Written by Joseph Chin
Thursday, 17 September 2009 11:20

KUALA LUMPUR: The major shareholders of both The New Straits Times Press (Malaysia) Bhd (NSTP) and MEDIA PRIMA BHD [] have agreed to the privatisation of the former, sources said.

The Employees Provident Fund Board (EPF), which is a common shareholder in both companies, is said to have given its go-ahead for the privatisation of NSTP. EPF is the single largest shareholder of Media Prima with a 25.55% stake and also owns 10.53% of NSTP, the publisher of the New Straits Times, Berita Harian and Harian Metro.

The privatisation is also said to have the blessings of Umno, which is also a major shareholder of Media Prima and whose interests are held through Gabungan Kesturi Sdn Bhd with a 14.41% stake and Altima Inc with 10.29%.

Umno is said to be in favour of NSTP’s privatisation as the share price had been trading very much below its net asset value of RM4.51 as at June 30 this year.

It is also learnt that Prime Minister Datuk Seri Najib Razak was positive about the corporate exercise when he was briefed about it recently. The next step would be to bring it up to Umno’s political bureau for its approval.

NSTP closed five sen higher at RM1.90 and Media Prima gained one sen to RM1.58 yesterday.

The privatisation does not involve any cash outlay from Media Prima. Shareholders of NSTP would instead get loan stocks and warrants of Media Prima. The issuance of such instruments is to ensure there is no immediate dilution of shareholdings in Media Prima.

Analysts had said it would make sense for Media Prima to privatise NSTP as it could fully consolidate NSTP’s expected strong earnings growth for next year (of almost six-fold) on the back of advertising expenditure recovery, lower newsprint and full-year impact of Harian Metro’s cover price hike.

AmResearch had recently alluded that the privatisation of NSTP — should it happen — would be through a share swap.

Its analyst Izz Al-Din Maslan said NSTP’s shares had not traded at its book value and as such, its shareholders could not expect Media Prima to make an offer at NSTP’s book value.

He said the privatisation would transform Media Pima into a media conglomerate with full control of operations in free-to-air TV, radio, outdoor media and newspapers.

Izz added that there was a lot of upside for NSTP shareholders as they would have exposure to Media Prima’s growing business whereas the print media continued to face stiff competition from online news portals.

“It (the privatisation) would also avoid earnings leakages as we estimate NSTP’s earnings to rebound in its financial year ending Dec 31, 2010, driven by Harian Metro,” he said.

NSTP reported a net profit of RM10.58 million on the back of RM146.67 million in revenue for its second quarter ended June 30. Its net asset per share was RM4.51.

Media Prima posted a net profit of RM8.45 million and revenue of RM178 million for its second quarter ended June 30. Net asset per share stood at 62.14 sen.


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