Hot Stock: Scope falls 23% on failed RTO by Matang

Hot Stock: Scope falls 23% on failed RTO by Matang

Written by Kamarul Anwar of theedgemalaysia.com
Monday, 03 June 2013 17:04

KUALA LUMPUR (June 3): Loss-making SCOPE INDUSTRIES BHD []
extended losses, falling as much as six sen or 23.08% to 20 sen.

The losses came after shareholders of MCA-linked Matang Holdings Bhd
rejected a proposal to inject cash and assets of the latter into Scope.

At 4:06 pm, ACE Market-listed Scope was traded 4.5 sen or 17.31%
lower at 21.5 sen. The counter saw 1.57 million shares changed hands.

The stock fell four sen to end at 22 sen at 5pm.

This was a continuation in the decline in Scope's share price after
Matang's extraordinary general meeting (EGM) last Friday.

On that day, Scope lost four sen or 13.33%

Remisiers were not surprised with the decline in the stock's price.
“It’s quite obvious why shareholders are selling down Scope Industries’
shares.

“They were disappointed with the reverse takeover (RTO) of Scope
Industries not materialising.” said SJ Securities senior remisier Goh Kay
Chong.

Matang shareholders who were present at the EGM unanimously voted
against a proposal to inject the company’s cash and assets which
include 1,083 ha (2,707.5 acres) of oil palm PLANTATION [] into Scope
for RM145 million.

In return, Scope will issue new shares at an issue price of 25 sen each to settle the purchase consideration.

Matang will receive 580 million shares which the firm plans to distribute to its shareholders. For 1,000 shares held in Matang, a shareholder will receive 4,833 shares in Scope.

However, the consideration shares shall be earmarked in batches with different moratorium periods.
Upon completion of the deal, MCA’s investment arm Huaren Holdings Sdn Bhd will eventually hold 5.7% of Scope, making it the second-largest shareholder in the company.

The controversial proposed exercise manifested a political imbroglio within MCA. Its deputy president Datuk Seri Liow Tiong Lai has opposed the exercise when president Datuk Seri Dr Chua Soi Lek defended the move.

MCA has an estimated 10.75% stake in Matang.

In a statement last week, Liow said the proposal was not brought up at the MCA central committee meeting for approval.

Shortly after he issued the statement, Chua rebutted with a statement which read: “I would like to stress that the share exchange between Matang Holdings and Scope Industries will result in a reverse takeover (RTO) of Scope Industries by Matang. Such a deal is meant to add value to Matang shares.”

Scope made a net loss of RM1.87 million in the third quarter ended March 31, 2013 (3QFY13). Cumulative year-to-date net loss came to RM1.61 million.

Bloomberg data showed that Scope generated a net profit of RM 590,000 in FY12.  This was a fraction of its previous year's net profit of RM 5.21 million.