INDEPENDENT BOARD AND INDEPENDENT ADVISER TO MIDF RECOMMEND HOLDERS TO ACCEPT THE CONDITIONAL TAKE-OVER OFFER BY PNB.
KUALA LUMPUR, 20 September 2007 – The Independent Directors of Malaysian Industrial Development Finance Berhad (“MIDF”), after careful study of the terms of the conditional take-over Offer and the evaluation and recommendation by the Independent Adviser, Kenanga Investment Bank Berhad (formerly known as K&N Kenanga Bhd) (“KIBB”), concur with the recommendation of KIBB, and recommends that holders accept the Offer by Permodalan Nasional Berhad (“PNB”) for a cash consideration of RM1.90 per share.
The Offer of a cash consideration of RM1.90 per share, is a conditional take-over Offer which is initiated by PNB, as the Offeror, to acquire all the remaining MIDF Shares not already owned by PNB. The closing date of the Offer is Monday, 24 September 2007 at 5.00 p.m.
The Independent Directors of MIDF, in recommending holders to accept the Offer, have taken into consideration the following evaluation of the Offer set out in the Independent Advice Letter from KIBB as follows:-
(i) Rationale for the Offer
The Offer provides the holders an opportunity to realise and exit their investment in MIDF at the Offer Price, taking cognizance of the risks inherent in the financial services industry arising from increased competition due to continuing liberalisation of the Malaysian financial market and the entry of foreign competitors.
(ii) Listing status of MIDF and compulsory acquisition
The holders who do not accept the Offer may potentially hold suspended/de-listed MIDF Shares as PNB, as stated in the Offer Document, does not intend to maintain the listing status of MIDF in the event that MIDF does not comply with the shareholdings spread requirement of Bursa Securities. In such circumstances, PNB will procure MIDF to apply to Bursa Securities for withdrawal of MIDF’s listing from the Official List of Bursa Securities in accordance with the Listing Requirements.
It is also the intention of PNB to invoke the provisions of Section 34 of the Securities Commission Act, 1993 to compulsorily acquire any remaining Offer Shares not accepted under the Offer on the same terms as set out in the Offer, in the event that PNB receives acceptances of 90% or more in nominal value of the Offer Shares consequent upon which steps will be taken to de-list MIDF.
In such circumstances where there is no market for the de-listed securities, holders may not be able to realise their investments in MIDF at the same or higher consideration as under the Offer.
(iii) Financial and price evaluation of the Offer Shares
The Independent Directors deem the Offer Price to be fair and reasonable as set out in the Independent Advice Letter. Based on the evaluation by KIBB, the Offer Price represents:-
(a) a premium of 38.69% to the 5-day Weighted Average Market Price (“WAMP”) of MIDF Shares up to 10 August 2007 (being the last Market Day prior to the suspension of trading of MIDF Shares on 13 August 2007) of RM1.37. The aforesaid premium is within the range of premiums offered by other companies in notable transactions involving privatisation / general offers and is higher than the average premium of 15.73% for those transactions;
(b) a premium of 26.67% to the one (1)-month and three (3)-month WAMP of the MIDF Shares up to 10 August 2007 (being the last Market Day prior to the suspension of trading of MIDF Shares on 13 August 2007) of RM1.50. In addition, the MIDF Shares have not traded above the Offer Price in the five (5)-year period from 11 August 2002 to 10 August 2007;
(c) a PE Multiple of 14.84 times (based on the audited consolidated EPS of MIDF for the FYE 31 December 2006) which is within the range of comparable companies’ PE Multiple of between 10.76 and 37.69 times;
(d) a PE Multiple of 26.76 times (based on the annualised unaudited EPS of MIDF Group for the six-month financial period ended 30 June 2007) which is above the average PE Multiple of comparable companies of 20.00 times;
(e) a price-to-NTA ratio of 1.01 times (based on the audited consolidated NTA of MIDF as at 31 December 2006) which is within the range of comparable companies’ price-to-NTA ratio of between 0.96 and 2.14 times; and
(f) a price-to-NTA ratio of 0.99 times (based on the unaudited consolidated NTA per Share as at 30 June 2007 being the latest available quarter results of MIDF) which is within the range of comparable companies’ price-to-NTA ratio of between 0.96 and 2.14 times.
(iv) Future Plans for the MIDF Group and its employees
It is expected that the existing business will remain status quo, as based on the Offer Document, PNB intends to continue with MIDF’s existing business and has no immediate intention to introduce any major changes, dispose of any major assets or undertake any major redeployment of the fixed assets or to retrench or make redundant the employees, except where necessary, to rationalise the business activities and/or direction of the MIDF Group.
The Independent Directors advise holders to consider carefully the information contained in both the Offer Document and the detailed evaluation and recommendation set out in the Independent Advice Circular (“IAC”). The IAC has been despatched to holders of MIDF Shares on 13 September 2007.
