MAMEE propose capital reduction and repayment

MAMEE share suspended for two trading days from 7th April 2011 pending for an announcement. Company gonna propose capital reduction and repayment....i call it "Privatization".

Company undertaking a selective capital repayment exercise under Section 64 to all shareholder, other than  Non-Entitled Shareholders.

The propose capital reduction and repayment will be funded by this 71.9% Non-Entitled Shareholder by way of an advance or/and borrowing.

Proposed cash repayment per share is RM4.39, arrive after consider 5days, 1month, 3months average price of MAMEE share. Based on MAMEE NTA of RM1.71, its propose price-to-book ratio is 2.57times.

The reason given by the board for this proposal is :
1. Concern about the trend of increasing raw material prices and forex volatility.
2. Substantial capital expenditure may needed to improve productivity and expand capacity.
3. Need higher borrowing, which will affect dividend payment capability in immediate term.
4. MAMEE share thinly traded.
    "lol, blame people don't stir up(goreng) the price "

All after all, MAMEE is a very highly rated company in my list. It doesn't disappointed me since i start researching them. Link.

I personally do not welcome this proposal, as we'll get kick out from a good partnership. However, MAMEE proposed cash repayment price RM4.39 is about 22% premium of closing price as of 6th April 2011(RM3.60). For the good faith of minority shareholder(28.1%) i think Non-Entitled Shareholder are generous and fair.