets start with this announcement on the 08/08/08 from Premium Nutrients
You can view it yourself here (especially the excel files)
http://announcements.bursamalaysia.com/EDMS/annweb.nsf/LsvAllByID/482568AD00295D074825749F003585DD?OpenDocument
I have copied the excel files in pdf format and they can be viewed here http://reform-nlfcs.blogspot.com/2008/08/pkp-sales-to-nalfin-realities-and.html
Type : Announcement
Subject : RELATED PARTY TRANSACTIONS ("RPT")
Contents : Pursuant to paragraphs 10.08, 10.09 and Practice Note 12/2001 of the Listing Requirements of Bursa Malaysia Securities Berhad, Premium Nutrients Berhad ("Premium" or "the Company") wishes to announce that related party transactions ("RPTs") have occurred whereby the wholly-owned subsidiary of the Company, Premium Vegetable Oils Sdn. Bhd. ("PVO") had entered into several contracts with Nalfin Realities Sdn. Bhd. and Status Point Sdn. Bhd. for the sale of Palm Kernel Pellets.
Attachments : Nalfin.xls
status inv (2).xls
Announcement Details :
RELATED PARTY TRANSACTIONS (RPTs)
Contents:
1. INTRODUCTION
Pursuant to paragraphs10.08,10.09 and Practice Note No. 12/2001 of the Listing Requirement of Bursa Malaysia Securities Berhad, Premium Nutrients Berhad (“Premium” or “the Company”) wishes to announce that related party transactions (“RPTs”) have occurred whereby the wholly-owned subsidiary of the Company, Premium Vegetable Oils Sdn. Bhd (‘PVO’) had entered into several contracts with Nalfin Realities Sdn. Bhd. and Status Point Sdn. Bhd. for the sale of Palm Kernel Pellets (PKP) for total purchase price satisfied by cash as follows:
Name of Company Year of Transaction Amount (RM)
Nalfin Realities Sdn. Bhd. 2005 2,267,657.13
2006 2,466,106.56
Status Point Sdn. Bhd. 2006 9,718,431.80
2007 17,316,750.19
2008 8,231,369.79
2. DETAILS OF THE RPTs
Information on the sale of PKP is as per the attached appendices.
The prices, terms and conditions of the above RPTs as contained in the respective SPAs are determined on arm’s length basis and on normal commercial terms which are not more favourable to the related parties than those generally made available to the public buyers.
3. RATIONALE
The RPTs are in the ordinary course of business of Premium Group.
4. EFFECTS OF THE RRPTs
The effects of the RPTs on Premium are as set out below:-
(a) Share Capital and Substantial Shareholdings
The RPTs do not have any effect on the issued and paid-up share capital of Premium or the shareholdings of Premium’s substantial shareholders.
(b) Gearing
The RPT’s do not have any effect on the gearing of Premium.
(c) Earnings and Net Assets
The RPTs have have not had any material effect on the net assets of Premium Group for the financial years ended 31 December 2005, 2006, 2007 and are nnot expected to have any material effect on the net assets of Premium Group for the financial year ending 31 December 2008, but is anticipated to contribute positively to the future earnings of Premium Group.
5. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
National Land Finance Co-opertive Society Limited (“NLFCS”) is deemed interested in the RPT by virtue of it being a common substantial shareholder of Premium, Status Point Sdn. Bhd. and Nalfin Realities Sdn. Bhd.
Y Bhg. Tan Sri Dato’ Dr. K.R. Somasundram and Datuk Sahadivanaidu s/o Baliah are deemed interested in the RPTs by virtue of them being Directors of Premium and holding senior management posts in NLFCS and connected to Premium and PVO. Y Bhg. Tan Sri Dato’ Dr. K.R. Somasundram is also a substantial shareholder of Premium.
The interested directors have abstained from deliberations and voting at the Board Meetings for the RPTs. Accordingly, the said Directors and substantial shareholders and persons connected with them will abstain from voting in respect of their direct/indirect shareholdings in Premium, if any, on the resolutions to be tabled at an EGM to be convened for the RPTs, if required.
Save as disclosed above, none of the Directors and substantial shareholders of the Premium Group as well as persons connected with them have any interest, direct and/or indirect, in the RPTs.
6. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors is of the opinion that the RPTs is in the best interest of the Group.
7. DOCUMENTS FOR INSPECTION
The transaction contracts/invoices are available for inspection at the Registered Office of Premium at Level 27, Wisma Tun Sambanthan , Jalan Sultan Sulaiman, 50000 Kuala Lumpur, during normal business hours from Monday to Friday (except Public Holidays) for a period of 3 months from the date of this announcement.
The second announcement is dated the 13/08/08 and is a reply to a query :-
You can view it here (I have italicised the response/answers)
http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/LsvAllByID/48256E5D00102DF4482574A4003220D7?OpenDocument
Type : Reply to query
Reply to Bursa Malaysia'sQuery Letter - Reference ID : ZO-080812-44667
Subject : Related Party Transactions
Contents : In connection with the query raised by Bursa vide letter 12 August 2008 (Ref: ZO-080812-44667), the information appended below is as follows:
Query Letter content : We refer to your Company's announcement dated 8 August 2008 in respect of the above matter.
In this connection, kindly furnish Bursa Malaysia Securities Berhad ("Bursa Securities") with the following additional information for public release:-
Whether the transactions in 2005, 2006, 2007 and 2008 are subject to the approval of shareholders.
To quantify the direct and indirect shareholdings of National Land Finance Co-operative Society Limited, Tan Sri Dato' Dr. K.R. Somasundram, Datuk Sahadivanaidu, Status Point Sdn. Bhd. and Nalfin Realities Sdn Bhd. in Premium or a negative statement.
To incorporate a statement that the interested directors and major shareholders have undertaken that they shall ensure that the persons connected with them will abstain from voting on the resolution at the general meeting.
A statement by the board of directors, excluding interested directors stating whether the transaction is in the best interests of the Company and where a director disagrees with such statement, a statement by the director setting out the reasons and the factors taken into consideration in forming that opinion.
Please furnish Bursa Securities with your reply via an announcement within one (1) market day from the date hereof.
Yours faithfully
SUZALINA HARUN
Head, Issuers
Listing Division
Regulation
WCY/ZOOS
c.c.Head, Market Surveillance Department
Securities Commission (via fax)
Announcement Details :
1. Based on Paragraph 10.09 – of the Listing Requirements of Bursa Securities relating to Recurrent Related Party Transactions, the transactions in 2005, 2006, 2007 and 2008 are subject to the approval of shareholders.
In this respect, the Board is in the midst of appointing the Adviser and an Independent Adviser.
2. The Direct and Indirect shareholdings of the related parties in Premium Nutrients Berhad as at June 30, 2008 are as follows:
Name of Related parties Direct Indirect Total Direct% Indirect%
National Land
Finance Co-operative
Society 108,275,312 Nil 108,275,312 32.13 Nil
Limited
Tan Sri Dato` Dr.
K R Somasundram 43,084,313 497,608 43,581,921 12.78 0.15
Datuk
Sahadivanaidu A/L Baliah 210,945 Nil 210,945 0.06 Nil
Subramaniam A/L
Seeenivasagam * 49,761 Nil 49,761 0.01 Nil
Status Point Sdn Bhd Nil Nil Nil Nil Nil
Nalfin Realities Sdn Bhd Nil Nil Nil Nil Nil
3. The interested Directors and Major Shareholders have undertaken that they shall ensure that the persons connected with them will abstain from voting on the resolution at the general meeting.
