news feature

The public interest in Nanyang Press Holdings Bhd has been rekindled in recent months as over 40 percent of its shares were divested to undisclosed parties.

However, the latest transaction has not stirred much controversy compared with when MCA's investment arm Huaren Management Sdn Bhd acquired the publishing group last May.

That's because the issue now is couched in numerical technicalities.

But a closer look at the figures and statements, coughed up by various parties, reveals that many vital questions remain unanswered.

On Tuesday, MCA president Dr Ling Liong Sik said Kurnia Insurans Bhd, a well-known insurance company with a reported capitalisation of RM200 million, has a five percent stake in Nanyang Press.

According to trading regulations, any change in substantial shareholding five percent or above must be disclosed on the Kuala Lumpur Stock Exchange (KLSE) not more than seven days after the transaction.

However, a check revealed that this information was not available on the KLSE website.

Authorities tightlipped

When contacted, a KLSE official refused to comment on whether the regulatory body had received any complaint about Nanyang Press and if there was any breach of listing requirement in the divestment of the shares.

The Securities Commission (SC), the central authority that monitors the regulation and development of the securities market in Malaysia, also chose to remain tight-lipped over the same questions.

Its spokesperson said the SC has a policy of confidentiality on enforcement and is therefore "not at liberty to confirm the receipt of the complaint, or for that matter, comment on its enforcement work".

The spokesperson added that the SC would "act without fear or favour" if there was any cause for action to uphold market integrity and confidence of investors in the securities market.

"The SC would also like to remind minority shareholders to take an active interest in the developments of companies they invest in and to make appropriate investment decisions," she added.

A facsimile was also sent to Kurnia Insurans to seek clarification over its 'investment' in the publishing company.

Malaysiakini was later told that Kurnia managing director, Adrian Loh, would respond next week.

Compared with Kurnia's actual involvement, more is known about the other Nanyang shares divested earlier but this hardly satisfies the curiosity of many, particularly MCA members.

In early May, Huaren appointed Rashid Hussain Securities Sdn Bhd as the agent to place out 10,888,636 Nanyang shares (or 18.60 percent of the total paid-up capital) at a minimum of RM5.60 each 10 sen above Huaren's purchase price of RM5.50.

Trading resumed

The disposal reduced Huaren's stake in Nanyang to 73.52 percent, or 43,047,177 shares. This fulfilled the 25 percent public shareholding spread over 1,000 shareholders and enabled Nanyang to resume trading on June 14.

(Nanyang had been suspended from KLSE at RM5.50 per share since Aug 20 last year after Huaren made a mandatory general offer which resulted in it owning 92.12 percent, or 53,935,813, Nanyang shares.)

As Nanyang reported a total of 996 shareholders late last year, it could be safely assumed that the first divestment was sold to at least four buyers to meet the 1,000 shareholders requirement.

On June 21 and 24 respectively, it was announced that Huaren disposed of altogether 453,000 Nanyang shares, without going through any placement agent.

Last Thursday, Huaren placed out another 14,735,000 shares, or 25.17 percent, through PB Securities Sdn Bhd. Two days later, it was reported in several Chinese-language newspapers that all these shares were sold.

This means Huaren now has 27,859,177 shares, or 47.58 percent, in Nanyang.

All in all, 44.54 percent or 26,076,636 Nanyang shares were sold over the last two months. If each share was sold at RM5.60, the transactions would be worth RM146 million.

The huge amount of money involved has raised many eyebrows in the market.

One analyst said it was "interesting" that Huaren still managed to dispose of so many shares at a time when the market mood here was affected by the weak performance of the United States market following several high-profile corporate scandals in the country.

That the volume of trading for Nanyang was low and its stock price consistently closed at around RM5.55 since the shares resumed trading last month also did not help much.

Another market analyst pointed out that this could be partly due to the low free float among public shareholders.

"Or probably the shares are in firm hands. Those owners have confidence in the company and are not selling their shares," said the analyst who declined to be named.

A favour

There is also another possibility individuals close to MCA top leaders, their proxies or even companies, could have bought the Nanyang shares as a 'favour'.

If each of them took less than five percent, there was no need for disclosure of their identities on the KLSE.

Many analysts had earlier expected Nanyang shares to be re-quoted at around RM3. After all, the stock was trading below RM4 before the market talk of a takeover last year.

Not forgetting, last August, soon after the takeover, Nanyang announced a net loss of RM4.9 million in its fourth quarter ended June 30, 2001 — although later it made a net profit of RM1.1 million and RM3.2 million in the next two quarters respectively.

The possibility of a 'favour' seems more real now. Immediately after the first divestment of shares in May, malaysiakini reported that two MCA-run cooperatives, Kooperasi Jayadiri Malaysia (Kojadi) and Kooperasi SerbaGuna Malaysia (KSM), were among the buyers.

The following day, Kojadi, an education loan scheme set up in the early 1980s to help needy students to pursue higher education, denied buying any of the shares.

But KSM, another cooperative set up in the late 1960s to accumulate capital from the Chinese lower middle-class to back MCA's then investment arm Multi-Purpose Holdings Bhd, did not make any denial.

Sources told malaysiakini that two months before the divestment, KSM chairperson Lau Yin Pin asked company directors to give him full mandate over share acquisition as he argued that such decisions would have to be made fast.

One interesting point to be noted is that Lau is also the MCA Terengganu chairperson and closely aligned to the party president.

Last month, KSM directors were told that the company had purchased 200,000 Nanyang shares worth RM1.12 million.

The purchase may not constitute a related party transaction under the trading rules but politically it may cause some controversy within MCA.

Economic viability

To begin with, the Nanyang Press takeover had split the party into two camps. The acquisition was later endorsed by a tissue-thin majority at an extraordinary general meeting. But the endorsement does not stop the small talks among some members and leaders.

They continue to question the economic viability of the deal since Huaren had pledged its shares in Star Publications the publisher of top-selling English daily The Star as collateral for the RM320 million loan which it obtained to seal the deal.

At a top-level meeting in April, MCA leaders were told that Huaren had serviced up to RM24 million as loan interest over the past 10 months since the takeover.

A senior party official said the Nanyang Press issue will continue to haunt MCA and create a difference of opinion among its members.

"It is more than the factional feud now because many party members who have investment in MCA companies are worried about their money," he said.

And their concern will be aggravated when they take a closer look at the figures.