Kisah Roti : Gardenia untung, Massimo Rugi, High 5 Nak Bangkit. Anda pilih mana?

Magika

Bread maker hopes to fly high again

SILVER Bird Group Bhd's factory in Seksyen 21, Shah Alam, is quiet onthe Monday afternoon, after the long Hari Raya break. The car park is quiteempty and not many employees are seen around. Most of them probably still beingon leave.

But then again, for the maker of the popular High 5 bread, activity at its15-acre factory has been subdued over the past year, as it struggled to putitself back on track, after a financial scandal saw its top three executivesslapped with multiple charges.

In February 2012, Silver Bird — which counts Berjaya Group, Lembaga Tabung Haji(LTH) and Koperasi Permodalan Felda Malaysia Bhd as substantial shareholders— dropped a bombshell, when it announced the discovery of a RM112million (which later turned out to be RM297 million) hole in its finances.

The board of directors led by chairman Datuk Gan Khuan Poh, immediatelysuspended Silver Bird's then group managing director Datuk Jackson Tan,executive director Ching Siew Cheong and general manager of accounts andfinance Lai Poh Mei.

Silver Bird subsequently filed a RM125 million civil suit against Tan, Chingand Lai in August 2012.

With its cash running low, the bread maker was forced to cut production to oneshift, and downsize its distribution network from 12,000 to 7,000 outlets. Thiscaused a sharp drop in its market share to 8% to 10%, from as high as 18%,before it ran into trouble.

Silver Bird's problems freed the way for new player Massimo — a unit of RobertKuok's PPB Group, to take on Gardenia, which is partly owned by Tan SriSyed Mokhtar Albukhary's Padiberas Nasional Bhd.

The outlook for Silver Bird was grim, that is until a couple of weeks ago, whenit managed to obtain interim funding of RM16 million from a group of newinvestors. The money came at the right time for the company to repair itsmain oven, during the Hari Raya break.

"Our machinery was not very efficient, because it was not repaired for along time. For the last two years, the company has not spent any money onrepairs," says Vincent Chew, a former merchant banker turned turnaroundspecialist, who is one of the new investors.

Although he is currently not drawing a salary from Silver Bird and does nothave any official position, Chew is leading the team that is working with theSilver Bird management, to try and revive the company.

The fresh capital, although a modest RM16 million, will help the team rebuildthe company's distribution network and raise production back to previouslevels. Having kept the creditors at bay with a restraining order, and hopefullywith better economies of scale, the team's immediate target is to break even interms of cash flow, by the end of the year.

The new funds have boosted staff morale and the payoff could be handsome if theturnaround plan succeeds, because with the approval of shareholders such asLTH, Berjaya and Felda, Chew and his team could end up with a 36% stake in thebread maker, based on calculations by The Edge.

The stake will come as part of the funding arrangement — announced a monthprior to Aug 19, along with the interim funding of RM16 million — that wouldgive Chew — a second investor — and the Silver Bird management team, the optionto purchase new shares equivalent to 40% of the restructured, enlarged sharecapital of the company over three years, priced at par value.

In the event the option is exercised, LTH (which now owns 22.19% equityinterest), Tan Sri Vincent Tan (a 17.35% direct and indirect stake throughBerjaya) and Felda (12.7%), will see their interests diluted.

The full details of the revised scheme are expected to be announced in a fewmore months (at point of writing), but its skeleton can be seen from what hasbeen announced to Bursa Malaysia thus far.

Redeemable preference shares and share option

"We hope to announce the full scheme in a couple of months (from Aug 19).We are currently talking to the major shareholders and creditors to finaliseit," Chew tells The Edge.

The silver-haired, fast-talking turnaround specialistm is the main partner ofCovenant Equity Consulting Sdn Bhd, which was appointed as the adviser to themanagement committee of Silver Bird, at the end of last year. Another of Chew'sfirms, PKF Malaysia, had earlier signed off on the forensic report on SilverBird.

"The first target [for Silver Bird] was to raise money, to sustain itsoperations. The second part was to stop the bleeding. We found that the problemwas definitely solvable," says Chew, who used to do investigativework in fraudulent cases for the Australian Securities Commission, such as theCompass Airlines scandal.

Covenant Equity has injected RM6 million into Silver Bird, while SunsciHoldings Sdn Bhd has put in RM10 million. Little-known Penang businessman LokeChoon Jin owns Sunsci.

The capital injection was by way of Covenant Equity and Sunsci, subscribing forRM16 million worth of redeemable preference shares (RPS) of RM1 each, bearing8% interest, which could potentially be exchanged into 160 million restructuredSilver Bird shares of 10 sen par value, plus 320 million free warrants.  

