PETALING JAYA: Telekom Malaysia Bhd (TM) is taking VADS Bhd private. Shareholders of the managed information and communications technology (ICT) services provider will receive a capital repayment of RM7.60 in cash for every share held in VADS.
VADS will become a wholly owned subsidiary of TM after the exercise, which will cost TM RM417mil. TM now owns a 63.3% stake in VADS.
TM’s rationale for taking the company private is to give shareholders an opportunity to realise their investment in VADS at a premium. It will also enable TM to streamline its business to maximise potential synergies and cost-savings benefits.
In a statement, TM said the proposed capital repayment of RM7.60 a share represented premiums of 18.4% and 26% respectively over the five-day and three-month volume-weighted average market prices of VADS shares up to last Friday.
Trading in VADS shares was suspended yesterday morning pending the announcement. The RM7.60 offer represents an 11.7% premium over the last traded VADS share price of RM6.80.
Analysts were not surprised by the move, as talk of taking VADS private had been circulating in the market for months.
TM said the proposal involved a selective capital reduction and repayment which would result in the reduction of VADS’ enlarged share capital after the proposed bonus issue.
It said it would not receive the cash amount of RM7.60 a share in capital repayment and waive its entire entitlement to the repayment of capital under the privatisation plan. TM instead is providing an interest-free advance of RM417mil to a special-purpose vehicle to fund the privatisation. This is to ensure that VADS has sufficient reserves to implement a proposed bonus issue of 706.2 million new VADS shares.
TM said the bonus issue was proposed to be effected by way of capitalisation of VADS’ entire share premium account and the balance from VADS’ retained profits.
“For avoidance of doubt, the new VADS shares to be issued under the proposed bonus issue will not be credited to the central depository system accounts of VADS shareholders and the proposed bonus issue is to be implemented solely for the purpose of facilitating the selective capital repayment under the proposal,’’ TM said.