Part 1: FELDA – The smell of easy money
Part 2: FELDA – The smell of easy money
Part 3: FELDA – The smell of easy money
Part 4: FELDA – The smell of easy money
Part 5: FELDA- The smell of easy money
- The brains behind the FGV-KPF-FH restructuring are good at selling stories. Their skills are probably as good as the medicine peddlers at the night market. Being private company, FELDA-A has refuses to make public their annual report or the annual report of FGV. The basic fact is that they it owes it to the taxpayers. I have been fortunate for knowing a group of people who wish to be identified as “Friends of Felda”. They have been giving me information and documents that I need to write my post as well as to answer some of the commentators. In the last few days TV3 has also been selling the story of how Felda settlers would benefit by interviewing key pro-BN settlers in light of the upcoming KPF EGM on Jan 5th, 2012. Unfortunately they never explicitly explained how the settlers would benefit. Their explanation is very grey. The way I see it, they don’t really know or they don’t want people to know that they don’t know.
- FGV has been touted as the global player and has been promoted using the media as a competent group that would propel Felda and the settlers to greater greatness in the next few years. The world is facing economic slow down. Globally everyone talks about it and is taking preventive actions. However our government is says that Malaysia will be fine. The settlers must appreciate the reality. Their revenue is expected to drop as the global CPO price is expected to soften in view of weakening demands in EU, USA and China. If they think FGV can do wonders I suggest they think again and think hard.
- Felda Global Ventures has 101 subsidiaries. Only 90 of the companies are actively doing business. The rest are either dormant or holding companies. Recently they entered the sugar business and float the company (MSM Holdings). They are planning to float another 4 companies within the next 18 months. In the past few years, the bulk of its profits came from Felda Holding.The other 89 subsidiaries are in general contributed losses or some meager profits.
- These are the companies that everyone thinks as high value assets that FGV are injecting into the merger. If we can split the land bank based on equity, the 49% share of FH can be translated into 170,000 hectares. As at Dec 31st, 2010 FGV pretax profit is RM366mill and during the same period FH profit is RM760mill. Going by the fact that FGV owns 49% of FH, we can assume that would get RM372.4 mill profit from FH is the entire 100% of the profits are returned to shareholders. In reality that is not the case.
- For the first half of 2011, FGV chalked a turnover of RM1.98bill with a profit of RM167.8 mill. Assuming that their fortune is good, than the profits for 2011 would be about RM336 mill. Again this would mainly come from Felda Holding. Clearly, FGV has very poor track record. The restructuring followed by IPO is merely an exercise to support FGV poor business venture as well as “to feed a few personalities”. The company would be in debt and the financial outlook for the settlers after the IPO and listing looks bleak. Numbers don’t lie. Based on past financial performance, I don’t think KPF should support the scheme. FGV track records are extremely discouraging. So, what’s the true value of FGV contribution to this merger?
Cool Video: Enjoy!
ONE STEP AT A TIME- Who will eventually sit on the board of KPF?
CURRENT
STEP 1
STEP 2
STEP 3
Dear doc and Ak,
Did a bit of probing and manage to get the bye laws of KPF.
1) There will always be Felda A representatives on KPF. Pervious DG datuk tarmizi was also chairman of KPF. Abidin who is dep dg of felda A is also secretary of KPF. My point is that parties wear too many hats and it has not been operated in pure isolation of different entries.
2) Doc Ive rechecked and confirm there is a massive land injection which I believe you’ve not reconsidered. The question to solve our gap is the following: Will KPF gets similar amount of dividend/return under the IPO structure with the current structure. If you can provide the numbers we can ascertain the same.
3) relooking at the structure it does not make sense to list FH. If intent is for fgv to undertake all the business including felda A, the business should merge. If no intention on merging business my view is that its better not to list FH at all. Profits at FH need not be shared with third parties.
FGV is part owner of FH and many of the personalities in the management may be the same, but they are DEFINITELY NOT the same entity.
