Monday, January 20, 2014

Is it a good thing if the proposal to take PRK private is blocked?

PKNP, the investment arm of the Perak Government and 3 others have proposed to  privatize PRK under section 64 of the security act by selective capital reduction and repayment to the minority shareholders. 

The price they offered is RM3.90 per share. This price is way below the NTA value of RM5.05 per share of PRK as at 30.9.2014. 

The intrinsic value of PRK is much higher, considering that PRK has cash and bank balances in excess of RM187 million and a piece of land next to the Proton City which has improved very much in value. 

PRK's township, known as Bandar Meru Raya (BMR)  is doing well. A JV theme park with the Sanderson group in ongoing in BMR. Its investment in Integrax has also improved in value. 

Since PKNP already had the intention to privatize the company, it will not easily give up. I believe that if the present proposal is successfully blocked, it will try again by offering a higher price. For those who have the holding power to hold on, the reward should turn out to be much better when it comes.

Look at MBF, the first offer was only at 60 sen per share, but eventually it was done at RM1.80 per share.

Whatever action you take as a result of this post, you do so at your own risk. I am long on PRK and intend to join the minority shareholders who object to the proposed repayment of RM3.90 per share.