Carson, Bukit in unique share swap with Malaysian plantation firms

Carson Cumberbatch PLC (CCPLC) and Bukit Darah PLC (BDPLC) yesterday announced that they have made offers to the minority shareholders of the four Malaysian Plantation Companies namely Selinsing PLC, Indo-Malay PLC, Good Hope PLC and Shalimar (Malay) PLC (referred hereto as “MPCs”).

The terms of the offers are such that CCPLC and BDPLC (Offerors) offer to purchase all of the issued shares of the MPCs, i.e. the minority shareholdings which are not already owned by CCPLC, BDPLC or Goodhope Asia Holdings Ltd (GAHL), the plantation sector investments holding company of the Carsons group incorporated in Singapore. CCPLC and BDPLC currently hold 52.79% and 35.19% of the issued shares of GAHL respectively and together owns approx. 88% of GAHL.

Accordingly, CCPLC and BDPLC together with GAHL acting in concert with CCPLC and BDPLC continue to hold 75%‐85% of the four MPCs, through GAHL.

As consideration under the offers, CCPLC would offer 60% of the consideration by way of BDPLC shares held by CCPLC and 40% of the consideration would be offered by BDPLC by way of CCPLC shares held by BDPLC.

CCPLC and BDPLC have appointed ‘Corporate Services (Private) Limited’ (an affiliate company of                       F. J. & G. De Saram, Attorneys-at-Law and Notaries Public), as the Trustee of the Intermediary-Trust set up to facilitate the proposed Offer.  Accordingly, the shareholders of the MPCs would be required to surrender the shares held in the MPCs, for which the Offer is accepted, to ‘Corporate Services (Private)

Limited’, the Intermediary-Trustee. In turn, shares offered as consideration by CCPLC and BDPLC would be transferred through the said Intermediary-Trustee to the shareholders of MPCs.

The value of any fractional allotment of shares of CCPLC and BDPLC to shareholders of the MPCs would be settled in cash.

For the purpose of this Offer, the shares of MPCs, CCPLC and BDPLC are priced as per the Table indicated below. These Offer prices are based on the Volume Weighted Average Price (VWAP) of the shares during the month of February 2011 (from 1 February, 2011 to 21 February, 2011 being the most recent practicable date before announcing the offer). In determining the offer prices various valuation methodologies such as VWAP, Net Asset Value, Earnings based value and Discounted Cash Flow based value were considered. The selected offer prices are the highest prices for the MPCs based on the different valuation methodologies considered above.

The above offers are a part of the internal restructuring exercise announced by CCPLC in early 2009, with respect to its long term plan to consolidate the plantation sector investments of the Carsons group under a regional holding company. Goodhope Asia Holdings Ltd. (GAHL) is the holding company incorporated in Singapore for this purpose.

CCPLC, as announced to the market through the CSE and notified to its shareholders from time to time, has taken various steps in implementing the said restructuring. Accordingly, in around 2009 ‐2010 the controlling interests held by CCPLC in the Malaysian Plantation Companies namely Selinsing PLC, Indo-Malay PLC, Good Hope PLC and Shalimar (Malay) PLC (referred hereto as “MPCs”) as well as interests of some of Carson’s Indonesian plantation companies were transferred to GAHL.  Having acquired the shares held by the Carsons group in the Indonesian plantation companies, in January 2011, GAHL also acquired a minority holding in those companies thereby increasing GAHL’s holding in the Indonesian plantation companies to approximately 90 ‐ 95% in each of the Indonesian plantation companies. Thus, all upstream plantation sector companies have now been brought under the umbrella of GAHL. Hence, GAHL now has control over a larger plantation sector asset base, both in Malaysia and Indonesia.

As the next step in the restructuring process, in a bid to further consolidate the plantation sector of the Carsons group, the directors of CCPLC and BDPLC, have decided to acquire the shares of the MPCs that are currently not held by the Carsons group of companies, through a series of offers made to the shareholders of the MPCs. As consideration for these offers, shares of CCPLC and BDPLC would be offered to the shareholders of the MPCs, enabling them to remain within the Carsons group. The shareholders of the MPCs who accept the Offers would still benefit from the plantation sector returns and also additionally enjoy the benefits of holding shares of a diversified conglomerate engaged in the business of investing in Oil Palm Plantations with exposure to a larger plantation base in Indonesia and Malaysia, Beverage, Investment Holdings, Real Estate and Leisure sectors.

