Touted as the second largest IPO (AFTER Facebook which saw its recent price debuting at below Offer price of USD38 per share and ended in the first week at about USD31:(, more than 15% decline!
So from themalaysianinsider, let's have an examination:~~~
Side Views
FGVH listing: Misery or windfall? — Sakmongkol AK47
June 04, 2012
JUNE 4 — Every FELDA settler is an automatic member of their co-operative (KPF). KPF owns 51 per cent of FELDA Holdings, the business unit that is the rainmaker for FELDA. Has any settler asked what happens to KPF after the listing? Where is its 51 per cent in FELDA Holdings?
Did KPF get anything? If an EGM has taken place and delegates agreed to the transfer of KPF’s interest in FELDA Holdings and in 10 other subsidiaries, how was its stake in FH valued? Where did it go and how much stake does it get in the enlarged FGVH? I haven’t seen any clarification on this matter written anywhere. It’s as though KPF’s stake has vanished into thin air. Was this the reason Isa Samad came up with a statement that FELDA has allocated 20 per cent to settlers’ interest to be handled by a trust fund? Will KPF continue to exist?
Let’s be clear about this. We are not opposed to the idea of the settler receiving RM15,000 per household. The money is probably theirs anyway, derived probably from previous underpaid dividends. How many times have settlers gone before the courts demanding FELDA make good over its under-declaration of extraction rate on fresh fruit bunches (FFB)? Probably over the years, the value of the extra extraction ran into hundreds of millions. RM15k is probably a cumulative backdated under-payment to each FELDA household (112,635 of them).
The settler, especially the first generation, must think of the future by assessing what they are losing out. There is no way now second-generation FELDA settlers can lay claim on the 360,000 hectares of land managed by FELDA Plantations. All the land and the assets therein are leased to FGVH for 99 years. While FELDA probably gets payments on the lease, the lease rate is revisable every 20 years. They must also be mindful of the fact that they also lose about RM2.5 billion a year from earned revenues which are used to manage the FELDA plantations and provide social amenities. FELDA needs RM3 billion a year to run its operation.
If the money comes from the government, this raises another issue. From which source too, it does no matter now. Probably when in London, the PM sold this business of FGVH IPO to Louis Dreyfus and sold 20 per cent of the business and got RM3 billion. Maybe part of the money is allocated for paying off FELDA settlers. The SC should look whether all material information has been given by FGVH. I don’t see the sale to Louis Dreyfus in the FGVH prospectus. Did it materialise? Or is it hidden under the 23 per cent share under FAHC?
We are therefore left with the question: why is the settler given RM15k when ordinary kampung folks are not? The plausible answer is, it’s done to soften settlers up into forcing KPF to agree to the FGVH listing. Then, clearly that is bribery.
Secondly, it’s given to actually soften up the settler when he realises that he will get a smaller value when the FGVH IPO takes place. He will probably get around RM810 or even less after deducting banking charges and other fees.
It’s crucial to put pressure on KPF through the settlers. So when an EGM or AGM takes place, the delegates can vote asking KPF divests its 51 per cent in FELDA Holdings as the interests they have in 10 FELDA Holdings subsidiaries. Unless KPF divests its 51 per cent in FELDA Holdings, FELDA only has one portion of the core asset. Indeed the only asset that matters — FELDA Holdings.
Now FELDA is at again. What we are opposed is seeing the settler believing that this IPO is done to elevate their welfare. This IPO will lead to the concentration of vast resources and power in the hands of a few mandarins.
After the listing how much will settlers get? 91.2 million shares or 2.5 per cent out of the 3.648 billion shares. FELDA employees will get 3 per cent of the offered shares or 109.44 million shares. Settlers and employees get 5.5 per cent of the shares offered. Institutional investors (41 per cent), MITI (11.5 per cent) and the public (2 per cent).
FELDA settlers really don’t know what they are getting into. By hook or crook KPF is made to give up its 51 per cent share in FELDA Holdings. FELDA owns FGV. FGV owns 49 per cent of FELDA Holdings. KPF is the 51 per cent owner of FELDA Holdings. KPF is 30 per cent owned by FELDA directly and 70 per cent owned by settlers. So, any which way FELDA is in the loop. So, all the while FELDA and the consultants are the ones planning to wet their massive beaks in this deal.
As for the settlers, they may well find themselves in the same position as they are now. Each year, Najib will come around handing them dividends telling them this is government money that we are giving out to you because we care for you. We are such a good government because the people are always in our heart. The sad truth is, they may even find themselves receiving less dividend payments if the management at FGV fumbles and earns less revenue or becomes less efficient.
Being co-operative members, they get dividends each year anyway. Will they not get their yearly dividends if the IPO doesn’t take place? They will still do. They get miserly amounts. Sometimes the people in FELDA Chini in Pekan get RM400 each after paying off kedai koperasi from where they have taken provisions. So, yes, the RM15k is much welcome and some portion of the money is used to settle debts.
Again yes, the RM15k is a welcome relief and a windfall. It is the price of future misery. — sakmongkol.blogspot.com
* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.
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