The price looks appealing, but the legal battle that the company is undergoing does not.
MEWAH International, a palm oil firm with refineries in Malaysia, is expected to raise as much as $449 million through its initial public offer (IPO) here, according to a report by International Financing Review (IFR).
The IPO also comes in the thick of an ongoing legal battle, as criminal charges have been brought in Malaysia against Cheo Tong Choon - the controlling shareholder and chairman of Mewah International - and its subsidiary Mewah-Oils, shows Mewah International's preliminary prospectus. The charges against Mr Cheo are said to be in his capacity as a director of Mewah-Oils.
The prospectus, lodged yesterday, shows that in March 2007, Mewah-Oils and Mr Cheo were charged with allegedly using two falsified Customs documents to discharge crude palm oil between October and November 2003.
Mewah-Oils has also been charged with stealing two batches of crude palm oil belonging to Lushing Traders.
According to the prospectus, this claim arose after Mewah-Oils bought 8.97 million tonnes of crude palm oil from Summerwind Trading, which in turn bought the palm oil from Lushing.
Malaysian lawyers representing the two accused parties are said to view these charges as having no merit, saying that the Customs documents that were allegedly falsified were filled out by an independent forwarding agent and there would be no reason for the parties to falsify the alleged documents since there is no Customs duty on crude palm oil imported into Malaysia.
Mewah International also says that the parties did not know whether the crude palm that Summerwind supplied was stolen.
The maximum penalty for the charges is up to five years' jail and a fine.
Mewah International is expected to offer up to 289.5 million shares in its IPO, including a greenshoe option of 37.8 million shares priced at $1.25-1.55 each, IFR said yesterday.
Mewah declined comment on the IPO pricing.
The company is Malaysia's second-largest palm oil refiner after Wilmar International, and the world's sixth-largest palm oil refining company.
The IPO size should be slightly ahead of that of Cache Logistics Trust, which raised US$334 million, making it the third-biggest IPO deal this year after Global Logistic Properties and Mapletree Industrial Trust, according to figures from Dealogic.
Another upcoming IPO is that of shipbuilder STX Europe's offshore support vessel unit STX OSV, which is expected to raise about US$400 million in net proceeds, as previously reported by BT.
Mewah International has three refineries and processing plants in Malaysia, two packing plants there and a packing plant in Singapore. It makes vegetable oil products such as cooking oil and margarine.
Its net profit for the six months ended June 2010 came to US$35.5 million, down 30.1 per cent from US$50.7 million a year ago, as rising costs outpaced profit growth. Gross profit margin for the six months came to 7 per cent, down from 11.9 per cent a year earlier. Half-year revenue rose 35 per cent to US$1.62 billion, from US$1.2 billion a year earlier.
Trading in the Mewah International stock is expected to start on Nov 24.
From Business Times, "M'sian palm oil producer seen raising up to $449m from S'pore IPO".
