What you can do with RM38mil in N. Sembilan?

PKNNS has given up a strategic 18.96% hold in a listed company that has diversified interest in property development, education services, quarry, operation of golf and country club and landscaping in exchange for a mere 22.75% shareholding in a sdn bhd which sole assets was a resort in Seremban.

By Lee Wee Tak

Perbadanan Kemajuan Negeri Negeri Sembilan (PKNNS) has been a major shareholder in PK Resource Berhad, a company listed on the Bursa Saham Malaysia.

According to Bursa Malaysia records, as at 15 June 2001, PKNNS held 21,357,000 shares representing about 18.7% of the Company’s 114,035,500 issued and paid up ordinary share capital. PKNNS has maintained more or less the same shareholding level from 2001 till 2007.

Things became fast moving and interesting in 2007. Suddenly, a long term strategic investor in PKNNS did something significantly different.

On 26 April 2007, PK sold its subsidiary, Emerald Spirit Sdn Bhd (ES) to Gen Glamour Sdn Bhd. GG paid a total of RM49.3 million either by way of subscribing to share capital of ES or assuming the liabilities of ES.

ES owns and runs the Allson Klana Resort in Seremban. (It boasted the biggest resort swimming pool in Malaysia when it was first completed, me thinks).

The disposal by PK was approved by the Foreign Investment Committee on 16 May 2007 subject to certain conditions.

Amazingly, 2 days later, on 18 May 2007, PK made an announcement to the stock exchange that PK and GG agreed to a waive a term in the sales and purchase agreement that required PK shareholders to approve the sale of ES by PK to GG.

“With reference to the announcements made on 3 May 2007 and 26 April 2007 pertaining to the above subject heading, the Board of Directors of PK Resources Berhad wishes to further announce that the parties to the Subscription Agreement dated 26 April 2007 have, on 18 May 2007, agreed that the Conditions Precedent in respect of the Company’s Shareholders’ Approval as stated in the said Agreement and any provisions related thereto be waived.”

Why the rush and did this violate the provisions of Companies Act, 1965 and interest of the shareholders, like PKNNS?

One would expect a strategic investor would be hopping mad if he or she was by-passed when the company they invested in did a deal behind their back. So what’s PKNNS gonna do?