ARMED forces and police veterans group Patriot is urging the government, armed forces fund Lembaga Tabung Angkatan Tentera (LTAT), Boustead Holdings Bhd and stock exchange Bursa Malaysia to act against threats of a hostile takeover and the “daily illogical pressing down” of Boustead Holdings Industries Corporation Bhd’s (BHIC) share price.
Patriot resident Datuk Mohamed Arshad Raji said the group was disappointed by Urusharta Jamaah Sdn Bhd, the government-owned special purpose vehicle, for disposing 1.2 mil shares of BHIC in the open market on April 22.
“This is despite our statement on April 11 urging that BHIC must be protected because the company is intrinsically valuable to the military and its potential for mega profits. Patriot feels the matters of BHIC could have been better managed in several aspects. This includes the disposal of the shares if there really is a need, but none,” he said.
According to Arshad, in December 2018, Urusharta, a company fully owned by the Ministry of Finance, issued RM19.6 bil sukuk murabahah for the assets of Tabung Haji, which included 18.6 million BHIC shares bought at RM2.50 per share. It has a 10-year tenure at 4.1% per annum. Now, after barely one and half years, some 1.2 million BHIC shares were disposed of last week at about 70 sen or less. “With eight and half years remaining, and selling at a RM1.80 loss per share, it is sheer stupidity,” he said.
Arshad said that eight years was a long time for the share price of a good company to turn around.
“The current Covid-19 pandemic that is partly responsible for the depressive stock market is not going to last forever,” he said.
“In fact, to boost the BHIC share price, LTAT needs to just make an announcement that a portion of the RM1.4 bil Mindef-approved variation orders will be taken as profit and to reflect it in the BHIC quarterly report. A 20 sen dividend can also be announced for the coming AGM. Just by doing that the share price of BHIC should fly high within days and effectively tell the predators currently at work to scramble.”
Arshad said that Urusharta selling off the BHIC shares with a big loss in such a depressive market was like one GLC entity sabotaging another. “Unwittingly Urusharta is helping the share price manipulators to press down the price. The interest of Mindef and LTAT, for the welfare of the military personnel, is to see the price of BHIC shares go up, not down,” he said.
According to Arshad, these “predators” had been at work manipulating the BHIC shares for several months, more vigorously since early March, and all-out assaults since mid-April.
“It is impossible for the boards of LTAT and the Boustead group, and Bursa Malaysia not to notice. Staying quiet and doing nothing watching the share price of BHIC battered down is a dereliction of their duties. Ultimately the defence minister is answerable and has to take responsibility for discrepancies in the armed forces welfare fund,” he said.
Also, Arshad said that on the matters of BHIC that suffers from poor management involved Citibank.
“A total of 18,646,300 BHIC shares have been transferred from Urusharta Jamaah Sdn Bhd to Citigroup Nominees Sdn Bhd as custodian and fund administrator. If the selling of BHIC shares by Urusharta was really necessary, Citigroup could have sold off tranches at a price not marked to the market, but direct negotiation for the best off-market deals. That way the market price of BHIC shares should see no negative impact. This is so basic any investment banker should know,” he said.
Arshad said an example of unprofessional conduct in the disposal of BHIC shares could be seen on Friday (April 17). “At around 11.30am, large quantities, almost 420,000 shares, were keyed into the Sell Q (offer prices and quantities) at 70 sen. After 2.30pm, the Sell Q volume at 70 sen increased to 805,100 shares,” he said.
It was “effectively restricting” the shares from transacting higher where “a responsible investment banker or a fund manager would not do that,” Arshad added. “Logical assumption is that these large chunks of BHIC shares offered for sale came from Urusharta. If so, then Citigroup was being irresponsible. “
“Patriot wants to know why the ministries of finance and defence, and the boards of LTAT and Boustead group remain tongue-tied,” he said.
Arshad added that Patriot encouraged the generals in the military and the various veterans associations to also speak up.
“Patriot calls on the altruism of veterans, especially those with extra savings, to buy at any comfortable amount to support the BHIC shares,” he said. – April 23, 2020