QL's move for Lay Hong based on its values of "integrity and trustworthiness"

PETALING JAYA: QL Resources Bhd, which yesterday dispatched its offer document to Lay Hong Bhd's shareholders, said its move to make an offer for Lay Hong shares before it started buying up shares in the open market is a mark of its "integrity and trustworthiness".
"We are aware that some quarters have commented that QL could have saved money by accumulating shares (in the open market) until it triggers a mandatory general offer (MGO).
"This action would have compromised everything that QL stands for – integrity and trustworthiness. We chose to inform Lay Hong and to make it public as soon as possible, and offer a fair price to all, and attractive value to all Lay Hong shareholders." QL executive director Chia Mak Hooi, who failed to be re-elected as a director of Lay Hong last month, said in a statement yesterday.
QL stressed that it is in a solid cash position to undertake the MGO, which is estimated to cost about RM120 million for the remaining shares in Lay Hong.
It had on September 24, made a takeover offer for Lay Hong shares that it does not own, at RM3.50 apiece. At the time of announcement, QL held 26.81% of Lay Hong.
QL has been accumulating Lay Hong shares ever since, upping its shareholding in Lay Hong to more than 34% as at October 15, triggering the mandatory general offer threshold.
The Yap family controls the most shares in Lay Hong, with a 44% stake.
The takeover offer came after Chia was voted out from Lay Hong's board by the Yap family, without giving any reason or "prior known conflict".
"While QL's shareholding in Lay Hong is substantial, we are still a minority shareholder who has been denied a seat on the board and therefore, unable to contribute and play a role in the growth of Lay Hong which would have mutually benefited minority shareholders.
"Our intention is to give a good offer to LHB shareholders to realise the value of their investment," Chia said.
He added that Lay Hong's shares have not traded at or above the offer price of RM3.50 for 12 years with low liquidity, judging from the average daily trading volume of Lay Hong shares over the past one year up to and including September 23 was 53,496 shares, representing only 0.37% of Lay Hong's total free float.
The offer price of RM3.50 also represents a premium of 98 sen or 38.89% over the five-day volume weighted average market price of Lay Hong shares up to and including September 23 of RM2.52.
The offer price is pegged at 1.46 times of Lay Hong's book value and at 25 times of its earnings for the financial year ended March 31, 2014.
The offer period for acceptances of Lay Hong shares is until November 5.