In addition to my previous posting on this subject, MSWG wrote this in their weekly newsletter:


Minority shareholders of Shell Refining were shocked with the proposed transaction by their majority shareholders, Shell Overseas, as reflected in complaint letters MSWG received.

The sale transaction to Malaysia Hengyuan is at an approximately RM1.80 per Sale Share. Although it is only 7 % discount to the latest net asset value of RM1.93 per share as at September 2015, it was a huge discount of 63.6% to the market price of RM4.94 as at 29 January 2016 prior to the release of the announcement.

For information, other substantial shareholders are EPF (15.71%), Amanah Saham Malaysia (11.09%) and other minority shareholders are KWAP (2.38%), PNB (1.12%), Khazanah Nasional (1.12%) and Others (17.58%) as per shareholders’ listing as at 30 April 2015.

The negative impact this transaction has on minority shareholders is already happening. Shell Refining shares have plunged from RM4.98 to RM3.68 on 29 January 2016 and would possibly drop further to the SPA price of approximately RM1.80 per share.

We urge the Board of Shell Refining look into the interest of minority shareholders in respect of this acquisition and the subsequent Mandatory General Offer which is expected to be triggered by the new major shareholder.

As for the major shareholder, no doubt the transaction is a private one, but one would expect that certain care and obligations to the existing minority shareholders by the majority considering that they had been with them for a long period of time. Thus, a longer time for more offers to come by so that transaction can be done at a more equitable level to minority shareholders.


Shell was queried by Bursa, and replied the following:


We refer to the query by Bursa Securities Malaysia Berhad dated 4 February 2016 where you have requested for additional information on the “other existing commitments” and “a long term offtake from Shell Refining Company” referred to in the press release issued by our major shareholder, Shell Overseas Holdings Limited (“SOHL”) on 1 February 2016. For your ease of reference, we have reproduced the relevant paragraph below:-

Shell Malaysia Trading will ensure security of supply to its retail and commercial customers in Malaysia and honour other existing commitments through an existing comprehensive supply strategy that includes a long term offtake from Shell Refining Company.

We would like to clarify that in respect of the abovementioned paragraph:-

a)        the phrase “other existing commitments” refers to the existing commitments of Shell Malaysia Trading Sdn Bhd in the course of its business, and is not referring to the existing commitments of Shell Refining Company (Federation of Malaya) Berhad (“SRC” or the “Company”);

b)       the phrase “a long term offtake from Shell Refining Company”, if taken in its full context (reproduced below), refers to an existing strategy which includes an existing long term offtake from SRC. In respect of the terms and conditions of the existing long term offtake between the Company and Shell Malaysia Trading Sdn Bhd, we wish to further clarify that the transaction is related party transaction which has been approved by the shareholders in general meeting. The said agreement is dated 15 October 1985 and shall continue to be in force until it has been terminated by either party, or if there is an event of default. The Board of Directors have not yet received any proposals for a new offtake agreement; and

d)       the Company has not received a take-over notice or offer document from the offeror which may contain further information.

As far as I can see there is no "c)", may be an oversight?

Many questions remain, at least with me. Why the low price, was it because of high future capital expenditure? Or is this may be a combined deal, is there something else going on that we are not aware of?

At the moment the share price of Shell is trading at around RM 3.50, a far cry from its price before the announcement of around RM 4.90. As mentioned by MSWG, this is indeed a very old listed company and some shareholders must have held on to the stock for a very long time. I think they deserve at least a better explanation.