FH has a separate set of shareholders, KPF. FH has a relatively focused set of business activities, most of them related to the plantation industry in one way or another, and has solid financial results. The only real disadvantage to KPF shareholders is their holdings are not liquid i.e. they are not freely tradeable shares. It pays very good dividends, though.
FGV has this other set of business, messy , unfocused, many of them making losses.
The fact is, even if there is no wrong doing, FGV has clearly got itself into business ventures that it doesn’t understand and doesn’t know how to manage.
Knowing Bolehland culture, the “No wrong doing” assumption is a very questionable one.
Merging a solid, profitable, non-fully owned subsidiary into a troubled holding parent, while legal, raises many ethical questions.
I’ve seen it done before in other companies…you know what ? Most of the time the majority shareholders who mastermind such deals are either up to no good, or using it to cover up past mistakes or misdeeds.
If Malaysia had anything like a free press and independent corporate analysts, this proposed transaction would already have been bombarded by very serious questions in the market.
Ah…I see 1 Fella wears all three hats. Ali Baba doesn’t need 40 thieves. He can do it all by himself…
Dr
In order to camouflage the dilutive exercise, the swap has to take place prior to the listing. Value FGV lower and swap the indirect interest in FGV to Felda A via a combination of shares in FGV and cash. This can be worked backwards to arrive at 9.3% for the settlers upon listing.
After the listing, the market value of the FGV shares is transparent. Settlers will not settle for a swap of less than 1:1 based on market value and hence their collective interest will remain at 42.7% whether at KPF level or individually. well, unless the settlers ignored at their own peril. I think financial implications is just one side of the equation. To lose your direct attachment to the land toiled by generations and surrender it to the corporate world, that would be a tragedy to many. Whatever the outcome, I hope Felda wont end up like Salcra in Sarawak where the indigenous rights to the land are lost forever. As far as land matters are concerned, you can never quantify the emotion attachment value.
Good luck Felda settlers, whatever your decision. I can only hope you make the right decision, not for you only but your many generations to come.
MMC
In my assessment, the swap will occur after IPO because the IPO price can be pushed. One of FGV subsidiary is MSM, a business in producing sugar. The IPO was set at RM3.50 (38 June 2011) and last transacted price is RM4.85. A total 234 mill shares @0.50 were floated. PE ratio not fantastic. Dividend policy is 50% of profit but actual yield may be about 5%.
For FGV, as they have a listed subsidiary, they expect that they can generate bigger value. They can float more shares. The think about stock market, the price can be “controlled” to a certain extent by manipulating buying and selling.
ok dr
lets await for details.
have a great holiday season.
ak
thanks for the clarification.
good luck to felda settlers if the swap happens. they will lose control of their precious assets. with 9.3% minority stake, they can kiss goodbye to whatever they have built with sweat and tears.
dr
just a point of clarification. upon completion of step 3, your chart seems to suggest that KPF, the cooperative will eventually be 100% owned by Felda (the authority) and the settlers will have only 9.3% in the enlarged listing co.
cant be?
mmc,
This can happen if there is a share swapped between the settlers & employees and Felda A for KPF and FGV shares. Doc is showing an option where Felda A will dilute its share in FGV from 27.3% to 18% and that is taken up by the settlers & employees of 9.3% shares of FGV. Felda A will in turn own 100% of KPF
Dear MMC
Based on info that I received, thats the overall short-medium term game plan. However the actual share percentage of FGV that will be owned by the individual settlers at this stage is fluid. It is dependent on
(1) Number of shares being float.
(2) The post listing price of FGV.
Felda-A will sell the following story line. The lead vocalist t would be ISA… ” Koperasi share value is RM1 and FGV share is RMX. If you exchange you will make a paper gain of RM(X-1).. and the price of share is expected to go up further..Settlers must be part of the global business.
Also read sakmongkol latest release HERE
ak
numbers dont add up. after step 2, setllers still control 42.7% of the listed co via KPF. how can settlers own only 9.3% of the same listed co by swapping their 100% interest in KPF to Felda (authority) under step 3 unless there are other consideration for such a huge dilution. Picture doesnt seem complete.