Based on the original restructuring scheme announced early this year, SilverBird's enlarged share capital could rise to 1.02 billion shares of 10 sen parvalue, after a proposed 98% capital reduction-cum-share consolidation, theissuance of new shares for debt settlement and a rights issue with warrants.

The enlarged share capital could vary under the revised scheme, as Silver Birdis still negotiating with creditors on total debt payable, which could alterthe number of shares to be issued as debt settlement.

However, based on the enlarged share capital of 1.02 billion shares under theold scheme — the RM16 million RPS, if converted into 160 million new shares,could give Covenant Equity and Sunsci equity interest of about 13.56% in SilverBird, without taking into consideration the warrants.

On top of that, Covenant Equity and Sunsci have negotiated an option topurchase new shares equivalent to about 40% of the enlarged share capital ofSilver Bird (which works out to about 410 million shares) over the next threeyears, with free warrants at the par value of the restructured shares of 10 seneach.

Conversion of the RPS and option shares could give them a 36% stake in SilverBird, based on a total enlarged share base of over 1.5 billion shares (1.02 billion+ 160 million + 410 million).

However, the roughly 36% stake will be held separately by Sunsci, CovenantEquity and Silver Bird's management team.

It is worth noting that Covenant Equity and Sunsci have proposed to allocateone-fifth of the 40% share option and free warrant entitlement to a"management team, comprising the existing management team of Silver Bird,new recruits and representatives of Covenant Equity and Sunsci tasked withspearheading the turnaround effort".

"In the end, Covenant's stake in the company would be less than 10%,"says Chew, adding that in the past, his firm had helped in the restructuring ofcompanies such as Harvest Court Industries Bhd and JMR Conglomeration Bhd, andheld small stakes in them.

On top of the shares, it has been proposed that the management team be given a10% share of profits, if Silver Bird achieves a consolidated audited pre-taxprofit of at least RM5 million in any financial year, plus 5% of a consolidatedaudited pre-tax profit in excess of RM10 million.

It seems to be a sweet deal for Chew and his team, but the proposals —especially the conversion of the RM16 million RPS and the option to purchasenew shares equivalent to 40% of Silver Bird's enlarged and restructured shares,need clearance from Silver Bird's shareholders and the regulators.

Chew would not comment on whether the major shareholders — whose holding inSilver Bird would be diluted — had given their support, but he stresses that"the current shareholders [LTH and Berjaya, among others] are still veryinterested in the company".

LTH and Berjaya still have representatives on Silver Bird's board, which isworking closely with Chew's team in the turnaround efforts. Inter-PacificSecurities Sdn Bhd, which is part of Berjaya, in July replaced KAF InvestmentBank as the principal adviser for Silver Bird's regularisation exercise.

It is understood that Silver Bird did not seek interim funding from any of itsdeep-pocketed major shareholders because LTH, Berjaya and Felda could not be seenas providing financial assistance to a non-subsidiary.

Tan Sri Vincent Tan would not have offered funding in his personal capacity, inorder to avoid a conflict of interest with Berjaya.

As for Sunsci's Loke, Chew would only say that he used to operate a quarry, butwas now an investor.
"The key was to look for an investor and we managed to get Sunsci. We toldthem our idea [for interim funding], and they were quite keen."

The scheme is also an incentive for important executives to stay.

According to Dawin Tang — Chew's partner at Covenant Equity, a groupof second or third-liner managers were promoted after their superiorsleft. They include George Tan — who now heads the finance department, Annie NIngkian (sales and marketing), and Chong Heng Loon(production). Their namesappeared among the key executives entitled to the share option and profitsharing in Silver Bird's announcement to Bursa.

Lim Teik Ee, former CFO of Haissan Resources and executive director of HongLeong Properties Bhd, has also joined Silver Bird.

In the meantime, the efforts of Chew and his team are showing results.

"When we came in, the rate of returned [unsold] bread was about 30%. Wehave managed to bring this down to 16%. By reducing the return rate, we can cutproduction, thus reducing wastage and saving money," Chew points out.

He explains that the drop in the return rate is in tandem with the downsizingof the company's distribution network, down from 12,000 to 7,000 outlets, inorder to focus on supplying to those with good sales.

The company has also tightened internal controls and plugged leakages in sales,due to cheating by its own salespeople.  

Despite competing with financially stronger rivals like Massimo and Gardenia,Chew believes Silver Bird will do well, post-restructuring. Apart from keepinga close eye on costs, he says bread prices have to go up, for the threemanufacturers to make decent profits.

"In this business, pricing is always a big issue. The price of flour andlabour has gone up. With rising salaries, bread prices will eventually have togo up. It is just a question of when," says Chew.

According to filings with the Companies Commission of Malaysia, GardeniaBakeries (KL) Sdn Bhd posted a pre-tax profit of RM34.8 million in 2012, onrevenue of RM690.9 million. Clearly, rising costs eroded Gardenia's earningsbecause its pre-tax profit in 2011 was a much higher RM66.5 million, on revenueof RM696.6 million. Gardenia commands around 60% of the bread market.

