Pantai deal valued at RM312 million

Malay Mail:ON Sept 13, Parkway bought 35 million Pantai shares from the open market and 89.7 million shares from Pantai group chief executive officer Datuk Lim Tong Yong, plus 24.3 million Pantai warrants. The purchases, for a combined RM312 million, gave it about 31 per cent stake in Pantai.
This makes the Singapore Exchange-listed Parkway the single largest shareholder in Pantai, which apart from a control of Fomema and Medivest, also operates seven private hospitals and another being built in Peninsular Malaysia.
Following its acquisition, Parkway changed five of the seven board members of Pantai, who are believed to be nominees of Parkway and/or its shareholder Newbridge Capital Inc., a US-based portfolio fund manager.
Under the Practice Notes 2.4 for the Malaysian Code on Take-Overs and Mergers, a company is said to be under a new control if its board is changed by more than half within a year of the entry of a new shareholder, or if there is reasonable grounds to believe that its board seems to be following the instructions of the new shareholder.
When this happens, the new shareholder may be required to make a mandatory general offer for the rest of the company.
Parkway skirted the issue of a mandatory general offer (MGO) by buying a shade under 33 per cent, the automatic trigger that would require it to make a bid for the rest of Pantai, which could be costly.
In its statement to Singapore Exchange accompanying its third quarter financial statement which was posted on the exchange’s web page early last month, Parkway informed the exchange that Pantai is regarded as a subsidiary because it has board control, even though it has less than 51 per cent in the company.
Sources said the Government is concerned that if Parkway has an effective control of both Fomema and Medivest, it could compromise the security issues of the two companies’ operations.
The loss of Malaysian control over the two would also be a breach of their privatisation agreement.
Fomema, which is an acronym for Foreign Workers’ Medical Examination Monitoring Agency, was awarded a 15-year concession in 1997 to supervise, coordinate and monitor the medical examination of legal foreign workers.
Medivest, a fully owned subsidiary of Pantai, has a 15-year government concession to manage clinical wastes and provide hospital support services in Negri Sembilan, Malacca and Johor.
Parkway has been operating in Malaysia for 30 years, through Gleneagles Penang.