The listed shares will have higher price than KPF shares which is un-traded. As mentioned, the final percentage is still fluid. It is dependent on the number of new enlarged FGV paid up capital and listing price
dr
value of KPF, for all intent and purpose, should at least reflect the IPO price of FGV. unless ones pull wool over eyes of the settlers, an exchange between Felda A and KPF settlers on 1:1 basis (and no less) should see settlers maintaining 42.7% of the listed co, FGV.
example, say FGV paid-up is 1b. at 42.7%, thats 427m shares. IPO of FGV is RM5. Theoritically, KPF is worth is RM2.1b. So, if Felda A wants the 42.7%, it has to pay market price at RM2.1b and not RM427m. Unless the settlers are duped into exchanging at 1:4.5 (the difference of 0.5 as gains!), then the dilution will come to around 9.3%
that would be daylight robbery of settlers rights and assets by Fleda A if the said massive dilution happens
Let me extend to you the next scenario after the listing. After this, FELDA A will be corporatise and sell out to another UMNO crony. How about Syed Mohktar for you. Watch this prediction.
Dear MMC
The total share value of KPF is about RM1.4 bill. FGV plans to float 30% of the enlarged capital to raise USD 2 bill. When the share swap is done, it would be based on market value of FGV shares and KPF shares. If you assume the floated share has a value of RM5/share than, for every 1 share of FGV, the settlers will get 5 KPF share. As a sweetener they might give more…
“(1) Number of shares being float.”
I think it is 35%…..
35% of ?
I was told that the final number has not been finalized. The enlarged shareholdings expected to be above 3 bill
35% of the enlarged capital of FGV.
Btw Doc, a similar exercise was proposed to TDM during his premiership… he did not agree.
Zul
My apologies if my question is vague. What I want to know is the exact size of the enlarged capital. Do you know. My source says that is still being evaluated
Maaf Doc…, sori my minda agak slow ckit.. Likewise, it is still being evaluated by the advisers/co-advisers.
dr,
i am no investment banker. just trying to make some sense out of it. KPF value of KPV is worth some RM1.4b as it is now or after the swapping of its 51% stake in Felda to FGV for a 61% stake in the latter?
Its worth is RM1.4b, at which time? what exactly do you mean by value? no of shares in FGV? if so, equivalent to what stake in FGV prior to the listing?
If FGV plans to float 30% to raise RM2.0b, that theoritically values FGV at RM6.7b at IPO. At 42.7% on listing based on your chart 2, then KPF is worth some RM2.85b and not RM1.4b upon listing of FGV.
I think what you meant was that after floatation, for every 5 KPF shares, a settler will get 1 FGV share in exchange with Felda A. Thats the massive dilution I am alluding to. Its outright cheating of the ignorant settlers. Simply, the correct methodology is for settlers to maintain their proportionate interest in FGV after the listing whether at the coop level (under KPF) or directly and their collective interest is therefore to remain at 42.7% even after swap with Felda A. Any other way is not acceptable and PURE CHEATING.
Having said that, I am still sticking to my views. If listing is for the benefit of the settlers with no other ulterior motive, then list FELDA HOLDINGS on standalone basis. There is no reason to get mired with the loss making assets of FGV, which will dilute the earnings of FELDA HOLDINGS and theoritically the value on listing. If FGV needs money to repay EPF or for other purposes, then FELDA A can sell their shares in listed co to another government agency (EPF or PNB).
After the listing, what happens to the social responsibility of FELDA A. who carries the burden? Now if my postulation is right, FELDA A will eventually be corporatised and privatised, will the social responsibility be passed on to taxpayers again? Privatise profits and socialise losses?
Comparing Felda H and FGV as if they are separate entities is inaccurate.
Felda H IS FGV’s business track record. FGV is an owner Felda H. And many times the decision makers in FELDA, FGV, Felda H and KPF are the same people.
