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Saturday, February 8, 2014

Robert Tan's PDZ in the limelight (Star)

 LOW-PROFILE tycoon Tan Sri Robert Tan Hua Choon seems to be on a roll to unlock the values of some his listed companies. His modus operandi: the entry of new shareholders that bring with them new businesses.

The 72-year-old, dubbed the elusive “Casio King”, only last month saw his Malaysia Aica Bhd (Maica) make headlines after it received a takeover offer from property developer Sunsuria Development Sdn Bhd. The move sent Maica shares sky rocketing by some 60%.

Now the buzz is around Tan’s ailing shipping firm PDZ Holdings Bhd. Market talk has it that Tan is steering PDZ into becoming an oil and gas services concern.

“PDZ is mulling the acquisition of an oil and gas services firm, which could see the emergence of a new major shareholder,” says a dealer.

Since January, PDZ shares have been traded heavily, averaging 18 million shares within that period and hitting a high of 54.5 million shares on Jan 20 alone.

It closed at 12 sen on Friday, a 50% jump from its 8 sen close on Jan 2.

This is the highest its shares have hit since May 2009.

PDZ is clearly in need of some kind of business revival. The loss-making container shipping firm is still reeling from the industry’s downturn since the 2008 economic crisis.

The shipping industry took a downturn following the 2008 economic crisis, on over capacity, high fuel costs and low freight charges.

Many shipping companies were caught, as they were unable to repay bank loans for the procurement of new vessels, and are still on the road to recovery.

According to its website, it operates six vessels covering Malaysia, Singapore, Brunei and Myanmar.

For its financial year ended June 30, 2013, it posted a net loss of RM12.45mil from a net profit of RM10.56mil the previous financial year.

PDZ attributed the loss to an impairment loss of RM8.24mil due to a vessel that it sold for scrap, and weakening freight rates due to oversupply of shipping tonnage.

The glut in the shipping industry is expected to continue on the back of the continued supply-demand imbalance caused by excess supply of tonnage.

Freight rates are expected to remain depressed this year.

“The existing container shipping industry is not doing so great. It will be hard for PDZ to make any headway in recovery,” an analyst says.

However, PDZ has a relatively clean balance sheet, being in a net cash position of close to RM16mil, which possibly makes it an attractive vehicle for new shareholders to emerge via the injection of an asset.

PDZ plans to reduce operating costs and improve operational efficiency in a bid to consolidate to a more competitive cost structure.

Another notable development at PDZ is the fact that Tan resigned from his role as chairman and director last June.

However, Tan has not sold any of his shares in PDZ, leading industry observers to speculate that he is likely to ride along with the new shareholders who come in as a result of the new asset injection.

Tan’s direct stake in PDZ stands at 19.13% although it is believed he might control more of the company through friendly parties.

His son-in-law Wong Hok Yim, who was appointed as PDZ’s non-independent non-executive director in June last year, has a deemed interest of 0.85% in the company.

Any corporate exercise involving the injection of an asset into PDZ for new shares will dilute Tan’s stake in the company.

A close associate of Tun Daim Zainuddin, Tan’s company Spanco Sdn Bhd obtained a privatised contract in 1993 to service government-owned vehicles.

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