The Board of Directors, excluding interested Directors state that the related Party transactions are in the best interest of the Company.
*Mr. Subramaniam A/L Seenivasagam is deemed a related party as he is a common Director, being a Director in NLFCS and Premium Nutrients Berhad.
Summary
The enquiry by the Bursa Securities was brought about by the differences highlighted here
http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html
and here
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
But the answers have opened a whole can of worms.
First lets examine the sale of PKP to Nalfin Realities and Status Point
PKP and PKM (Palm Kernel Pellets and Palm Kernel Meal respectively) are byproducts of the process of extracting palm kernel oil from palm kernels. They are an animal feed.
The announcement included excel details of the invoices which I have copied below
http://reform-nlfcs.blogspot.com/2008/08/pkp-sales-to-nalfin-realities-and.html
From Oct 2005 to Dec 05 Premium Nutrients sold 2.26m worth of PKP to Nalfin Realities
From Jan 06 to Mar 06 it sold 2.46m woth of PKP to Nalfin Realities.
Now, very conveniently
It no longer sold PKP to Nalfin Realities but started selling to Status Point, another NLFCS subsidiary right the next month.
From Apr 06 to Dec 06 Premium Nutrients sells 9.7m worth of PKP (or PKM) to Status Point (Status Point bought PKP from Premium in 249 separate transactions!)
From Jan 07 to Dec 07 it sold 17.3m! worth of PKM to Status Point (Status Point bought PKP from Premium in 331 separate instances, that is almost every day of the year!)
From Jan 08 to Jun 08 it sold 8.2m worth of PKM to Status Point (and ongoing?) (and Jan to June 08 Status Point bought PKP in 146 separate instances, almost everyday of the six months from Jan to June!)
This raises a number of questions.
Firstly as I have mentioned before Premium Nutrients has its own marketing division, why is it selling to its associate companies and foregoing the profit they make by selling it on its own?
Nalfin Realities is a holding/trading company, it doesn't use PKP/PKM, it just sells it on and makes profit on Premium Nutrients back.
More interestingly is the sale to Status Point
Now Status Point is described as
We are premium producers of all grades of Desiccated Coconut, Nata De Coco, Coconut Cream and Coconut Shell Flour. From here http://statuspoint.asiaep.com/status.htm
and also as
Manufacturing of Coconut products and other allied products based on coconuts.
from here http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
It has nothing to do with animal feed (pkp/pkm). So why on earth has it started buying 17.3m woth of animal feed in 2007 and continues to do so in 2008?
It becomes clearer if you look at Status Point's accounts for 2007
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
The pertinent details are
Operating Revenue : 17,438
Profit After Taxation : 1,151,623
On revenue of 17,438 it made profit of 1.15m. That is because the buying and selling of animal feed could not be classified as part of its normal revenue. It looks like its entire profit was based of buying animal feed from Premium Nutrients and selling it on, profit that should have gone to Premium Nutrients in the first place.
Status Point has no expertise buying and selling animal feed, it is a company that is a manucfacturer of coconut products, who are actually the people doing the buying and selling? I believe the buying and selling of animal feed by Status Point from Premium Nutrients is the only thing keeping Status Point solvent. That to all intents and purposes Status Point is an insolvent, defunct company with revenue of 17,438 in 2007 and this fact is being kept hidden from NLFCS members.
This is deception! the common directors of these companies have used their control of these companies to shift profit to Status Point from Premium Nutrients thereby impoverising Premium Nutrient shareholders and giving a deceptive picture of Status Point's financial condition to NLFCS directors and to NLFCS members.
This has only come to light because the Securities Commission follow up on a discrepancy in the 2007 and 2006 accounts of Premium Nutrients which is listed company and a 32% associate of NLFCS. This begs the question of what else is happening in the other NLFCS companies that do not undergo public scrutiny?
The directors of Premium Nutrients might approve of this without knowing anything and the directors at the NLFCS level might not know what is going on, but the common directors of Premium Nutrients, NLFCs and Status Point are definitely a party to an attempt to keep Status Point afloat and paint a deceptive picture that NLFCS is doing better than it is. How long did they think they could do this? What else are they doing in all the other NLFCS companies?
The directors of Status Point as at 2007 can be found here
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
They have to answer these questions. What is going on at Status Point? Why is it buying so much PKP/PKM (animal feed)? What else is it doing? Is it buying things from other parts of NLFCS. Is it still a manufacturing concern using coconuts to produce various products? Without this buying and selling on of PKP/PKM, would it still be solvent? How is the profits of 1.15m made of when the revenue is only 17,438 in 2007?
Because this is a Recurrent Related Party Transaction, it looks like Premium Nutrients will have to call an EGM to get shareholders approval of all this transactions (which they should have done in the first place but failed to do). Due to the conflict of interest, NLFCS, the chairman of NLFCS and a few other people can't vote (that is 44.98% of the shares!). Therefore this is a golden (and probably only) opportunity for Premium Nutrient shareholders to make your displeasure heard and felt.
And of course once again, no one is going to be accountable for anything.
P.S = Premium Nutrients has just released its interim financial report for 30/06/08. It's doing well, cumulatively 4.9m profit vs 3m last year.. If only it could concentrate on its own operations instead of doing the shifty things I have highlighted above which is a transfer of profit. Concentrating on itself will benefit everyone especially NLFCS who is the biggest shareholder.
I suggest reading the summary first.
Status Point is a 100% subsidiary of NLFCS while Premium Nutrients is a public listed company and a 32% associate of NLFCS.
Prologue
This really goes back to
http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html
and this
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
and a little bit of this
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
and this bit
Status Point Sdn Bhd
Latest Accounts as at 31-12-07
Paid Up Capital : 8,000,000
Operating Revenue : 17,438
Profit After Taxation : 1,151,623
Net Profit Margin : ?
Unappropriated Profit Brought Forward : -11,601,737
Unappropriated Profit Carried Forward : -10,450,114
Not sure how they made such a profit with such a low Operating Revenue Figure. If I can surmise, it is likely from extraordinary gains from the sale of an asset.
from here
http://reform-nlfcs.blogspot.com/2008/06/look-at-nlfcs-subsidiaries-and.html
I mentioned back in
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
About the related party transactions and how they were suddenly turning up in the 2007 accounts for 2006. Basically backtracking on previous information/annual report without any explanations.
(If you look here http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html you can see other differences like interest income receivable from subsidiaries at the company level)
end of prologue
I will try to structure this the most informative way possible, highlighting key points.
First lets start with this announcement on the 08/08/08 from Premium Nutrients
You can view it yourself here (especially the excel files)
http://announcements.bursamalaysia.com/EDMS/annweb.nsf/LsvAllByID/482568AD00295D074825749F003585DD?OpenDocument
I have copied the excel files in pdf format and they can be viewed here http://reform-nlfcs.blogspot.com/2008/08/pkp-sales-to-nalfin-realities-and.html
Type : Announcement
Subject : RELATED PARTY TRANSACTIONS ("RPT")
Contents : Pursuant to paragraphs 10.08, 10.09 and Practice Note 12/2001 of the Listing Requirements of Bursa Malaysia Securities Berhad, Premium Nutrients Berhad ("Premium" or "the Company") wishes to announce that related party transactions ("RPTs") have occurred whereby the wholly-owned subsidiary of the Company, Premium Vegetable Oils Sdn. Bhd. ("PVO") had entered into several contracts with Nalfin Realities Sdn. Bhd. and Status Point Sdn. Bhd. for the sale of Palm Kernel Pellets.