Yes, the govt has failed in many business development but Felda H is its success. Whether thru MOF golden share or FELDA and its biz arm FGV.
I think this deal is being bulldozed without talking properly to all the stakeholders. But i dun buy the line of argument above. It is very misleading
Rocko
Felda H has their own independent board and management. Both KPF and FGV are purely shareholders/investors in the company
Disagree doc. Take for example thehighest-ranking corporate officers for both entities, you wil find Sabri Ahmad.
He is is the current Group President and Group Managing Direcor of Felda Global Ventures Holdings and Felda Holdings Berhad.
They are different entities but having common directors.. solomon v solomon
My point is Felda H’s success IS FGV/FELDA track record. Being partly owned, having the same CEO and chairnan and sharing common board members n top management. I don’t buy arguing otherwise.
Rocko
Since when the chairman and CEO that sits on FGV and FH is the same person?
What i was referring to is isa samad being chairman of both FGV and Felda H.
And Sabri Ahmad being the highest-rankiny corpotate officer for both FGV and Felda H
Hope that clarifies.
Hi Rocko
Can you tell me if prior to Isa/Sabri, was there any common people in both entity?
Quote” Felda Holdings Bhd was incorporated in 1995 as the commercial arm of the Federal Land Development Authority (FELDA). In July, 2009, Felda Global Ventures Holdings Sdn Bhd (FGVH) was launched, with a view to accelerate the international expansion of the business and to pursue new ventures. Subsequently, in January 2010, the organisational structure and management of FGVH and Felda Holdings Bhd were integrated into a single entity, to be known collectively as Felda Global Group (Felda Global).”
You analysed 2010 and 2011 performance. FGV and Felda H are run by a single management during this period. So yes back to my point Felda H success is FGV’s track record.
Even if you look back before FGV. FELDA always have representation in Felda H Board. And high ranking corporate officers are ex FELDA (Sharifuddin Hizan).
To repeat my main point track record wise govt has done well to develop Felda H biz.
mr rocko,
FGV track record is dismal at best. it has literally lost its pants with its overseas downstream ventures. the saving grace came from the sugar business which was acquired from the Kuok brothers. After the acquisition, how many times were sugar prices raised to benefit both Syed Mohktar and FGV?
Stripped off the sugar profits and the accumulated profits from Felda Holdings (which own the upstream assets ie plantation assets and CPO refineries), the accumulated losses from the international downstream activities under FGV would be higher than the RM500m already accumulated under the books of FGV. Key question-who directed the acquisition spree for overseas venture and at fair market price? Where is EPF RM6b loan parked? Post listing, will Felda A be privatised and what are the rights of the settlers except to own shares in FGV? Is this the last scorched earth policy to transfer assets to UMNO cronies ifrom the government and the settlers n case UMNO falls?
In my view… Felda H is FGV track record . So I disagree tat FGV performance is abyssmal
As for sugar price. We have to appreciate that global sugar price has increased rapidly in the last couple of years.
http://i416.photobucket.com/albums/pp242/tindakmalaysia/financial%20education/SugarGlobalPrice5-yearchart.jpg
I share the concern with this listing. What will hapoen to FELDA poverty eradication programme, this deal is being bulldozed unprofessionally but I don’t buy the track record argument
oops it shld be salomon..
I read all the comments/discussion with an honest intellectual effort… and from my background and training I feel that KPF/FELDA would be asking for taxpayers money in a very near future if they vote favourably for the IPO. Goodbye and good luck settlers….
FGV….will not seek funds from EPF…., if at all it’s living …within it’s standard…,
all..we know…it’s just a stupid company run by some stupid politicians from the ruling party,…, we need to make our stand…, We had enough.
We are not suckers…., like how the government..abuse tax payers money to the tune of 1/4 billion RM…
Now they the bastards ..of BN want to bail out Idiot’s in the transportation Industry…to a tune of RM 400 million…., we are indeed IDIOTS…, if not ARSEHOLES.
