Petronas Defends MISC Buyout Price After Minorities Call It Low

Petroliam Nasional Bhd., Malaysia’s state energy company, defended its 8.8 billion ringgit ($2.8 billion) buyout offer price for MISC Bhd. (MISC) after criticism from minority shareholders that it’s too low.
“It’s the right number,” Shamsul Azhar Abbas, chief executive officer of Petroliam Nasional, or Petronas, told reporters in Kuala Lumpur yesterday, after announcing a 57 percent drop in fourth-quarter profit. “It’s a premium. Everyone has the right to choose.”
Petronas offered 5.30 ringgit per share in January for the rest of the world second-largest liquefied natural gas shipping company it doesn’t already own. The Employees Provident Fund, MISC’s biggest minority shareholder, wants a higher price, Azlan Zainol, chief executive officer of the country’s biggest pension fund said March 1. Penang Development Corp. and Pacific Mutual Fund Bhd. have also said the offer undervalues the company.
Fourth-quarter net income fell to 5.97 billion ringgit in the three months ended Dec. 31 from 13.81 billion ringgit a year earlier after suspending production in South Sudan and booking impairments on assets in Egypt, Petronas said in a statement today. Revenue fell 1.6 percent to 76.77 billion ringgit.
“We continue to face headwinds due to the weaker global economy,” Shamsul said.
Petronas owns 63 percent of MISC shares, while EPF holds 9.6 percent, according to data compiled by Bloomberg.
Liner Exit
MISC fell 0.2 percent to 5.27 ringgit as of 4:30 p.m. in Kuala Lumpur before today’s earnings announcement, tracking a 0.1 percent decline in the benchmark FTSE Bursa Malaysia KLCI Index. Petronas’ offer price was a 19 percent premium to the stock’s last traded price of 4.45 ringgit before the Jan. 31 bid, a level last seen in April 2012.
MISC completed a rights issue at 7 ringgit per share in February 2010. The stock subsequently tumbled as the company booked losses and exited the liner industry.
A buyout would provide Petronas with greater flexibility in revamping MISC, the group said when making the offer. Minority shareholders “can join us in this misery if they wish,” Shamsul said today.
Petronas and its partners were forced by South Sudan’s government to shut down oil production at Thar Jath field in Unity state amid a dispute with its northern neighbor Sudan over transportation fees for its exports. This led to a loss of about 120,000 barrels of oil equivalent per day production, the Malaysian energy group said in today’s presentation.
Total production for the quarter was 2.08 million barrels of oil equivalent per day compared to 2.1 million barrels during the same period last year, Petronas said.
Source: Bloomberg