Barefoot Investor: RAM Ratings: PNB’s conditional offer has no immediate rating impact on SP Setia

KUALA LUMPUR: RAM Ratings said that there was no immediate rating impact from Permodalan Nasional Bhd’s (PNB) recent conditional offer for the remaining shares of SP SETIA BHD [] (SP Setia) that it does not already own.

SP Setia’s RM500 million Redeemable Serial Bonds are currently rated AA3/P1 by RAM Ratings with a stable outlook.

In a statement Friday, Oct 14, RAM Ratings’ head of real estate and CONSTRUCTION [] ratings Shahina Azura Halip said any rating action at this juncture would be premature.

“Should PNB continue to leave the strategic planning and daily operations in the capable hands of SP Setia’s present management, the Group’s strategic lineage may pave the way for additional business opportunities through PNB’s vast land bank, or put it in the running for more attractive government projects.

“This would be a positive for the group,” she said.

However, Shahina cautioned that nn the other hand, SP Setia’s longer term business profile may face negative implications if Tan Sri Liew Kee Sin decides to sell his entire stake or if PNB’s involvement and control over the Group extends beyond board representation, thus inhibiting the agility of the management team.

A strong management team was a major factor supporting SP Setia’s AA3 rating, she said.

On Sept 28, 2011, PNB offered to pay cash for the SP Setia’s shares at RM3.90 apiece and warrants at 91 sen per unit.

This had followed PNB’s (and parties acting in concert with it) earlier acquisition of 3.07 million shares from the open market, thereby raising their collective stake to 33.2% and triggering the general offer.

On Oct 10, 2011, PNB and SP Setia made a joint announcement whereby the former stated that it intended to maintain SP Setia’s listing and would restrict its involvement in the Group to only board representation.

PNB’s offer document and SP Setia’s independent advice circular to its shareholders are expected to be released next week.

RAM Ratings said it had initiated the annual rating review on the group, and would make the appropriate rating announcement in due course.(


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