Will Berjaya Media be delisted?

By Xavier Kong

With no word on Bursa Malaysia’s announcement page of Berjaya Media Bhd, it looks as though the group has accepted its fate to be delisted from the Malaysian bourse. Or has it?

“Berjaya Media is currently waiting for Bursa Malaysia to revert on the appeal,” the company tells FocusM. This follows the latest announcement on Nov 1, stating that Berjaya Media has already sent in an appeal for another extension of time to Bursa Malaysia. However, there appears to be no decision from the bourse as of yet.

With the media sector having seen some upheavals this year, will this turn the number from two (Media Prima Bhd joining the media empire of tycoon Tan Sri Syed Mokhtar Albukhary and Utusan Malaysia shutting down) to three?

On the cards is a rescue plan involving Singer (M) Sdn Bhd, a private entity belonging to Tan Sri Vincent Tan, who is also a major stakeholder in Berjaya Media. Unfortunately, this has hit a snag, as Singer is currently facing a technical issue regarding its audited financial statements to the Companies Commission of Malaysia. Singer expects to resolve this by the end of March 2020.

Only a hiccup

William Ng, chief investment/research officer of LeInves PLT, tells FocusM that he believes Tan should be able to convince Bursa Malaysia for more time, considering Singer is “quite a notable company, which should not see any reason for rejection”.

“If you look closely, Tan Sri Vincent Tan has a very large stake in Berjaya Media, with shareholder funding coming largely from Tan himself. As the deadline approached, he immediately took Singer to inject, as Singer is one of his private entities that can very quickly help Berjaya Media overcome its difficulties,” says Ng, noting that the only hiccup might be that the injection of Singer is a related party transaction.

“I believe Bursa Malaysia does not want to delist a company, as it would negatively impact the market. Furthermore, Berjaya Media as a group has no history of having a company delisted due to the Practice Note 17 (PN17) status. This then becomes a matter of reputation, and Tan will not want a black mark from Berjaya Media being delisted to be associated with the rest of the Berjaya group,” he adds.

Berjaya Media’s sole operation remains the running of local English daily theSun, which saw an average circulation of 259,661 copies in Peninsular Malaysia (audited by the Audit Bureau of Circulations) over Monday to Friday, during the second half of 2018, with a majority of their readership coming in from the Klang Valley, Penang and Johor.

The group has been receiving ad-spend support from its sister companies, but it was not enough to stem the tide of weak ad-spend sentiments permeating the Malaysian media sector.

A distressing affair

The saga began when Berjaya Media was hit with a PN17 status – a sign that a company is in financial distress – by Bursa Malaysia on June 22, 2017.

This brought the group to a point where the shareholders’ equity of Berjaya Media was 25% or less of its issued capital, which is the first criteria for a company to be issued a PN17 notice.

This had required Berjaya Media to send in a plan within 12 months to Bursa Malaysia, detailing how it intended to regularise the finances of the company or risk losing its listed status. For the full financial year ended April 30, 2017 (FY17), Berjaya Media posted a wider net loss of 20% at RM5.3 mil compared to RM4.4 mil for FY16.

Over the course of the year, the required monthly update announcements regarding the company’s PN17 status tell their tale, as months passed without a feasible plan or proposal from the group.

It was also revealed that the board of directors was exploring other options, including diversifying into areas of business outside the media sector. This is where it has primarily operated with its newspaper, theSun. The aim is to strengthen the company’s financial position to regularise its PN17 condition.

As the deadline approached, Berjaya Media was still unable to put forth a proposal or plan for regularisation of its finances, necessitating a request for an extension of time. This request was granted, with Bursa Malaysia agreeing to the new deadline of Dec 20, 2018.

However, despite bringing on AmInvestment Bank Bhd to serve as primary adviser, Berjaya Media was unable to come up with a plan before the new deadline. AmInvestment Bank, on behalf of the company, stepped forward to submit an application for another extension of time.

Whither white knight?

The extension was again approved by Bursa Malaysia, with the new deadline coming in as June 20, 2019 for the company to submit a regularisation plan. Now, the announcements have the company working on the plan, which still did not materialise by the new deadline.

Yet again, AmInvestment Bank had to go, hat in hand, to request another extension from Bursa Malaysia. This time, though the extension was granted with a new deadline of Dec 20, it came with a caveat: Berjaya Media had to enter a definitive agreement with a proposed white knight by Oct 20. The group failed to meet the October deadline, hence its awaiting a decision from the bourse.

How this will pan out remains to be seen. But judging from the group’s financials, fortunes have faded for Berjaya Media. The group recorded a revenue of RM33.3 mil for FY18. However, this translated to a net loss of RM10 mil.

This marked a doubling of losses from 2017, and Berjaya Media has been unable to make a turnaround. According to its FY19 results, Berjaya Media still sits in the red with a loss of RM16.2 mil compared to its loss of RM10 mil for the same period last year.

At the moment of suspension, Berjaya Media’s shares were last traded at 11 sen.

[box] How Vincent Tan owns Singer

One particular observation about the injection of Singer (M) Sdn Bhd into Berjaya Media is the possibility of a reverse takeover. When asked about this, the group refused to comment, stating that it would only be able to provide a response following a decision from Bursa Malaysia.

Singer, a purveyor of household appliances and motorcycles, is a brand name known to households for its sewing machines. Though it started out as a subsidiary of Singer Sewing Machine Company based in the US, the Malaysian office had 100% of its equity acquired by Tan Sri Vincent Tan, the magnate behind the Berjaya group of companies.

Since then, Singer has been built up from sewing machines to other appliances, as well as motorcycles. Featuring brands such as Honda, Yamaha, Modenas and SYM, Singer allowed for easy payment in terms of monthly instalment schemes, and worked with a plethora of banks to provide 0% interest payments.

But how did this come about?

It started with Singer Sewing Machine Company setting up an office in Malaysia in 1906, bringing with it the sewing machines of its brand and make. By 1985, Berjaya Group Bhd acquired a 48% stake in Singer Sewing Machine Company’s Malaysian subsidiary.

In a bid to expand beyond the Asia-Pacific region, Berjaya next launched a takeover bid for Singer Sewing Machine Company itself, listed in New York in the US. The takeover bid failed, but not without Berjaya gaining a 100% equity stake in the sewing machine company’s Malaysian operations. Through various subsequent corporate exercises, Singer became a wholly-owned subsidiary of Berjaya Retail Bhd on June 14, 2010, along with the 7-Eleven Group.

Berjaya Retail was then listed on the Main Market of Bursa Malaysia on Aug 16, 2010, a little over two months after it became the holding company of both Singer and 7-Eleven. It had an issue price of 50 sen per share, and at its peak had closed at a price of 56 sen per share.

Seven months later, the decision was made by Tan to privatise Berjaya Retail, with no particular reason given by the magnate. He made an offer of 65 sen per share, a premium over the trending price of Berjaya Retail, with the delisting being made official on May 3, 2011.

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