KUALA LUMPUR: The Federal Land Development Authority (Felda) obtained a special exemption from Bursa Malaysia in late December on complying with the 25 per cent public shareholding spread in FGV Holdings Bhd, as it continues to privatise the latter, according to sources.
The sources said the exemption was given before the deadline to meet the requirement on February 3 this year, after failing to formulate a plan to rectify FGV's lower public spread.
It is learned that Felda's shareholding in FGV stood at 82 per cent, way off the 95 per cent ownership to trigger the compulsory share acquisition to take the country's largest crude palm oil (CPO) producer private.
As at November 25, 2021, FGV's public shareholding spread stood at 13.19 per cent, 11.81 per cent shy of meeting Bursa's 25 per cent public spread rule.
This resulted from the failed RM1.30 per share privatisation initiated by Felda in March last year, the sources disclosed.
According to Bursa Malaysia Securities Bhd's Guidance Note 13 on Public Shareholding Spread, the exchange has the right to review its decision on lower public shareholding spread, for those listed on the ACE market.
However, it is not known whether such right is applicable to companies listed on the main market.
Felda was still keen to privatise FGV, sources said.
"Felda needs to privately talk to the remaining key shareholders namely the Sabah state government (4.0 per cent) and Pahang state government (5.0 per cent) to take FGV private," one of the sources told the New Straits Times (NST) recently.
A Felda spokesperson said the FGV privatisation had been an integral part of the government agency's recovery plan as drawn by the Special Task Force chaired by Tan Sri Abdul Wahid Omar.
He said the proposal alongside other initiatives were presented and approved by the Cabinet in October 2020.
"The privatisation of FGV will guarantee a more sustainable business model with the economies of scale and enable Felda to hold direct control of the whole supply chain in the plantation sector thus improving its cash flow and overall finances," he added.
Another source said Felda's majority shareholding in FGV could weigh down the company's share attractiveness if the takeover failed to materialise.
This might be attributable to insufficient liquidity as well as public and institutional investors shareholdings, the source added.
Felda might have to revise its RM1.30 offer price if it was still committed to the privatisation given the stock's current price and higher CPO prices that were currently trading at about RM5,000 per tonne.
"The offer price should be tagged competitively to entice the remaining shareholders to sell their stake in FGV," the source added.
At 5pm yesterday, FGV's shares edged up two sen or 1.34 per cent to RM1.51, giving a market capitalisation of RM5.51 billion.
Former FGV chief executive officer Datuk Zakaria Arshad said privatisation might be a good move for Felda to manage its estates solely.
"From the settlers' perspective, they want to have a full control or regain their control over their estates. If CPO prices rise, it would benefit us (settlers) more as we can reap the most benefit," he told the NST.
Zakaria, who is also the Koperasi Permodalan Felda representative, said FGV needed a new business model and ventures to remain profitable in the future.
NST previously reported that Felda was unlikely to terminate the 99-year Land Lease Agreement (LLA) with FGV as the compensation would be more expensive than taking the latter private.
FGV reportedly said Felda would have to compensate between RM3.5 billion and RM4.3 billion to the company due to early termination of the LLA, covering Felda-owned estates of about 350,733ha that were leased to FGV for 99 years beginning from November 1, 2011.
Felda had said it did not intend to keep FGV - which was listed at an initial public offering price of RM4.55 on June 27 2012 - on the local bourse.
At the offer price of RM1.30 a share, FGV was valued at about RM4.75 billion based on its issued share capital of about 3.65 billion, according to reports.
Public Investment Bank Bhd plantation analyst Chong Hoe Leong said FGV might keep requesting an extension to fulfil the public spread requirement.
"However, there will be no enforcement or action that can be taken by the regulator," he told the NST.
He said Felda had been mopping up FGV's shares in the open market, and it would be interesting to see whether the government agency can privatise the FGV once it hit 90 per cent shareholding.
On whether Bursa would lose its lustre without FGV, which was once lauded as the world's second-biggest listing in 2012, he said the company was not part of Bursa's index member.
"There will be no impact on Bursa's attractiveness," he added.