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| Media Prima: RM2 for NSTP justifiable |
| Written by Joseph Chin | |||
| Wednesday, 21 October 2009 20:14 | |||
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Replying to several queries from Bursa Malaysia Securities, MPB said on Wednesday, Oct 21 the RM2 per offer share was based on the one-month volume weighted average market price (VWAMP) of NSTP up to July 30, 2009 of RM1.36. "MPB believes that the offer price, which represents a premium of 47% to the one-month VWAMP of NSTP, is justified based on the fundamentals of NSTP, its future prospects and earnings profile," it added. In its rationale, MPB said the proposed offer involving a share swap of NSTP shares for MPB shares. Hence, the consideration for the proposed offer should not be based solely on the offer price for NSTP shares nor the issue price of MPB shares, "but rather the fairness and reasonableness of the exchange ratio to the shareholders of both MPB and NSTP". "More importantly, NSTP shareholders should not take the proposed offer as an exit strategy but as an opportunity for them to participate in the future growth and prospects of the enlarged MPB group," it said. MPB also said the exchange ratio was based on the relative historical market value of both NSTP shares and MPB shares traded and not the absolute valuation of NSTP shares nor MPB shares. MPB also said the issue price of RM2 per consideration share was based on the comparative trend of the historical share prices of MPB and NSTP. It added MPB share prices had, over the past two years up to July 30, 2009, had been trading above or relatively close to the NSTP share prices. The issue price was justified based on the fundamentals of MPB, its future prospects and earnings profile. On Bursa Securities' query about the basis of arriving at the theoretical value of the consideration warrants of about 49 sen per MPB warrant, it said: "The theoretical value of the consideration warrants of approximately 49 sen is computed based on the “Trinomial” pricing model, as highlighted in our previous announcement dated Oct 16, 2009," it said. On Bursa Securities' query about MPB's justification for the premium of 6.51% to the five-day VWAMP of MPB share of RM1.69 up to Oct 15, 2009. MPB said the exercise price of the MPB warrants of RM1.80, a premium of 6.51% to the five-day VWAMP of MPB up to Oct 15, of RM1.69, "strikes a good balance between the attractiveness of the MPB warrant to its holder and the interest the company". In a separate statement, responding to more queries from Bursa Securities, MPB said in evaluating the available fund raising options for MPB, it considered both debt and equity related fund raising options. MPB said the proposed bonds with detachable warrants issue would enable MPB to raise fixed rate financing to fund future investments. "It will also reduce MPB’s exposure to any potential increase in interest rates to enable MPB to effectively plan for its operational costs," it said. MPB added the proposed bonds with detachable warrants issue would provide MPB with lower financing cost as compared to traditional bank borrowings.
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