Thursday, June 7, 2012

THE SIGN OF BE-END OF BN???? MIND YOUR STEP SINGAPORE PAP SMEAR GOVERNMENT


FinanceAsia: Berjaya Sports Toto plans to transfer its wholly-owned Sports Toto Malaysia (STM) unit to a business trust with the intention of listing it in Singapore, according to a stock exchange filing made late on Monday. STM mainly operates so-called Toto pool betting, or lucky-numbers games.
The business trust will have an indicative valuation of between M$5.9 billion and M$6.5 billion ($1.84 billion to $2 billion) based on discounted cashflow, it said. Deloitte has been hired to make an independent valuation of STM, which will be published in a circular to Berjaya Sports’ shareholders at a later date.
The spin-off and listing is expected to unlock shareholder value and to allow STM to gain access to a larger pool of investors in non-shar’iah compliant stocks. It will also see STM adopt a corporate structure that facilitates capital management, Berjaya Sports said. The mandate of the business trust, which will be named Sports Toto Malaysia Trust (STM Trust), will be to invest only in gaming-type businesses and it will distribute 100% of its surplus operating cashflow to unitholders as dividends.
The plan further underlines that Malaysia looks set to become one of the most active and interesting markets with regard to new listings this year, even if this particular company has chosen to list in Singapore. While IPOs in other markets are being withdrawn or are being done virtually as club deals, offerings out of Malaysia continue to attract a lot of attention. At the moment palm oil, rubber and sugar plantation company Felda Global Ventures is on the road with an IPO of up to $3.2 billion and hospital operator Integrated Healthcare Holdings (IHH) is expected to follow shortly behind. IHH, which is majority-owned by Khazanah, may raise more than $1 billion from a dual-listing in Kuala Lumpur and Singapore and sources say there is already a lot of interest among international investors in the stock.
Berjaya Sports’ share price gained 3.3% yesterday morning on the news of the spin-off but after reaching a high of M$4.39 it spent the rest of the session edging gradually lower. It finished 0.9% higher at M$4.29.
According to the filing, all of STM’s 12.5525 million outstanding shares, or 100% of the equity interest in the company, will be transferred to a business trust at a transfer cost of M$6 billion, or S$2.43 billion ($1.89 billion). As payment for these shares, Berjaya Sports will receive 4.43 billion new units in STM Trust at an issue price of S$0.50 per unit as well as a promissory note to cover the balance S$213.4 million. However, Berjaya Sports will use the note to cancel its outstanding debts to STM, including the estimated interest due before the end of October, which is when the share transfer is expected to be completed.
Berjaya Sports bought STM in 1992 and has invested a total of M$603.95 million in the company.
The transfer cost is equal to 17.4 times STM’s net profit for the fiscal year to April 30, which is estimated at M$345.3 million, and also values the company at an enterprise value to Ebitda multiple of 12 times. Both pitches STM slightly above the average of other listed lottery operators and companies involved in internet betting, although valuations vary widely, the company noted in the filing. Multi-Purpose Holdings, which is listed in Malaysia, is quoted at an historical P/E ratio of 9.4 times and at an EV/Ebitda multiple of 6.5 times, while Hong Kong-listed Rexlot Holdings is quoted at a P/E ratio of 7.3 times and at an EV/Ebitda multiple of 6.3 times.
The plan is to list up to 4.89 billion STM Trust units on the Singapore Exchange and to sell a total of 1 billion units, or 20.4%, to other investors thorough an initial public offering. The proposed offering will include up to 540 million existing units sold by Berjaya Sports and up to 460 million new units to be issued by the trust.
Based on an assumed offer price of S$0.50 per unit, the IPO would total S$500 million and Berjaya Sports would raise S$270 million, which it said it intends to distribute to its shareholders in the form of a special dividend within three months. It may also consider distributing “a substantial portion or all” of its remaining 3.89 billion units in STM Trust to its shareholders at an appropriate time, it said.
The spin-off is subject to approvals from Berjaya Sports’ shareholders at an extraordinary general meeting, as well as various regulatory bodies in Malaysia and Singapore. It also needs the go-head from the holders of M$550 million of medium-term notes issued by STM.
Maybank Investment Bank is a principal adviser to Berjaya Sports with regard to these proposals, and Maybank Kim Eng Corporate Finance has been appointed financial adviser, issue manager, global coordinator, bookrunner and underwriter for the proposed listing.