MPHB is planning to have a major restructuring

MPHB is planning to have a major restructuring that will separate the non-gaming and gaming units. By doing so, a new entity will appear to house its non-gaming assets and leaving Magnum Corporation Bhd the cash-cow and profitable numbers forecast operator alone.


Below are news extracted from Theedgemalaysia.com:

KUALA LUMPUR: Multi-Purpose Holdings Bhd (MPHB) is planning a major restructuring that will feature the creation of a new entity to house its non-gaming assets, a move that will turn the group into a pure proxy for the gaming sector.

Under the plan, MPHB is proposing to inject its interests in properties, hotels and financial services into a special purpose vehicle and leave the group with one asset, Magnum Corp Bhd, the profitable numbers forecast operator.

Financial executives familiar with the corporate proposal said shares in the new entity that will house the group’s non-gaming assets will be distributed to shareholders before a public listing.

MPHB is considering presenting the plan to shareholders at the company AGM today, according to a financial executive familiar with the exercise.

“The purpose of this exercise is to make MPHB a pure gaming outfit while creating another new listed company focusing on properties, hotels and financial services. It’s better to separate the gaming and non-gaming businesses into two listed entities to unlock the values for shareholders,” he said, adding that the listed companies would have greater appeal to different sets of institutional investors.

A restructuring at the MPHB group has been expected since it acquired a 47% stake in Magnum from private equity firm CVC Asia Pacific Ltd and another 2% from certain members of Magnum’s management for a total consideration of RM1.64 billion. That transaction was financed via the issue of new MPHB shares and cash.
In a nutshell, the exercise made Magnum a 100% subsidiary of MPHB, while CVC realised some RM600 million cash from its Magnum stake and received new shares in MPHB. CVC held an 11.21% stake in MPHB as at April 4, making it the second largest shareholder after Casi Management Sdn Bhd, which holds 28.35% equity interest. Casi is a vehicle controlled by Datuk Surin Upatkoon, who effectively owns a 33% stake in MPHB.

While the 2011 exercise mainly benefited CVC, the latest restructuring plan could benefit other MPHB shareholders, who would have shares in the new listed company in addition to their current holdings in MPHB, said a market observer.

Shareholders can either cash out from the new listed company containing the non-gaming assets or stay on to reap the growth of its property development plans.

MPHB entered into a deal with Bandar Raya Developments Bhd (BRDB) last year to jointly develop land in Penang, Rawang and Mimaland (Gombak) in Selangor. The joint development deal covers a total of 670 acres (271ha) and is expected to generate a combined gross development value of around RM4.25 billion.

However, it remains to be seen if the group wishes to further grow its financial services business, which comprises a general insurance business under Multi-Purpose Insurans Bhd and stockbroking outfit A A Anthony Securities Sdn Bhd. It has been reported that MPHB is looking to divest Penang-based A A Anthony through a management buyout.

This article appeared in The Edge Financial Daily, May 23, 2012.