By Emmanuel Samarathisa
GEORGE Kent (Malaysia) Bhd (GKM) chairman Tan Sri Tan Kay Hock is seeking to sell his entire stake, both directly and indirectly held, in the engineering group but has hit a brick wall in finding a suitor, according to people familiar with the matter.
“He (Tan) is looking to exit. The problem is there are no buyers due to legacy issues,” a source told FocusM.
Tan is believed to directly hold 4.77% in GKM while indirectly controlling an additional 37.42% through Star Wealth Investment Ltd, his wife Puan Sri Tan Swee Bee, private vehicle Johan Equities Sdn Bhd and a clutch of nominee accounts.
Tan, who was not available for immediate comment, courted infamy for being closely linked to then prime minister Datuk Seri Najib Razak, who is now at the centre of the 1Malaysia Development Bhd (1MDB) scandal.
According to national newswire Bernama, in its Jan 27 report, Tan was Najib’s golfing buddy and had been perceived as a “crony” of the previous Barisan Nasional (BN) regime.
That meant Tan fell out of favour with Pakatan Harapan (PH) when the coalition routed BN during the May 9, 2018 general election.
Indeed, investors reacted aggressively to BN-linked stocks, including GKM, after the change of hands in Putrajaya. On May 15 last year, GKM hit limit down and was the second-biggest loser on Bursa Malaysia at mid-morning that day.
More importantly, GKM’s joint venture with Malaysian Resources Corporation Bhd to construct the Light Rail Transit 3 (LRT3) was hanging in the balance as the PH government ordered a pause and review of the project, alleging that the cost had astronomically ballooned to RM31.65 bil.
On July 21 last year, the Cabinet gave the nod for the project to continue albeit at a lower cost of RM16.63 bil or a 47% reduction from the original price. The implementation of the project was also changed from a project delivery partner to a fixed price contract regime.
But a series of negotiations that followed among GKM-MRCB, the Ministry of Finance and public transport operator Prasarana Malaysia Bhd led to further delays. It is believed that GKM-MRCB is expected to resume work full swing in 2020.
Naturally, stalled talks led to GKM registering a drop of 50% in net profit to RM10.25 mil for the quarter under review from RM20.55 mil for the same period last year. Sales, too, dropped 29% to RM72.91 mil from RM103.55 mil for last year’s corresponding quarter. – Dec 27, 2019