Attachments : Nalfin.xls
status inv (2).xls
Announcement Details :
RELATED PARTY TRANSACTIONS (RPTs)
Contents:
1. INTRODUCTION
Pursuant to paragraphs10.08,10.09 and Practice Note No. 12/2001 of the Listing Requirement of Bursa Malaysia Securities Berhad, Premium Nutrients Berhad (“Premium” or “the Company”) wishes to announce that related party transactions (“RPTs”) have occurred whereby the wholly-owned subsidiary of the Company, Premium Vegetable Oils Sdn. Bhd (‘PVO’) had entered into several contracts with Nalfin Realities Sdn. Bhd. and Status Point Sdn. Bhd. for the sale of Palm Kernel Pellets (PKP) for total purchase price satisfied by cash as follows:
Name of Company Year of Transaction Amount (RM)
Nalfin Realities Sdn. Bhd. 2005 2,267,657.13
2006 2,466,106.56
Status Point Sdn. Bhd. 2006 9,718,431.80
2007 17,316,750.19
2008 8,231,369.79
2. DETAILS OF THE RPTs
Information on the sale of PKP is as per the attached appendices.
The prices, terms and conditions of the above RPTs as contained in the respective SPAs are determined on arm’s length basis and on normal commercial terms which are not more favourable to the related parties than those generally made available to the public buyers.
3. RATIONALE
The RPTs are in the ordinary course of business of Premium Group.
4. EFFECTS OF THE RRPTs
The effects of the RPTs on Premium are as set out below:-
(a) Share Capital and Substantial Shareholdings
The RPTs do not have any effect on the issued and paid-up share capital of Premium or the shareholdings of Premium’s substantial shareholders.
(b) Gearing
The RPT’s do not have any effect on the gearing of Premium.
(c) Earnings and Net Assets
The RPTs have have not had any material effect on the net assets of Premium Group for the financial years ended 31 December 2005, 2006, 2007 and are nnot expected to have any material effect on the net assets of Premium Group for the financial year ending 31 December 2008, but is anticipated to contribute positively to the future earnings of Premium Group.
5. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
National Land Finance Co-opertive Society Limited (“NLFCS”) is deemed interested in the RPT by virtue of it being a common substantial shareholder of Premium, Status Point Sdn. Bhd. and Nalfin Realities Sdn. Bhd.
Y Bhg. Tan Sri Dato’ Dr. K.R. Somasundram and Datuk Sahadivanaidu s/o Baliah are deemed interested in the RPTs by virtue of them being Directors of Premium and holding senior management posts in NLFCS and connected to Premium and PVO. Y Bhg. Tan Sri Dato’ Dr. K.R. Somasundram is also a substantial shareholder of Premium.
The interested directors have abstained from deliberations and voting at the Board Meetings for the RPTs. Accordingly, the said Directors and substantial shareholders and persons connected with them will abstain from voting in respect of their direct/indirect shareholdings in Premium, if any, on the resolutions to be tabled at an EGM to be convened for the RPTs, if required.
Save as disclosed above, none of the Directors and substantial shareholders of the Premium Group as well as persons connected with them have any interest, direct and/or indirect, in the RPTs.
6. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors is of the opinion that the RPTs is in the best interest of the Group.
7. DOCUMENTS FOR INSPECTION
The transaction contracts/invoices are available for inspection at the Registered Office of Premium at Level 27, Wisma Tun Sambanthan , Jalan Sultan Sulaiman, 50000 Kuala Lumpur, during normal business hours from Monday to Friday (except Public Holidays) for a period of 3 months from the date of this announcement.
The second announcement is dated the 13/08/08 and is a reply to a query :-
You can view it here (I have italicised the response/answers)
http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/LsvAllByID/48256E5D00102DF4482574A4003220D7?OpenDocument
Type : Reply to query
Reply to Bursa Malaysia'sQuery Letter - Reference ID : ZO-080812-44667
Subject : Related Party Transactions
Contents : In connection with the query raised by Bursa vide letter 12 August 2008 (Ref: ZO-080812-44667), the information appended below is as follows:
Query Letter content : We refer to your Company's announcement dated 8 August 2008 in respect of the above matter.
In this connection, kindly furnish Bursa Malaysia Securities Berhad ("Bursa Securities") with the following additional information for public release:-
Whether the transactions in 2005, 2006, 2007 and 2008 are subject to the approval of shareholders.
To quantify the direct and indirect shareholdings of National Land Finance Co-operative Society Limited, Tan Sri Dato' Dr. K.R. Somasundram, Datuk Sahadivanaidu, Status Point Sdn. Bhd. and Nalfin Realities Sdn Bhd. in Premium or a negative statement.
To incorporate a statement that the interested directors and major shareholders have undertaken that they shall ensure that the persons connected with them will abstain from voting on the resolution at the general meeting.
A statement by the board of directors, excluding interested directors stating whether the transaction is in the best interests of the Company and where a director disagrees with such statement, a statement by the director setting out the reasons and the factors taken into consideration in forming that opinion.
Please furnish Bursa Securities with your reply via an announcement within one (1) market day from the date hereof.
Yours faithfully
SUZALINA HARUN
Head, Issuers
Listing Division
Regulation
WCY/ZOOS
c.c.Head, Market Surveillance Department
Securities Commission (via fax)
Announcement Details :
1. Based on Paragraph 10.09 – of the Listing Requirements of Bursa Securities relating to Recurrent Related Party Transactions, the transactions in 2005, 2006, 2007 and 2008 are subject to the approval of shareholders.
In this respect, the Board is in the midst of appointing the Adviser and an Independent Adviser.
2. The Direct and Indirect shareholdings of the related parties in Premium Nutrients Berhad as at June 30, 2008 are as follows:
Name of Related parties Direct Indirect Total Direct% Indirect%
National Land
Finance Co-operative
Society 108,275,312 Nil 108,275,312 32.13 Nil
Limited
Tan Sri Dato` Dr.
K R Somasundram 43,084,313 497,608 43,581,921 12.78 0.15
Datuk
Sahadivanaidu A/L Baliah 210,945 Nil 210,945 0.06 Nil
Subramaniam A/L
Seeenivasagam * 49,761 Nil 49,761 0.01 Nil
Status Point Sdn Bhd Nil Nil Nil Nil Nil
Nalfin Realities Sdn Bhd Nil Nil Nil Nil Nil
3. The interested Directors and Major Shareholders have undertaken that they shall ensure that the persons connected with them will abstain from voting on the resolution at the general meeting.
The Board of Directors, excluding interested Directors state that the related Party transactions are in the best interest of the Company.
*Mr. Subramaniam A/L Seenivasagam is deemed a related party as he is a common Director, being a Director in NLFCS and Premium Nutrients Berhad.
Summary
The enquiry by the Bursa Securities was brought about by the differences highlighted here
http://reform-nlfcs.blogspot.com/2008/06/differences-for-2006-between-2006-and.html
and here
http://reform-nlfcs.blogspot.com/2008/06/reclassification-of-information-in-2007.html
But the answers have opened a whole can of worms.
