Friday January 8, 2010

Khazanah gets nod to talk to HLB


EON Cap and EON Bank boards expected to meet next week

PETALING JAYA: Khazanah Nasional Bhd is believed to have obtained the nod from Bank Negara to negotiate for the sale of its 10% stake in EON Cap, sources told StarBiz.

This makes Khazanah the third major shareholder to have received the nod to talk, after Rin Kei Mei and Tan Sri Tiong Hiew King, through their indirect 31.7% stake held through Kualapura Sdn Bhd and Lintang Emas Sdn Bhd (15.4%) and RH Development Sdn Bhd (16.3%).

It is believed that Kenanga Investment Bank is the advisor for Khazanah, Rin and Tiong while CIMB Investment Bank is advising Hong Leong.

In a statement to Bursa yesterday, the board of EON Capital said it had appointed Goldman Sachs as its international financial advisor and Ethos & Company as its Malaysian financial advisor to assist the company with its strategic review.

On Wednesday, Hong Leong Bank obtained approval to commence talks with the boards of EON Cap and EON Bank.

“The board remains committed in its role as steward of EON Bank in creating shareholder value,’’ EON Cap said.

Analysts said this could be a signal that the board also welcomed other bidders.

On Wednesday, Hong Leong Bank obtained approval to commence talks with the boards of EON Cap and EON Bank for the potential purchase of the assets and liabilities of EON Cap and EON Bank, including EON Cap’s interest in EON Bank.

EON Cap and EON Bank boards are expected to meet next week to deliberate on the next course of action following Hong Leong’s approval from Bank Negara to talk.

EON Cap is also expected to seek the nod to talk to Hong Leong on an institutional level. Following that, Hong Leong will probably submit its proposal which may be in various forms involving cash, shares or a combination of cash and shares.

The Employees Provident Fund (EPF), which holds 10.7% in EON Cap, is not talking directly to Hong Leong and hence does not require the approval to negotiate. It will scrutinise Hong Leong’s proposal as one of EON Cap’s shareholders.

“Now that Hong Leong has received permission to talk to EON Cap on an institutional level, the offer will be open to all shareholders to consider,’’ said an observer.

Hong Leong’s Tan Sri Quek Leng Chan is known to be tight-fisted but being an old hand in the game, he may surprise with an attractive scheme.

Khazanah and EPF already have 28.4% and 57.5% respectively in CIMB Bank and RHB Capital Bhd.

The EPF is also a major shareholder in Hong Leong Bank with 9.31%.

Analysts told StarBiz that considering the likely opposition from another major shareholder, Primus Partners (HK) Ltd that had bought its 20.2% stake for RM9.55 per share or 55% premium, the proposal by Hong Leong to use the assets and liabilities route meant that approval would be required from just 50% of shareholders plus one share.

Taken together, the combined stake of Rin, Tiong, Khazanah and the EPF comes up to 52.4%.

“In this case, the impartiality of the EON Cap board has to remain intact,’’ said an observer. “They can recommend not to accept the offer, if they find it unattractive, but they should present it to the shareholders.’’

Shareholders holding 5%-10% of the shares may also requisition for an EGM to remove the board.

In its statement yesterday, EON Cap said its bank would continue to pursue a strategy aimed at building a superior financial services franchise that benefits all stakeholders, including its shareholders, customers and employees.

“The board of EON Bank supports the management team of EON Bank in its effort to build on the success of its most recent transformation programme, Project Quantum Leap, which resulted in substantial operational improvement and a marked improvement of EON Bank’s financial performance,’’ the statement added.

EONCAP :  [Stock Watch]  [News
HLBANK :  [Stock Watch]  [News]

For latest Bursa Malaysia indices, charts and other information click here

For Bank Negara statements click here

Related Stories:
Bank Negara gives green light to HLB
How much will tycoon Quek pay for Eon Capital
EPF, Khazanah exit EON Cap
EON Cap advised to get nod for institutional-level talks
Pricing key in takeover bid of EON Cap

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