INSAS Bhd has proposed to inject its wholly-owned subsidiary M&A Securities Sdn Bhd into SYF Resources Bhd.
Under the proposal, Insas will dispose of its 100% equity stake in M&A comprising 100 million ordinary shares and 60 million redeemable convertible preference shares to SYF in exchange for 1.58 billion new SYF shares, thus valuing M&A at RM222 mil.
To re-cap, the trading of both Insas and SYF shares was suspended today pending the release of a material announcement, according to a Bursa fling by both companies.
The proposed M&A disposal is essentially a backdoor listing of M&A via SYF which will enable Insas to create a separate listing platform for M&A on the Main Market of Bursa Securities.
The listing status of M&A Group on the Main Market of Bursa Malaysia will enable it to raise its future equity and debt funding requirement through the capital market independently from Insas Group, expand its customer base as well as retain and attract new employees from the financial services industry.
Upon completion of the proposed M&A disposal, SYF will see a name change to M&A Capital Bhd with the company being principally involved in the business of financial services via the M&A Group.
Insas will emerge as the new controlling shareholder of SYF with 75.9% stake from 8.8% currently. Insas will also seek an exemption from undertaking a mandatory offer for the remaining shares in the company.
As part of the overall proposal to transform SYF into a financial services group, SYF has proposed to dispose its rubberwood furniture manufacturing arm, and two parcels of lands in Cheras for a total consideration of RM71.2 mil cash.
Subsequently, SYF plans to undertake a special dividend-cum-capital repayment exercise of RM102.4 mil or 18 sen/share to reward its shareholders on an entitlement date to be determined later.
This comprises a special dividend of 7 sen and capital repayment of 11 sen per SYF share which will be funded via proceeds from the proposed SYF disposals with the remaining from existing cash in SYF.
Based on the financial performance of M&A for the financial year ended June 30, 2021, the RM222 mil valuation represents a price-to-earnings of 11.8 times and price-to-book of 1.2 times.
The issue price of 14 sen for each consideration share, meanwhile, represents a discount of 1 sen or 6.7% to SYF’s adjusted net assets value of 15 sen per share after the Proposed SYF disposals and proposed special dividend-cum-capital repayment.
Concurrently, SYF also proposed a one-for-two rights issue of its shares at 14 sen apiece to raise approximately RM39.8 mil as well as a restricted issue of approximately 10% of its enlarged share capital after the proposed acquisition of M&A – also at14 sen/share to raise RM30.2 mil.
The application for the proposals is expected to be submitted to the relevant authorities by end-December 2021.
Subject to approvals from relevant parties including Securities Commission, Bursa Securities as well as shareholders of Insas and SYF, the proposals are expected to be completed in 2Q 2022.
M&A is adviser to Insas for the Proposed M&A Disposal with FHMH Corporate Advisory Sdn Bhd as independent adviser. Malacca Securities Sdn Bhd is adviser to Insas for the proposed exemption.
Shares of Insas which was last traded on Monday (Oct 4) closed unchanged at 97.5 sen with 1.07 million shares traded which valued the company at RM676 mil while SYF’s shares were 2 sen or 4.49% lower at 42.5 sen with 30.34 million shares exchanged hands, hence giving the company a market capitalisation of RM244 mil. – Oct 6, 2021