First lets examine the sale of PKP to Nalfin Realities and Status Point
PKP and PKM (Palm Kernel Pellets and Palm Kernel Meal respectively) are byproducts of the process of extracting palm kernel oil from palm kernels. They are an animal feed.
The announcement included excel details of the invoices which I have copied below
http://reform-nlfcs.blogspot.com/2008/08/pkp-sales-to-nalfin-realities-and.html
From Oct 2005 to Dec 05 Premium Nutrients sold 2.26m worth of PKP to Nalfin Realities
From Jan 06 to Mar 06 it sold 2.46m woth of PKP to Nalfin Realities.
Now, very conveniently
It no longer sold PKP to Nalfin Realities but started selling to Status Point, another NLFCS subsidiary right the next month.
From Apr 06 to Dec 06 Premium Nutrients sells 9.7m worth of PKP (or PKM) to Status Point (Status Point bought PKP from Premium in 249 separate transactions!)
From Jan 07 to Dec 07 it sold 17.3m! worth of PKM to Status Point (Status Point bought PKP from Premium in 331 separate instances, that is almost every day of the year!)
From Jan 08 to Jun 08 it sold 8.2m worth of PKM to Status Point (and ongoing?) (and Jan to June 08 Status Point bought PKP in 146 separate instances, almost everyday of the six months from Jan to June!)
This raises a number of questions.
Firstly as I have mentioned before Premium Nutrients has its own marketing division, why is it selling to its associate companies and foregoing the profit they make by selling it on its own?
Nalfin Realities is a holding/trading company, it doesn't use PKP/PKM, it just sells it on and makes profit on Premium Nutrients back.
More interestingly is the sale to Status Point
Now Status Point is described as
We are premium producers of all grades of Desiccated Coconut, Nata De Coco, Coconut Cream and Coconut Shell Flour. From here http://statuspoint.asiaep.com/status.htm
and also as
Manufacturing of Coconut products and other allied products based on coconuts.
from here http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
It has nothing to do with animal feed (pkp/pkm). So why on earth has it started buying 17.3m woth of animal feed in 2007 and continues to do so in 2008?
It becomes clearer if you look at Status Point's accounts for 2007
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
The pertinent details are
Operating Revenue : 17,438
Profit After Taxation : 1,151,623
On revenue of 17,438 it made profit of 1.15m. That is because the buying and selling of animal feed could not be classified as part of its normal revenue. It looks like its entire profit was based of buying animal feed from Premium Nutrients and selling it on, profit that should have gone to Premium Nutrients in the first place.
Status Point has no expertise buying and selling animal feed, it is a company that is a manucfacturer of coconut products, who are actually the people doing the buying and selling? I believe the buying and selling of animal feed by Status Point from Premium Nutrients is the only thing keeping Status Point solvent. That to all intents and purposes Status Point is an insolvent, defunct company with revenue of 17,438 in 2007 and this fact is being kept hidden from NLFCS members.
This is deception! the common directors of these companies have used their control of these companies to shift profit to Status Point from Premium Nutrients thereby impoverising Premium Nutrient shareholders and giving a deceptive picture of Status Point's financial condition to NLFCS directors and to NLFCS members.
This has only come to light because the Securities Commission follow up on a discrepancy in the 2007 and 2006 accounts of Premium Nutrients which is listed company and a 32% associate of NLFCS. This begs the question of what else is happening in the other NLFCS companies that do not undergo public scrutiny?
The directors of Premium Nutrients might approve of this without knowing anything and the directors at the NLFCS level might not know what is going on, but the common directors of Premium Nutrients, NLFCs and Status Point are definitely a party to an attempt to keep Status Point afloat and paint a deceptive picture that NLFCS is doing better than it is. How long did they think they could do this? What else are they doing in all the other NLFCS companies?
The directors of Status Point as at 2007 can be found here
http://reform-nlfcs.blogspot.com/2008/06/status-point-sdn-bhd.html
They have to answer these questions. What is going on at Status Point? Why is it buying so much PKP/PKM (animal feed)? What else is it doing? Is it buying things from other parts of NLFCS. Is it still a manufacturing concern using coconuts to produce various products? Without this buying and selling on of PKP/PKM, would it still be solvent? How is the profits of 1.15m made of when the revenue is only 17,438 in 2007?
Because this is a Recurrent Related Party Transaction, it looks like Premium Nutrients will have to call an EGM to get shareholders approval of all this transactions (which they should have done in the first place but failed to do). Due to the conflict of interest, NLFCS, the chairman of NLFCS and a few other people can't vote (that is 44.98% of the shares!). Therefore this is a golden (and probably only) opportunity for Premium Nutrient shareholders to make your displeasure heard and felt.
And of course once again, no one is going to be accountable for anything.
P.S = Premium Nutrients has just released its interim financial report for 30/06/08. It's doing well, cumulatively 4.9m profit vs 3m last year.. If only it could concentrate on its own operations instead of doing the shifty things I have highlighted above which is a transfer of profit. Concentrating on itself will benefit everyone especially NLFCS who is the biggest shareholder.
Tuesday, August 26, 2008
Thursday, August 21, 2008
Updates on Nalfin Realities, Nalfin Healthcare and Minsawi
Just a follow up on my post below
http://reform-nlfcs.blogspot.com/2008/06/look-at-nlfcs-subsidiaries-and.html
I have since acquired the 2007 info for Nalfin Realities, Nalfin Healthcare and Minsawi so will do an analysis of the difference between 2006 and 2007. All new information is directly below this blog.
Nalfin Realities Sdn Bhd
Operating Revenue in 2006 : 69,354,660.00
Operating Revenue in 2007 : 98,746,847.00
Revenue increased by 42.38%!
Profit after Taxation in 2006 : -124,194
Profit after Taxation in 2007 : 1,137,992.00
Net Proft Margin for 2007 : 1.15%
Net Profit Margin still dangerouly low. Any reduction in revenue will push Nalfin Realities into the red (loss).
Nalfin Healthcare Sdn Bhd
Operating Revenue in 2006 : 7,101,314.00
Operating Revenue in 2007 : 7,116,445.00
Revenue increased by 0.21%
Profit after Taxation in 2006 : -1,134,478.00
Profit after Taxation in 2007 : -1,070,633
Net Proft Margin for 2007 : 0
Minsawi Industries (Kuala Kangsar) Sdn Bhd
Operating Revenue in 2006 : 43,151,540.00
Operating Revenue in 2007 : 69,968,900.00
Revenue increased by 62.15%!
Profit after Taxation in 2006 : 1,229,520.00
Profit after Taxation in 2007 : 1,526,230.00
Net Proft Margin for 2006 : 2.85%
Net Proft Margin for 2007 : 2.18%
So the Net Profit Margin has decreased slightly while sales/revenue has increased by 62.15%. Not sure what is happening here. I would have have expected that with a 62% increase in revenue, more would have flowed to the bottomline/profit rather than remaining static.
http://reform-nlfcs.blogspot.com/2008/06/look-at-nlfcs-subsidiaries-and.html
I have since acquired the 2007 info for Nalfin Realities, Nalfin Healthcare and Minsawi so will do an analysis of the difference between 2006 and 2007. All new information is directly below this blog.
