Pioneer Is Pressed on Discount Of Shares to Net Asset Value
May 19, 2011
HONG KONG -- Regent Fund Management Ltd. stepped up pressure on Hong Kong-listed Pioneer Industries International (Holdings) Ltd. to take steps to narrow Pioneer shares' hefty discount to their net asset value. Regent owns 20% of the shares in Pioneer through various funds that it manages and has been engaged in a longstanding battle with Pioneer's biggest shareholders and management over how best to maximize the value of Pioneer's shares. Regent puts Pioneer's net asset value per share at 14.33 Hong Kong dollars (US$1.85), or at HK$12.46 after tax, thanks largely to Pioneer's 3.77% shareholding in Bangkok Bank PCL, Thailand's largest bank. Regent claims that Adamo also owns a further 6.5 million foreign shares in Bangkok Bank, which it says are held through a 49% stake in a Liberian company called Central Asia Ltd.. Other Assets Pioneer's shares last traded at HK$5.90, representing a discount of 59% to the estimated net asset value (or of 53% to the NAV after tax). Pioneer's other assets consist of a 21% stake in Hong Kong-listed Wah Kwong Shipping Holdings Ltd., hotel interests in Burma and the U.S., and property interests in Hong Kong and Shanghai. Regent said Thursday that it has called a shareholders' meeting for next Tuesday at which it will propose certain steps to boost the share price. It will also propose placing 13 new directors on the board, ``as we anticipate that the company itself is reluctant to take the (necessary) actions,'' said Petrina Hollar, managing director of Regent Fund Management. Range of Proposals Mr. Hollar said Regent has proposed several ways of eliminating the discount to NAV to Pioneer's management in previous discussions. At Tuesday's meeting, Regent will propose that Pioneer reduce the dividend payout and directors' emoluments so that the company retains a higher proportion of its earnings. In addition, Regent wants Pioneer to dispose of noncore assets and interests in small projects in the U.S. which it says contribute very little to Pioneer's operations. Regent will also propose ways of improving the recurrent income from Pioneer's holding in Bangkok Bank. Pioneer officials couldn't be reached for comment. Mr. Hollar said that in the course of recent discussions with Adamo's chairman over how best to enhance the value of Pioneer's shares, the chairman had disclosed certain potentially price-sensitive information to Regent. He said Cardoso wasn't in a position to divulge that information and had been advised by its lawyers not to act upon it. He said Regent had reported Pioneer's chairman to the stock exchange for not distributing price-sensitive information fairly to all shareholders in Pioneer.
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