Can we be so naive…to be taken for a ride so often..? Just forget about the Murders and guys who…are fighting for survival…, we need a change of clothes…., and it’s not BN…, anything …but…” ABU “…!
Please have some sense and not make this great nation go to waste…, all because of a corrupted..party.
MMC,
How Najib wish he got the personality cult of such leader? I am looking for youtube about that pakcik tied the cows & literaly leaving the cows to die while voting for UMNO……aiyaaa…..
Looes 74,
They will leave their cow’s to graze…., but tied their pricks to a Flag post in P.W.T.C., baru kau…., then they will know they are Idiots….taken for a ride.., just like they were taken all these years.
Can we assume Malays are brilliant like the Indians….who look forword to peanuts…., stupid…Indians …with worst shit then cowdung,…..just because they trust a stupid party like MIC…., who are rotten to the core.
Sellers…., rotten yet stupid populace of INDIANS can buy their SHIT..,
Wish these stupid Indians Well…for they are just about idiots.
Incoming Adam Curtis……That summarises how UMNO has near perpetual rule for 50 over years
It is not the Malay culture and against Islam to weep hysterically over the dead.
I found that Adam Curtis’s documentary can be very additive……Again, enjoy!
Ted Forstmann and the Plc
—————————————–
Taking a company public may benefit all the share holders
provided if a company can get the leadership of
personalities like the Ted Forstmann who could distribute
about rm 45billion ++ to his company shareholders
over a period of 6 years.
Does one expect a mat, or even an anglicised mat danny
or tony koling or a Robert Chai to do a Forstmann on
a Plc in boleland -malingsia?
I doubt it ver very much much. Ilek. Zilch . No way
The infrastructure in corporate governance is severely lacking
and the people appointed to enforce discipline in the
marketplace have questionable backgrounds.
In Singapore , Tan Koon Swan was jailed for the fiasco in the
Pan -Electric debacle, Would the questionable CEO of
the SC move quickly should there be questionable dealings
in the Felda [newco ] later?
In bolehland – malingsia company shenanigans and bad financial
decisons are tolerated by the authorities and the public at large.
How many glcs , banks , insurance companies and cooperatives
have folded because of bad governance since madey’s regime ?
What disciplinary actions have the gomen taken since madey’s regime?
Even as we speak we have a mat danny spent rm 18 million of
mas scarce fund to sponsor a footbal jersey for a club bound for relegation
and mas itself is coming out of the international business [cutting
down international routes] . Such mindless action is accepted by
both gomen and the intellect at the local university. No propeser
had ever made an adverse comment about it.
Does this mean that
this kind of action is ok for malaysia corporate management?
So l c you are still the devil’s advocate for the Pendek -isa ‘s action.
murphy’s law
——————-
You are morally right actually . Isa has done no wrong. Things will
go wrong only if the gomen disciplinary agencies , the sc go to
sleep and employees and shareholders are not vigilant as to the
going-ons in the board room. At the current level level of morality
murphy’s law will apply.
Whatever bad expectations that the commentators expect to happen will
happen,
Why?
Our disciplinary agencies were filled with people with questionable integrity
during the regime of dolah-mat -mata- layu as pee em. What great things
do you expect to happen?
A rm 250 million loan dished out with no possiblity of recovering it in sight
and no proper procedures followed.
This is fortelling the bleak and morally bankrupt future in boleland-malingsia!!
after tv3, utusan, star and nst will do their part to sell the story for Isa and co.
hey, just a digression. if you do remember the Ling Liong Sik family takeover of Berjaya Industrial saga. Star paper went to the extent of getting opinions from supposedly savvy businessmen from Hong Kong who touted how good Berjaya Industrial will be under the Ling family. Sounds familiar as above? Less than year later, Berjaya Industrial went bust and no audited accounts were even presented for many subsequent years. What did SC do? Nothing of consequence if i remember correctly.
I smell a rat in this Felda play from afar. What more if you have a convicted money-bag UMNO man (by UMNO itself) to run the show. Hmm..it sure stinks.