The Star

BERJAYA Corp Bhd is considering a plan to take its 74.4% unit Cosway Corp Bhd private, via a voluntary general offer at RM1.20-RM1.40 per share. 

As at August this year, Berjaya Corp owned about 74.4% or 256.2 million shares of Cosway Corp, via Garima Holdings Sdn Bhd, Berjaya General Insurance Bhd, Prime Credit Leasing Sdn Bhd, Juara Sejati Sdn Bhd, Bizurai Bijak (M) Sdn Bhd, Inter-Pacific Securities Sdn Bhd and Indah Corp Bhd.  With a VGO of between RM1.20 to RM1.40,Berjaya Corp will end up forking out between RM105.8mil and RM123.5mil for the 88.2mil shares or 25.6% it does not already own in Cosway Corp.

The offer price however is lower than Cosway Corp's net asset per share, which as at end July stood at about RM1.57. 

“It (Cosway Corp) is a company with decent earnings...fundamentals are sound. But it is undervalued and has been trading below the RM1 mark since late 2003 and only recently breached that level,” says an observer.  

In fact, the source says that the plan may be to first take the company private and may involve, later down the road, listing it on an overseas stock exchange.  

Berjaya Corp had as much as RM296.7mil in deposits with financial institutions, RM210.9mil in cash and bank balances and trade and other receivables amounting to about RM1.4bil as at end July this year. 

At press time the Berjaya Corp's plans are still unclear but Cosway Corp, which is largely involved in home entertainment products and consumer goods, has businesses in Singapore, via Berjaya HVN (S) Pte Ltd, in Thailand via Cosway Thailand Co Ltd, Australia through Cosway Value Club (Australia) Pty Ltd and in the Philippines via Cosway Philippines Inc among others. 

The Berjaya Corp meanwhile is the one of the vehicles of tycoon Tan Sri Vincent Tan, who has wide ranging businesses, in a large number of countries including some which are publicly traded in Hong Kong, Singapore, Canada, the US and Philippines.  

For the financial year ended April 2006, a bulk or 70% of Cosway Corp's RM1.1bil revenue stemmed from Malaysian operations while sales from other areas of the Asia Pacific region was RM162.2mil.  

Cosway Corp, for its first financial quarter ended July this year, posted a net profit of RM10.3mil on the back of RM180.4mil in sales, which is a dip of about 15% and 36% respectively from the corresponding period a year ago. 

In its notes, which accompany its financials, Cosway Corp says, “Both the decrease in revenue and pre-tax profit was mainly due to the deconsolidation of Dunham-Bush (Malaysia) Bhd which ceased to be a subsidiary upon completion of the capital distribution exercise on April 28, 2006.” 

Dunham-Bush was a unit of Cosway Corp, with the latter having about 73% equity in the air conditioning and refrigeration system manufacturer.  

However after a capital distribution, Dunham-Bush ceased to be a subsidiary of the Cosway Group but remains a unit of the Tan's Berjaya Group Bhd. 

Market watchers say the news of Cosway Corp's privatisation has been in the market for sometime now and as a result, the company's stock has gained more than 40% over the past month.  

It ended trading on Thursday at RM1.14.