Nalfin Realities Sdn Bhd
Operating Revenue in 2006 : 69,354,660.00
Operating Revenue in 2007 : 98,746,847.00
Revenue increased by 42.38%!
Profit after Taxation in 2006 : -124,194
Profit after Taxation in 2007 : 1,137,992.00
Net Proft Margin for 2007 : 1.15%
Net Profit Margin still dangerouly low. Any reduction in revenue will push Nalfin Realities into the red (loss).
Nalfin Healthcare Sdn Bhd
Operating Revenue in 2006 : 7,101,314.00
Operating Revenue in 2007 : 7,116,445.00
Revenue increased by 0.21%
Profit after Taxation in 2006 : -1,134,478.00
Profit after Taxation in 2007 : -1,070,633
Net Proft Margin for 2007 : 0
Minsawi Industries (Kuala Kangsar) Sdn Bhd
Operating Revenue in 2006 : 43,151,540.00
Operating Revenue in 2007 : 69,968,900.00
Revenue increased by 62.15%!
Profit after Taxation in 2006 : 1,229,520.00
Profit after Taxation in 2007 : 1,526,230.00
Net Proft Margin for 2006 : 2.85%
Net Proft Margin for 2007 : 2.18%
So the Net Profit Margin has decreased slightly while sales/revenue has increased by 62.15%. Not sure what is happening here. I would have have expected that with a 62% increase in revenue, more would have flowed to the bottomline/profit rather than remaining static.
Wednesday, August 20, 2008
Sale of Malim Sawit Palm Oil Mill - Premium Nutrients, whither?
The sale (details below) was meant to be completed by the 31/01/08. The proceeds are 22m. 18m is to be used to pay down debt. Usually for a listed company if they have finally completed the sale, they should announce it, otherwise shareholders would have no idea of what is going on.
I hope this goes through, as I have mentioned before, anything that reduces Premium's debt levels is always welcome.
I had a look at Revenue Direction Sdn Bhd. I am a bit sceptical whether they have the financial resources to complete this purchase but they are taking financing to buy the asset rather than using internal resources. Well I hope this gets done or is already done.
I believe Malim Sawit (Premium's subsidiary) went into refining/milling in 2004. Now it has decided to get out of it since it is loss-making.
General Announcement
Reference No CP-071026-60904
Company Name : PREMIUM NUTRIENTS BERHAD
Stock Name : PREMIUM
Date Announced : 26/10/2007
Type : Announcement
Subject : PREMIUM NUTRIENTS BERHAD ("PREMIUM")PROPOSED DISPOSAL OF OIL PALM MILL ASSETS
Contents :
1. INTRODUCTION
Premium Nutrients Berhad (“Premium”) would like to announce that its wholly-owned subsidiary Malim Sawit Sdn. Bhd.( Company No. 47109-H ) (“MSSB”) has on October 26, 2007 entered into a conditional Sale and Purchase Agreement (“Conditional S&P”) with Revenue Direction Sdn Bhd ( Company No. 717067-K ) (“RDSB”)for the proposed disposal of a palm oil mill together with the subdivided plots of land where the palm oil mill is situated and certain machineries and stocks (full particulars whereof are set out in the Conditional S&P) and hereinafter the aforesaid are collectively referred to as “the Sale Subdivided Plots and Sale Assets” free from all encumbrances whatsoever but subject to whatever restriction-in-interest category of land use and conditions whether express implied in the documents of title affecting the Sale Subdivided Plots for a total sale consideration of RM22,000,000.00 (Ringgit Malaysia: Twenty Two Million only) (“Proposed Disposal”).
The Sale Subdivided Plots together with the remaining subdivided plots to be retained by MSSB (“Retained Subdivided Plots) subsequent to demarcation and subdivision presently constitute the six (6) pieces of lands owned by MSSB held under H.S.(M) 649 No P.T. PTD 3471, H.S.(M) 651 No P.T. PTD 3472, H.S.(M) 652 No P.T. PTD 3460, H.S.(M) 658 No P.T. PTD 3425, H.S.(M) 662 No P.T. PTD 3494 and H.S.(M) 692 No P.T. PTD 3445 all in the Tempat Sungai Sayong, Mukim of Layang Layang, Daerah Kluang, Negeri Johor (collectively, “the said Lands”). The said Lands are presently charged to Malaysian Trustees Berhad (Co. No. 21666-V) (“Master Chargee”) vide charge presentation No 1262/2004 and Debenture dated March 31, 2004 (“the Charges”) as security for a bond issue raised by Premium (“MUNIF/ IMTN Facility”).
2. DETAILS OF THE PROPOSED DISPOSAL
2.1 Salient Terms of the Conditional S&P
The Conditional S&P shall be subject to and conditional upon the fulfilment of the following within six (6) months from the date of the Conditional S&P or such other extendedperiod as may be mutually agreed between the parties:-
(1) MSSB obtaining and delivering the Master Chargee’s redemption statement cum undertakings confirming the redemption sum for the Sale Subdivided Plots and the Sale Assets (which in any event shall not exceed RM19.8 million, being the balance purchase price payable to MSSB) and that, subject to the Master Chargee’s receipt of the redemption sum, the Master Chargee covenants and undertakes, inter alia, the following:-
(a) that the Master Chargee consents to the amalgamation and subdivision application in respect of the said Lands (“Amalgamation & Subdivision”) by the parties;
(b) that the Master Chargee shall consent, upon request by RDSB or RDSB’s financier to the transfer by MSSB to RDSB of the undivided shares of the Sale Subdivided Plots and the creation of a legal charge over the undivided shares of Sale Subdivided Plots in favour of RDSB’s financier in any of the following events:-
(aa) failure of the parties to apply and/or obtain the approval of the Amalgamation & Subdivision within six (6) years from the date of the Conditional S&P (including appeals after any rejection by the appropriate authorities); or
(bb) the successful sale to any third party arising from any auction or foreclosure proceedings by the Master Chargee on the subdivided plots retained by MSSB,
(c) that the Master Chargee agrees to endorse its written consent on the deed of assignment executed by RDSB assigning all RDSB’s rights, title, interest and benefits to the said Sale Subdivided Plots and under the Conditional S&P to RDSB’s financier;
(d) that the Master Chargee consents to MSSB creating and registering a lease on the portion of the said Land representing the Sale Subdivided Plots in favour of RDSB under the provisions of the National Land Code 1965 upon the terms and conditions set out in the lease to be entered into between MSSB and RDSB (“the Lease”) and to the creation of a charge of the Lease to RDSB’s financier and an undertaking to deliver the original issue documents of titles to the said Lands to facilitate the aforesaid;
(e) that the Master Chargee consents to MSSB executing and giving an irrevocable Power of Attorney to RDSB in authorising dealings in respect of the Sale Subdivided Plots and application for Amalgamation & Subdivision only in respect of the said Lands upon the terms and conditions contained in the Power of Attorney granted by MSSB in favour of RDSB; and
(f) to refund the redemption sum to RDSB’s financier in the event that:-
(aa) the Lease cannot be registered for any reason attributable to the Master Chargee; and
(bb) upon issuance of the subdivided titles to the Sale Subdivided Plots and the Retained Subdivided Plots, the discharge of the Charges on the Sale Subdivided Titles cannot be registered for any reason attributable to the Master Chargee,
(the Master Chargee’s redemption statement cum undertakings aforesaid are hereinafter referred to as “the Master Chargee’s Redemption Statement cum Undertakings”).
