Tradewinds (M) Berhad: your rice and sugar daddy

Previously, I wrote about Tradewind (M) Berhad borrowing RM1 billion to acquire shares of Padiberas Berhad at interest around 5.20-6.50%.


It is also interesting to note this:
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http://www.theedgemalaysia.com/first/17961-working-out-a-new-role-for-bernas.html

Working out a new role for Bernas
Written by Cindy Yeap
Monday, 29 June 2009 00:00

Hong Kong-based Wang Tak Co Ltd, which has been actively mopping up Bernas shares on the open market since early 2006, continues to be a buyer. Wang Tak, which is linked to IGB Corp Bhd’s Tan family, held a 14.34% stake in Bernas in late 2006; it has since doubled its holdings to 30.14% as at June 16

Wang Tak’s* average investment cost — RM1.75 per Bernas share — while above the prevailing market price, is 0.88 times Bernas’ net asset per share of RM1.98 at end-March.
* no relationship with the author

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On page 52 of Tradewinds(M) Berhad's 2009 annual reports and accounts, it has this disclosure:

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2. Material Contracts Involving Directors and Major Shareholders

(a) a Share Sale agreement dated 28 august 2009 between Tradewinds (M) Berhad (“TWS” or the “Company”) and Wang Tak Company Limited (“WT”) for the acquisition of 148,281,100 ordinary shares of RM1.00 each in padiberas Nasional Berhad (“Bernas”), representing 31.52% of the total issued and paid-up share capital of Bernas from WT for a total purchase consideration of RM308,424,688.00. The said acquisition was completed on 2 November 2009.

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hence TW paid an average RM2.08 per share and base on the average cost of investment reported above at RM1.75 per share, a cool profit of RM56.35 million has been shifted to good old Hong Kong while Malaysians will foot the loan repayment and interest. Another consequence of privatising something that the federal government should be overseeing.


TW is also a major player in Malaysia's sugar supply chain. According to its Managing Director, Bakry Hamzah in his operations reports included in the annual accounts and reports,
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" For the financial year ended 2009, the Sugar Division generated total revenue of RM976.2 million as against RM862.2 million posted in the previous year.......

....presently, Malaysia has only four sugar refineries, of which two are owned by TWS i.e. Central Sugars refinery Sdn Bhd (“CSr”) at Batu Tiga Shah alam, Selangor and Gula Padang Terap Sdn Bhd (“GPT”) at Kuala Nerang, Kedah."

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According to note 29 of its 2009 accounts, government grant /tax payers money of RM287 million was received by TW Group for rice and sugar.

Amazingly, this was disclosed in the accounts:

RM203.6 million or roughly 21% of the subsidized sugar was sold to......Bukhary Sdn Bhd

And on what trade terms? According to the accounts, normal trade terms for TW is 7 to 90 days. At RM203million per annum, average daily sales is about RM550K to Bukhary Sdn Bhd and the balance of RM118 million owing by Bukhary Sdn Bhd amounts to 212 days of sales, about 7 months owing. For 2008, TW sold RM165 million worth of sugar to Bukhary Sdn Bhd and the receivables not collected from Bukhary Sdn Bhd of RM170 million even exceeded the whole year sale of sugar!

I wonder what does Bukhary Sdn Bhd do with so much sugar? Can they assist in the sugar shortage that we are facing in Malaysia?

http://english.peopledaily.com.cn/90001/90777/90851/6743421.html

Syed Bukhary has apparently benefited for a few years from his shareholdings in Padi Beras Berhad by way of dividend pay outs plus disposal of Budaya Generasi Sdn Bhd's substantial 145 million shares to TW.

Further examination of TW's operating expenses is interesting. In 2009, RM20 million was paid out to Albukhary International University.

This is a private university located in Kedah and provides scholarship to many studens from all over the world.
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http://www.aiu.edu.my/sponsorship.html

The Albukhary Foundation Scholarship
Albukhary International University (AIU) is fully funded by the Albukhary Foundation, Malaysia and all students attending AIU shall be sponsored through the Scholarship described herein.

The Albukhary Foundation intends to make available ten (10) scholarships for each country to assist disadvantaged youths, mainly Muslim youths, to graduate with a degree from the Albukhary International University.

Instituted in 2003, the Albukhary Foundation Scholarship has been offered to 382 students from almost 50 countries of whom many are currently studying at the International Islamic University Malaysia.

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Fine, if a very successful and rich man wants to be charitable with his earning but when a lot of the money comes from tax payers' subsidy and revenue from sales of staple diet of Malaysians i.e. sugar, rice and palm oil, there is an element of public interest we are talking about.

In the light of the annual brain drain and insufficient scholarship for all top scorers outcry plus the "Rakyat Diutamakan" rally call, the lucky foreign recepients includes Afghans, Albanians, Laotians, Yemenians, Ethopians, ...would we get any benefit out of this?