Landmarks Special Placement

On Aug 4, the company proposed to place out up to 29.53 million new shares to potential institutional investors to raise funds expeditiously to reduce the debt level. Assuming the issue price per placement share is RM1.54, or a discount of about 10% from the five day volume-weighted average market price up to and including Aug 3, of RM1.71, gross proceeds would be RM45.48 million. It is not the amount of money raised, but rather the tactic which will anger the other camp. There are now two camps, one is the North Symphony also controlling the board. The other camp involves Syed, possibly Ong Beng Seng, and possibly CMY. There was a listing of ESOS last week which saw NS buying most of the shares from employees. The strategy to do a special placement stems from another route taken to maintain control by either placing to parties close to North Symphony.

The Syed camp can either continue to mop up shares but is at a disadvantage really, as that would make the placement highly successful, and Syed may not be able to garner sufficient shares to get board seats or control, but will be left holding substantial shares at highish prices. Syed's camp can let shares go down, like they did today, to hopefully scupper the placements. Since the placement is at RM1.54 or thereabouts, further dips towards that level may make the placement unfeasible. Looking at the equation, the fact that NS has to resort to these tactics to maintain control shows that they lack financial firepower, as making a simple G.O. even at RM1.85 or RM2.00 would be justifiable financially.

Chances for the two camps to come to an agreement is unlikely as their corporate strategy to unlock value from Landmarks are also divergent. I suspect Landmarks will continue to be whacked lower by Syed's camp to scupper the placement. If that fails, Syed's camp would probably have to come in with a G.O., which the NS group will not have the financial resources to match. Syed's camp still does not have more shares than NS at the time of writing, judging from the available information. So, thats the gist of the matter, even when you are on a good thing, bad things can still happen. Price will tumble towards RM1.50 but for medium term view investors, that would be a good entry level as the story is far from over and the fat lady hasn't even hail her cab to the Petronas Philharmonik opera house yet.