Albedo’s RTO deal hanging on tenterhooks

Catalist-listed Albedo shares bounced back a tad yesterday after an injurious showing last Wednesday when its stock price plunged more than 40 per cent following a report that its lifeline-deal involving sizeable Iskandar land had fallen through.

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Guanyu said…
Albedo’s RTO deal hanging on tenterhooks

Shares recover slightly but announcements signal tension

Anita Gabriel
25 March 2014

Catalist-listed Albedo shares bounced back a tad yesterday after an injurious showing last Wednesday when its stock price plunged more than 40 per cent following a report that its lifeline-deal involving sizeable Iskandar land had fallen through.

The proposed massive $1.86-billion reverse takeover deal involving Malaysian tycoon Danny Tan taking control of Albedo is still hanging on tenterhooks but the counter inched up 0.2 cent or 7 per cent to 3.2 cents yesterday when share trading resumed, with some 690 million shares done. This was after an intra-day low of 2.3 cents and high of 3.7 cents.

Trading resumed yesterday after it was halted since the early hours of trading on March 19 following a sharp fall triggered by a report in Malaysia’s The Star Online news portal that the deal would be called off.

Albedo’s announcements to Singapore Exchange signal that there is, indeed, some tension.

Last Wednesday, it referred to report as “incorrect” as the parties have not reached any mutual agreement to scrap the deal. Two days later, on Friday, it said that, following a meeting, the representatives of Mr Tan’s privately owned Infinite Rewards requested that the deal be mutually terminated.

However, Albedo said that both parties had not, as at the date of the Friday announcement, reached any mutual agreement on the terms to terminate the deal, which remains valid and binding on both parties.

Interestingly, even as investors bolted out of Albedo shares last week as the chances of the deal panning out dimmed, there were some who sniffed an opportunity.

On March 19, the same day the company drew a trading activity query from SGX and the counter was halted from trading just over an hour after the market opened, little known Jarmata Profits scooped up 33.9 million shares, raising its stake from 3.76 per cent to 5.58 per cent.

According to a filing to SGX last Friday, Jarmata coughed up $1.996 million for the shares which works out to 5.888 cents apiece, higher than its 5.2 cents close the previous day and way higher than yesterday’s finish.

The turn of events for Albedo is surprising considering that this monthwas meant to be the targeted deadline for the RTO involving the issue of new Albedo shares to be completed.

If it pulled through, the deal, one of the largest RTOs announced last year, would have been the silver lining for the loss-making and struggling steel firm.

The jubilation over that rosy promise is amply reflected by Albedo’s share price performance - it rose from a low of 1.1 cent in July last year to scale a high of 7.6 cents two months later when the deal was finalised.

Investors gleefully embraced Albedo’s turnaround story, which involved the injection of massive land, just over a dozen land parcels, spanning some 480 hectares in the flourishing enclave of Malaysia’s southern growth corridor Iskandar.

Now though, many are befuddled; what had seemed close to a done deal - from seven parcels of land, the deal got bigger to include six more late last year, indicating that all was well - is now tottering on the brink of termination.

The sharp fall in Albedo’s stock price last week was somewhat reminiscent of the penny stock crash that gripped the local bourse last October and has since left investors relatively more wary of ploughing their money into such low-priced counters.

Even with that, the penny stock play has been alive, just not to the same euphoric extent.

There is some speculation that the deal or some of its terms did not have the “blessing” of the Sultan of Johor, who has, of late, cranked up his own business involvement - some of which involves Mr Tan’s brother, another tycoon and seasoned entrepreneur Vincent Tan.
Guanyu said…
As this deal involves major tracts of prime land in the state and more so in Gelang Patah, north of Nusajaya which is Iskandar’s flagship, some insiders say the Sultan’s tacit approval would be sought.

There may be other factors. For one, the issue of conflict of interest. Concerns have been raised that once the deal with Albedo is completed, it could emerge as a rival to Tropicana Corp, a flagship property group controlled by Danny Tan which is listed on Bursa Malaysia.

In fact, the Albedo move announced last August had surprised market watchers who were of the notion that Mr Tan would pump most of his prime property assets into Tropicana instead.

Then, there was an article over the weekend in The Star, which quoted unnamed analysts as saying that Tropicana’s management had affirmed that the deal would be called off, citing “corporate governance issues”.

When contacted, Mr Tai Kok Chuan, Albedo’s founder and chief executive declined comment. Mr Tan, who made his debut on the Forbes 2014 rich list for Malaysia, hurriedly responded “no comment”.

BT contacted key people involved in the deal who previously were readily available to the press when the deal was hunky dory, but most were just as tight-lipped.

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