As set out above, the ultimate intention of CCPLC and BDPLC in the internal restructuring of its plantation sector is to consolidate all the plantation sector investments under GAHL. Therefore, subsequent to the completion of the aforesaid offers, BDPLC and CCPLC intend to eventually transfer the MPC shares acquired in the Offers to GAHL, which currently holds the controlling interests of the MPCs.

The directors of CCPLC and BDPLC are of the opinion that the consolidated entity, GAHL, would be in a stronger position to leverage on its larger assets base to support the envisaged expansion and development plans of the plantation sector which returns are expected to enhance the value of the shares of CCPLC and BDPLC. The consolidation will also enable the Carsons group to derive greater capital, administrative and operational efficiencies.

MPC shares at present are very thinly traded and provide very little liquidity to the shareholders. The Offers would provide the opportunity for MPC shareholders to replace their relatively illiquid shares of MPCs with the shares of CCPLC and BDPLC which command a higher value, higher market capitalisation and have a greater marketability in the CSE. With the transfer of CCPLC and BDPLC shares to the minority shareholders of the MPCs, the shareholding of CCPLC and BDPLC will be broad based further enhancing their liquidity. On the completion of the offers, the rationale and need for the MPCs continuing to be listed on the CSE will be assessed. In the event CCPLC and BDPLC receive the expected level of acceptances, it is likely that the MPCs will consider delisting.

MPCs going on the strength of their smaller individual plantation estates will not be able to raise funds to the magnitude that is needed to support the expansion of large scale plantation projects, hence presently offers limited growth prospects. Therefore, growth potential of earnings to MPC shareholders is limited. Further, as small standalone companies, MPCs may not be able to attract suitable joint venture partners or strategic alliances as a basis to support growth and expansion.

GAHL, with a larger plantation assets base, would be able to raise the required finances to undertake further expansion and development in the upstream plantations as well as integrate with industry value chain via downstream opportunities. GAHL has the scale of operations to attract suitable joint venture and strategic alliance partners. This will further afford opportunities for returns from the plantation sector to be enhanced and thereby benefit its shareholders viz CCPLC and BDPLC.

GAHL owns and manages over 80,000 Ha. (combined land of MPCs is only 1,400 Ha.) of palm oil plantation land bank in Indonesia and Malaysia through which it is able to generate economies of scale, operational efficiencies and cost competitiveness. It has plans to further increase its plantation operations both within and outside Indonesia and Malaysia. Hence, GAHL is in a better position to generate synergies from the plantations operations. The benefits of the same will flow through to MPC shareholders through CCPLC and BDPLC shares. Further, the enhanced scale and diversified geographical locations of the plantation assets under GAHL will reduce the risks and volatility of plantation returns to CCPLC and BDPLC shareholders.

By holding CCPLC and BDPLC shares which have a diversified array of business portfolios the MPC shareholder can generate a more secure and enhanced return. MPC shareholders, who were subject to significant commodity risks, will continue to reap the benefits of upside movements in commodity prices whilst mitigating the downside movement in prices through the performance of other sectors of CCPLC and BDPLC. This will afford the opportunity for the MPC shareholders to minimise their risk and derive sustainable growth in shareholder wealth, via the holdings of CCPLC and BDPLC shares.

Carson Group stocks soar again

THE announcement of consolidation saw share prices of Carson Cumberbatch and its main shareholder Bukit Darah and related companies soar yet again yesterday.

Bukit rose by Rs. 110.70 to close at Rs. 1,380.40 after peaking to a high of Rs. 1,430, Carson by Rs. 51 to Rs. 676.10 (it peaked to Rs. 700), Good Hope by Rs. 61.90 to Rs. 1,348.90, Selising by Rs. 150 to Rs. 1,100 (it peaked to Rs. 1,290) Indo Malay by Rs. 66.10 to Rs. 1,345, Shalimar by Rs. 55 to Rs. 975 (it peaked to a high of Rs. 1,098), whilst Guardian Capital rose by Rs. 647.40 to Rs. 1,942.20.