In the event MSSB fails to deliver to RDSB’s solicitors the Master Chargee’s Redemption Statement cum Undertakings within thirty (30) days from the date of the Conditional S&P (“the Confirmation Period”), the Completion Period (as herein defined) for the payment of the Balance Purchase Price (as herein defined) shall be extended in accordance with the number of days delayed by MSSB free of interest calculated from the expiry of the Confirmation Period until the Master Chargee’s Redemption Statement cum Undertakings are duly received by RDSB’s solicitors;
(2) RDSB with the assistance of MSSB, obtaining the written consent and approval from the relevant authorities for the licences presently held by MSSB (the particulars whereof are set out in the Conditional S&P) to be issued to RDSB;
(3) RDSB informing and/or notifying the Foreign Investment Committee (hereinafter called “the FIC”) of the sale and purchase transaction and if applicable, the approval of the FIC being obtained, in accordance with the relevant FIC guidelines; and
(4) RDSB successfully obtaining a loan from RDSB’s financier to finance the purchase of the Sale Subdivided Plots and Sale Assets based on the collateral and/or security afforded under the Conditional S&P, the Lease and the Master Chargee’s Redemption Statement Cum Undertakings, (collectively, “the Conditions Precedent”).
Upon the execution of the Conditional S&P, RRDSB shall make a deposit payment of RM2,200,000.00 (“Deposit”) to MSSB.
Subject to the Conditions Precedent being first achieved, the balance of the sale consideration of RM19,800,000.00 (“Balance Purchase Price”) shall be deposited by RDSB with the MSSB’s solicitors as stakeholders, within a period of three (3) months from the date of the Conditional S&P and any extension attributable to any delay of the Confirmation Period (“Completion Period”) with an automatic extension of 2 months “Extended Completion Period”) provided that RDSB shall pay interest charged and calculated at the rate of eight per centum (8%) per annum on the total outstanding sum on a daily basis from the expiry of the Completion Period to the date of full payment of the Balance Purchase Price.
The date of payment of the Balance Purchase Price and late payment interest (if any) to MSSB’s solicitors within the Completion Period or Extended Completion Period, as the case may be, shall hereinafter be called the “Completion Date”.In the event that RDSB shall for any reason whatsoever breach or fail to comply with or complete this sale and purchase herein in accordance with the Conditional S&P after the Conditions Precedent have been met or otherwise waived, MSSB shall be entitled to forfeit the Deposit as agreed liquidated damages and the balance (if any) of all other monies paid by RDSB under the Conditional S&P, shall be refunded by MSSB to RDSB free of interest within fourteen (14) days of termination, failing which interest for delayed payment shall be chargeable at the rate of eight per centum (8%) per annum on the amount outstanding calculated from its due date until refund (whether before or after judgment) and upon such refund being made the Conditional S&P shall thereafter become null and void and be of no further effect and neither party hereto shall have any further claims, action or proceedings against the other in respect of or arising out of the Conditional S&P and MSSB shall be entitled to sell or deal in anyway with the said Lands thereafter.
The Parties hereby mutually agree that upon the Completion Date:-
(a) the employees seconded under the existing License Agreement dated December 31, 2005 (“License Agreement”) will be employed by RDSB and MSSB shall, undertake all applicable procedures for the retirement and/or retrenchment and/or termination of the seconded employees prior to the Completion Date to enable such seconded employees to be properly employed by RDSB upon the Completion Date; and
(b) the parties shall proceed with the application for Amalgamation & Subdivision to cause the issuance of the subdivided titles to the Sale Subdivided Plots and the Retained Subdivided Plots respectively with all costs and expenses incurred in respect thereof to be apportioned proportionately between MSSB and RDSB according to their respective interests in the subdivided plots.
Pending the delivery of legal possession of the Sale Subdivided Plots and the Sale Assets to RDSB in accordance with the Conditional S&P, the License Agreement shall remain valid and subsisting to regulate the operation of the Palm Oil Mill by RDSB and the License Agreement shall subject to Clause 7.4 of the Conditional S&P, be deemed terminated by the parties’ mutual consent upon the Completion Date, without prejudice to the rights of the parties accrued prior thereof or in respect of antecedent breaches, as the case may be.
2.2 Background Information on Purchaser
Revenue Direction Sdn Bhd (Co. No. 717067-K ) was incorporated in Malaysia under the Act on December 5, 2005. The principal activities of the Company are that of processing, extracting and manufacturing of crude palm oil from oil palm fresh fruit bunches.
2.3 Background Information on MSSB
MSSB was incorporated in Malaysia under the Act on May 4, 1979. The principal activities of MSSB are processing of oil palm fruits, refining of palm oil and sale of refined products along with its by products.
2.4 Basis for arriving at the Disposal Consideration
The disposal consideration of RM 22,000,000.00 was arrived at a “willing buyer, willing seller” basis.
2.5 Proposed Utilisation of Proceeds
Repayment of loan 18.0m
Working capital 4.0m
2.6 Original Cost of Investment
Palm oil mill RM21,908,273.00 ( Net Book Value: RM18.0 Million )
CPO feedstock RM4,000,000.00
2.7 Liabilities to be Assumed
Nil
3 RATIONALE FOR THE PROPOSED DISPOSAL
The proposed disposal of the Oil Palm mill is to discontinue with non core operations and mitigate losses. The significant portion of MSSB`s revenue is derived by producing edible oils utilized by related companies.
The Oil palm mill has continued to report losses and the rationale of the proposed disposal is ensure the reported losses are minimized for the current financial year.
With the proposed disposal, Premium will be able to achieve a cost saving of RM1.8million comprising bank loan interest and depreciation
The proceeds arising from the Proposed Disposal will be used to repay borrowings and thereby strengthening the Group’s financial position and profitability through 2007.
4. EFFECTS OF THE PROPOSED DISPOSAL
4.1 Share Capital
The proposed disposal will not have any effect on the issued and paid-up capital of Premium Nutrients Berhad /Malim Sawit Sdn Bhd
4.2 NTA
Based on the audited consolidated balance sheet of Premium as at December 31, 2006 and on the assumption that the Proposed Disposal had been effected on December 31, 2006, the Proposed disposal is expected to increase the NTA of the Premium Group from approximately RM 141.0 million to approximately RM 143.0million as shown in Table 1 of the appendix of the announcement.
4.3 Substantial Shareholders’ Shareholdings
The Proposed Disposal will not have any effect on the shareholdings of the substantial shareholders in Premium.
4.4 Earnings
Based on the audited accounts of Premium Group for the financial year ended 31 December 2006 and on the assumption that the Proposed Disposal had been effected on that date, the Proposed Disposal is expected to give rise to a net loss on disposal of approximately RM25,000.00 at Premium Group level, after taking into account the estimated expenses of approximately RM20,000.00 relating to the Proposed Disposal.
5. CONDITIONS TO THE PROPOSED DISPOSAL
The Proposed Disposal is subject to the approval of the following:-a) the Foreign Investment Committee
DEPARTURE FROM THE POLICIES AND GUIDELINES ON THE ISSUE/OFFER OF SECURITIES OF THE SECURITIES COMMISSION (“SC GUIDELINES”)
To the best knowledge of the Board of Directors of Premium (“Board”), the Proposed Disposal does not depart from the SC Guidelines.
6. DIECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the directors and major shareholders of Premium as well persons connected with them have any interest, direct and/or indirect, in the Proposed Disposal.
7. DIRECTORS’ STATEMENT
Having considered the rationale and effects of the Proposed Disposal, the Board is of the opinion that the Proposed Disposal is in the best interest of the Premium Group.
8. ESTIMATED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, the Proposed Disposal is expected to be completed by January 31, 2008.
9. DOCUMENTS FOR INSPECTION
The Conditional S&P and the Valuation letter dated August 15, 2007 will be available for inspection at the registered office of Premium at Level 27, Wisma Tun Sambanthan, Jalan Sultan Sulaiman, Kuala Lumpur during normal business hours from Monday to Friday (except public holidays) for three (3) months from the date of this announcement.This announcement is dated 26 October 2007
I hope this goes through, as I have mentioned before, anything that reduces Premium's debt levels is always welcome.
I had a look at Revenue Direction Sdn Bhd. I am a bit sceptical whether they have the financial resources to complete this purchase but they are taking financing to buy the asset rather than using internal resources. Well I hope this gets done or is already done.
I believe Malim Sawit (Premium's subsidiary) went into refining/milling in 2004. Now it has decided to get out of it since it is loss-making.
General Announcement
Reference No CP-071026-60904
Company Name : PREMIUM NUTRIENTS BERHAD
Stock Name : PREMIUM
Date Announced : 26/10/2007
Type : Announcement
Subject : PREMIUM NUTRIENTS BERHAD ("PREMIUM")PROPOSED DISPOSAL OF OIL PALM MILL ASSETS
Contents :
1. INTRODUCTION
Premium Nutrients Berhad (“Premium”) would like to announce that its wholly-owned subsidiary Malim Sawit Sdn. Bhd.( Company No. 47109-H ) (“MSSB”) has on October 26, 2007 entered into a conditional Sale and Purchase Agreement (“Conditional S&P”) with Revenue Direction Sdn Bhd ( Company No. 717067-K ) (“RDSB”)for the proposed disposal of a palm oil mill together with the subdivided plots of land where the palm oil mill is situated and certain machineries and stocks (full particulars whereof are set out in the Conditional S&P) and hereinafter the aforesaid are collectively referred to as “the Sale Subdivided Plots and Sale Assets” free from all encumbrances whatsoever but subject to whatever restriction-in-interest category of land use and conditions whether express implied in the documents of title affecting the Sale Subdivided Plots for a total sale consideration of RM22,000,000.00 (Ringgit Malaysia: Twenty Two Million only) (“Proposed Disposal”).
The Sale Subdivided Plots together with the remaining subdivided plots to be retained by MSSB (“Retained Subdivided Plots) subsequent to demarcation and subdivision presently constitute the six (6) pieces of lands owned by MSSB held under H.S.(M) 649 No P.T. PTD 3471, H.S.(M) 651 No P.T. PTD 3472, H.S.(M) 652 No P.T. PTD 3460, H.S.(M) 658 No P.T. PTD 3425, H.S.(M) 662 No P.T. PTD 3494 and H.S.(M) 692 No P.T. PTD 3445 all in the Tempat Sungai Sayong, Mukim of Layang Layang, Daerah Kluang, Negeri Johor (collectively, “the said Lands”). The said Lands are presently charged to Malaysian Trustees Berhad (Co. No. 21666-V) (“Master Chargee”) vide charge presentation No 1262/2004 and Debenture dated March 31, 2004 (“the Charges”) as security for a bond issue raised by Premium (“MUNIF/ IMTN Facility”).
2. DETAILS OF THE PROPOSED DISPOSAL
2.1 Salient Terms of the Conditional S&P
The Conditional S&P shall be subject to and conditional upon the fulfilment of the following within six (6) months from the date of the Conditional S&P or such other extendedperiod as may be mutually agreed between the parties:-
(1) MSSB obtaining and delivering the Master Chargee’s redemption statement cum undertakings confirming the redemption sum for the Sale Subdivided Plots and the Sale Assets (which in any event shall not exceed RM19.8 million, being the balance purchase price payable to MSSB) and that, subject to the Master Chargee’s receipt of the redemption sum, the Master Chargee covenants and undertakes, inter alia, the following:-
(a) that the Master Chargee consents to the amalgamation and subdivision application in respect of the said Lands (“Amalgamation & Subdivision”) by the parties;
(b) that the Master Chargee shall consent, upon request by RDSB or RDSB’s financier to the transfer by MSSB to RDSB of the undivided shares of the Sale Subdivided Plots and the creation of a legal charge over the undivided shares of Sale Subdivided Plots in favour of RDSB’s financier in any of the following events:-
(aa) failure of the parties to apply and/or obtain the approval of the Amalgamation & Subdivision within six (6) years from the date of the Conditional S&P (including appeals after any rejection by the appropriate authorities); or
(bb) the successful sale to any third party arising from any auction or foreclosure proceedings by the Master Chargee on the subdivided plots retained by MSSB,
(c) that the Master Chargee agrees to endorse its written consent on the deed of assignment executed by RDSB assigning all RDSB’s rights, title, interest and benefits to the said Sale Subdivided Plots and under the Conditional S&P to RDSB’s financier;
(d) that the Master Chargee consents to MSSB creating and registering a lease on the portion of the said Land representing the Sale Subdivided Plots in favour of RDSB under the provisions of the National Land Code 1965 upon the terms and conditions set out in the lease to be entered into between MSSB and RDSB (“the Lease”) and to the creation of a charge of the Lease to RDSB’s financier and an undertaking to deliver the original issue documents of titles to the said Lands to facilitate the aforesaid;
(e) that the Master Chargee consents to MSSB executing and giving an irrevocable Power of Attorney to RDSB in authorising dealings in respect of the Sale Subdivided Plots and application for Amalgamation & Subdivision only in respect of the said Lands upon the terms and conditions contained in the Power of Attorney granted by MSSB in favour of RDSB; and
(f) to refund the redemption sum to RDSB’s financier in the event that:-
(aa) the Lease cannot be registered for any reason attributable to the Master Chargee; and
(bb) upon issuance of the subdivided titles to the Sale Subdivided Plots and the Retained Subdivided Plots, the discharge of the Charges on the Sale Subdivided Titles cannot be registered for any reason attributable to the Master Chargee,
(the Master Chargee’s redemption statement cum undertakings aforesaid are hereinafter referred to as “the Master Chargee’s Redemption Statement cum Undertakings”).
In the event MSSB fails to deliver to RDSB’s solicitors the Master Chargee’s Redemption Statement cum Undertakings within thirty (30) days from the date of the Conditional S&P (“the Confirmation Period”), the Completion Period (as herein defined) for the payment of the Balance Purchase Price (as herein defined) shall be extended in accordance with the number of days delayed by MSSB free of interest calculated from the expiry of the Confirmation Period until the Master Chargee’s Redemption Statement cum Undertakings are duly received by RDSB’s solicitors;
(2) RDSB with the assistance of MSSB, obtaining the written consent and approval from the relevant authorities for the licences presently held by MSSB (the particulars whereof are set out in the Conditional S&P) to be issued to RDSB;
(3) RDSB informing and/or notifying the Foreign Investment Committee (hereinafter called “the FIC”) of the sale and purchase transaction and if applicable, the approval of the FIC being obtained, in accordance with the relevant FIC guidelines; and
(4) RDSB successfully obtaining a loan from RDSB’s financier to finance the purchase of the Sale Subdivided Plots and Sale Assets based on the collateral and/or security afforded under the Conditional S&P, the Lease and the Master Chargee’s Redemption Statement Cum Undertakings, (collectively, “the Conditions Precedent”).
