29th Nov 2013 09:28
LONDON (Alliance News) - Malaysia's Kuala Lumpur Kepong Berhad Friday made a takeover offer for the whole of Equatorial Palm Oil PLC after a funding deal between the companies took Kuala Lumpur Kepong's stake to 54.8%.
Under the funding deal, Kuala Lumpur Kepong subscribed for 153,817,648 shares at 5 pence each, and that will be the offer for the rest of the shares, valuing the company at about GBP17.7 million.
Earlier this month, Equatorial Palm Oil said Kuala Lumpur Kepong will be its new partner in its Liberian Palm Developments joint venture, with both companies pumping USD4 million of new loans into the business to get it up and running again within two months.
It was a complicated deal, with Kuala Lumpur Kepong buying Biopalm Energy Ltd's 50% stake in Liberian Palm and its 20.1% stake in Equatorial Palm Oil for 5 pence a share. It then provided a USD2 million loan to Liberian Palm, and Equatorial Palm Oil transfered USD6 million of the outstanding liabilities it is owed by Liberian Palm to Kuala Lumpur Kepong. Equatorial Palm Oil also lent Liberian Palm USD2 million.
In a statement Friday, Equatorial Palm Oil said it thinks 5p a share undervalues the company given its potential if it can develop the Liberian Palm business. However, it urged shareholders to consider the bid as it offers an opportunity for investors to realise their investments in cash in the near term.
It pointed out that there are risks to remaining a shareholder, including potential loss of an AIM listing, decreased liquidity in the stock, and the changes to the company's board that will take place due to Kuala Lumpur Kepong's acquisition of a majority stake.
Equatorial Palm Oil shares were down 3.8% at 5.05 pence Friday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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