The latest development is the last thing Felda needs after buying a majority stake in the company a decade ago via its wholly-owned investment arm Felda Investment Corp Sdn Bhd (FIC).
Encorp revealed in its bourse filing yesterday that the suspension is to facilitate an internal investigation process relating to “allegations made involving the Malaysian Anti-Corruption Commission (MACC)”.
The group also confirmed that three of its officers were arrested by MACC on Aug 8.
Encorp said it will be “business as usual” after appointing group chief financial officer Kamarul Azman Kamarozaman as the officer in charge during Hazurin’s suspension.
The episode, however, had little impact on the company’s share price which was down 2% or half-a-sen at 25 sen at 3.35pm, valuing it at RM79.2 million.
A disappointing investment
Felda, via FIC, bought a 49.5% stake in Encorp for RM239.72 million, or RM1.55 a share, in May 2014, triggering a mandatory general offer. It eventually ended up with 72.27% of Encorp, forking out RM306.11 million in total.
The initial 49.5% block of shares was acquired from Encorp founder Effendi Norwawi, a businessman cum politician from Sarawak.
He was a minister in the Prime Minister’s Department in charge of economic planning from 2006 to 2008, as well as a former agriculture minister. Effendi, 76, is married to actress and stage producer Tiara Jacquelina.
The group’s 2023 annual report reveals Felda owns a 62.3% stake via FIC as of March 27, 2024.
The other substantial shareholder is private company Anjakan Masyhur Sdn Bhd, the vehicle of Azhar Awal and Azman Hanafi Abdullah, which holds a 12.65% equity interest. The company incidentally shares the same address as a number of billionaire tycoon Syed Mokhtar Albukhary’s businesses.
Felda’s acquisition of Encorp is viewed as one of several poor investments made by the government agency over the years. Some analysts said then the purchase price of RM1.55 for Effendi’s block of shares was overpriced. Encorp’s shares have plunged 84% since Felda acquired his shares in 2014.
Others suggest the Felda-appointed management have underperformed given that Encorp posted profit after tax of RM29.66 million and RM95.82 million in FY2012 and FY2013, respectively, prior to Felda’s takeover.
In contrast, the group has been lossmaking in recent years. For the year ending Dec 31, 2023 (FY2023), it narrowed its net loss to RM4.65 million from RM11.95 million in FY2022. Its revenue fell to RM129.19 million in FY2023 from RM137.49 million the previous year.
Its main assets are Strand Mall in Kota Damansara, Selangor, valued at RM168 million, 29 shop offices at Warna Avenue, in Kota Damansara, worth RM136.3 million, 519 car park bays at Garden Office, Kota Damansara, valued at RM7.8 million, and several plots of land for property development.