Upon the execution of the Conditional S&P, RRDSB shall make a deposit payment of RM2,200,000.00 (“Deposit”) to MSSB.
Subject to the Conditions Precedent being first achieved, the balance of the sale consideration of RM19,800,000.00 (“Balance Purchase Price”) shall be deposited by RDSB with the MSSB’s solicitors as stakeholders, within a period of three (3) months from the date of the Conditional S&P and any extension attributable to any delay of the Confirmation Period (“Completion Period”) with an automatic extension of 2 months “Extended Completion Period”) provided that RDSB shall pay interest charged and calculated at the rate of eight per centum (8%) per annum on the total outstanding sum on a daily basis from the expiry of the Completion Period to the date of full payment of the Balance Purchase Price.
The date of payment of the Balance Purchase Price and late payment interest (if any) to MSSB’s solicitors within the Completion Period or Extended Completion Period, as the case may be, shall hereinafter be called the “Completion Date”.In the event that RDSB shall for any reason whatsoever breach or fail to comply with or complete this sale and purchase herein in accordance with the Conditional S&P after the Conditions Precedent have been met or otherwise waived, MSSB shall be entitled to forfeit the Deposit as agreed liquidated damages and the balance (if any) of all other monies paid by RDSB under the Conditional S&P, shall be refunded by MSSB to RDSB free of interest within fourteen (14) days of termination, failing which interest for delayed payment shall be chargeable at the rate of eight per centum (8%) per annum on the amount outstanding calculated from its due date until refund (whether before or after judgment) and upon such refund being made the Conditional S&P shall thereafter become null and void and be of no further effect and neither party hereto shall have any further claims, action or proceedings against the other in respect of or arising out of the Conditional S&P and MSSB shall be entitled to sell or deal in anyway with the said Lands thereafter.
The Parties hereby mutually agree that upon the Completion Date:-
(a) the employees seconded under the existing License Agreement dated December 31, 2005 (“License Agreement”) will be employed by RDSB and MSSB shall, undertake all applicable procedures for the retirement and/or retrenchment and/or termination of the seconded employees prior to the Completion Date to enable such seconded employees to be properly employed by RDSB upon the Completion Date; and
(b) the parties shall proceed with the application for Amalgamation & Subdivision to cause the issuance of the subdivided titles to the Sale Subdivided Plots and the Retained Subdivided Plots respectively with all costs and expenses incurred in respect thereof to be apportioned proportionately between MSSB and RDSB according to their respective interests in the subdivided plots.
Pending the delivery of legal possession of the Sale Subdivided Plots and the Sale Assets to RDSB in accordance with the Conditional S&P, the License Agreement shall remain valid and subsisting to regulate the operation of the Palm Oil Mill by RDSB and the License Agreement shall subject to Clause 7.4 of the Conditional S&P, be deemed terminated by the parties’ mutual consent upon the Completion Date, without prejudice to the rights of the parties accrued prior thereof or in respect of antecedent breaches, as the case may be.
2.2 Background Information on Purchaser
Revenue Direction Sdn Bhd (Co. No. 717067-K ) was incorporated in Malaysia under the Act on December 5, 2005. The principal activities of the Company are that of processing, extracting and manufacturing of crude palm oil from oil palm fresh fruit bunches.
2.3 Background Information on MSSB
MSSB was incorporated in Malaysia under the Act on May 4, 1979. The principal activities of MSSB are processing of oil palm fruits, refining of palm oil and sale of refined products along with its by products.
2.4 Basis for arriving at the Disposal Consideration
The disposal consideration of RM 22,000,000.00 was arrived at a “willing buyer, willing seller” basis.
2.5 Proposed Utilisation of Proceeds
Repayment of loan 18.0m
Working capital 4.0m
2.6 Original Cost of Investment
Palm oil mill RM21,908,273.00 ( Net Book Value: RM18.0 Million )
CPO feedstock RM4,000,000.00
2.7 Liabilities to be Assumed
Nil
3 RATIONALE FOR THE PROPOSED DISPOSAL
The proposed disposal of the Oil Palm mill is to discontinue with non core operations and mitigate losses. The significant portion of MSSB`s revenue is derived by producing edible oils utilized by related companies.
The Oil palm mill has continued to report losses and the rationale of the proposed disposal is ensure the reported losses are minimized for the current financial year.
With the proposed disposal, Premium will be able to achieve a cost saving of RM1.8million comprising bank loan interest and depreciation
The proceeds arising from the Proposed Disposal will be used to repay borrowings and thereby strengthening the Group’s financial position and profitability through 2007.
4. EFFECTS OF THE PROPOSED DISPOSAL
4.1 Share Capital
The proposed disposal will not have any effect on the issued and paid-up capital of Premium Nutrients Berhad /Malim Sawit Sdn Bhd
4.2 NTA
Based on the audited consolidated balance sheet of Premium as at December 31, 2006 and on the assumption that the Proposed Disposal had been effected on December 31, 2006, the Proposed disposal is expected to increase the NTA of the Premium Group from approximately RM 141.0 million to approximately RM 143.0million as shown in Table 1 of the appendix of the announcement.
4.3 Substantial Shareholders’ Shareholdings
The Proposed Disposal will not have any effect on the shareholdings of the substantial shareholders in Premium.
4.4 Earnings
Based on the audited accounts of Premium Group for the financial year ended 31 December 2006 and on the assumption that the Proposed Disposal had been effected on that date, the Proposed Disposal is expected to give rise to a net loss on disposal of approximately RM25,000.00 at Premium Group level, after taking into account the estimated expenses of approximately RM20,000.00 relating to the Proposed Disposal.
5. CONDITIONS TO THE PROPOSED DISPOSAL
The Proposed Disposal is subject to the approval of the following:-a) the Foreign Investment Committee
DEPARTURE FROM THE POLICIES AND GUIDELINES ON THE ISSUE/OFFER OF SECURITIES OF THE SECURITIES COMMISSION (“SC GUIDELINES”)
To the best knowledge of the Board of Directors of Premium (“Board”), the Proposed Disposal does not depart from the SC Guidelines.
6. DIECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the directors and major shareholders of Premium as well persons connected with them have any interest, direct and/or indirect, in the Proposed Disposal.
7. DIRECTORS’ STATEMENT
Having considered the rationale and effects of the Proposed Disposal, the Board is of the opinion that the Proposed Disposal is in the best interest of the Premium Group.
8. ESTIMATED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, the Proposed Disposal is expected to be completed by January 31, 2008.
9. DOCUMENTS FOR INSPECTION
The Conditional S&P and the Valuation letter dated August 15, 2007 will be available for inspection at the registered office of Premium at Level 27, Wisma Tun Sambanthan, Jalan Sultan Sulaiman, Kuala Lumpur during normal business hours from Monday to Friday (except public holidays) for three (3) months from the date of this announcement.This announcement is dated 26 October 2007
Subscribe to:
Posts (Atom)
Posts