Massimo's producer The Italian Baker Sdn Bhd made a loss of RM8 million onrevenue of RM101.6 million last year, and RM4.7 million on revenue of RM14.4million in 2011.

Meanwhile, long-time Silver Bird managers Ingkian, Tan and Chong areupbeat about the company's prospects.

"We have been working round the clock. We have drawn up plans foradvertisement and marketing activities after the Raya break," saysIngkian. "As we increase production and rebuild our distribution network,we want to tell the consumers that High 5 is back!"

After a rocky two years, clearly, Silver Bird's shareholders are hoping theirrenewed enthusiasm will lead to business success.

How Silver Bird was shot down

In 2006, Silver Bird Group Bhd sold its 15-acre land that housed its factory inSeksyen 21, Shah Alam, to Amanah Raya Bhd for RM91.2 million cash, in a saleand leaseback agreement. The land with the building was its sole property assetand perhaps one of its most important.

The sale was completed in October 2006, and the proceeds booked in its auditedfinancial statement for FY2006, ended Oct 31. According to the financialstatement, the disposal saw Silver Bird's cash and cash equivalents increase toabout RM60 million, from a negative RM4.1 million in the previous year.

However, the cash was used up fast.

In FY2007, the group purchased plant and equipment for RM34.2 million andrepaid a RM20 million bond. This saw its cash and cash equivalents fall toabout RM9 million.

The proceeds from the property disposal were supposed to help beef up SilverBird's business, but it kept making losses.

Although losses narrowed from RM48.4 million in FY2006 to RM15.9 million inFY2007, they rose to RM21.2 million in FY2008. However, the group managed toturn around in FY2009, posting a modest net profit of RM1.44 million. It made anet profit of RM3.65 million in FY2010.

Meanwhile, Silver Bird's cash pile continued to shrink.

It raised another RM51 million in FY2008 via a rights issue, and RM51.3 millionin FY2010 via the placement of shares and the exercise of warrants byshareholders.

Be that as it may, Silver Bird's cash and cash equivalents fell from RM21.3million as at Oct 31, 2010, to only RM3.6 million as at Oct 31, 2011, when thegroup posted a profit of RM4.93 million.

Serious problems surfaced in February 2012, when Silver Bird's board announcedthe suspension of group managing director Datuk Jackson Tan, executive directorDerek Ching Siew Cheong and general manager of accounts and finance Lai PohMei, to facilitate an internal probe into irregularities in the company'saccounts.

At the time, auditor Crowe Horwath expressed concerns over a multitude ofirregularities, amounting to at least RM111.5 million in Silver Bird's FY2011results, causing the board to lodge a police report on the matter. A subsequentreconciliation of its balance sheet highlighted a glaring shortfall of RM297million, with the bulk of the impairment coming from the group's property,plant and equipment (RM98 million) and trade receivables (RM110 million).

In a filing with Bursa on April 27, 2012, Silver Bird said the propertyimpairment might include assets that might have been capitalised above fairmarket value.

The resulting fallout from the fiasco saw Tan and his associates being slappedwith a number of lawsuits, by Silver Bird and its creditors.

In December 2012, Tan and Ching were also charged with 134 counts of misleadingMalayan Banking Bhd officers, when applying for banker's acceptance facilities,inducing the bank to deposit a total of RM67.43 million into accounts belongingto three separate companies — Asia Food Link Sdn Bhd (AFL), Violet Bonanza SdnBhd and Stanson Marketing Sdn Bhd (SMSB).

This was after Silver Bird filed a RM125 million civil suit in August 2012against Tan, Ching, Lai and seven others — including suppliers.

Among others, the group sought a declaration that the purported purchase ofmachinery for a new bread line by Lai from Triremis (M) Sdn Bhd and TriremisAsia Sdn Bhd for RM25.8 million, was fictitious and non-existent.

Lai was also alleged to have made fictitious purchases of capital assets andmachinery amounting to RM89.98 million, from Triremis, Triremis Asia andPossible Gains Agencies Sdn Bhd.

In a forensic accounting review report issued by PKF Advisory Sdn Bhd, the firmidentified 12 key areas of financial irregularities shrouding Silver Group andits associated companies. These included incorrect accounting entries, a lackof documentation and fictitious purchases of equipment.

In an announcement to Bursa, Silver Bird also said there was evidence ofdestroyed documents, including the deletion of computer files and physicaldamage to a hard drive.

These charges and suits are still before the courts.

Dilution issue for Vincent Tan

The biggest question about the rescue scheme for Silver Bird Group Bhdthat may soon be finalised, is whether Tan Sri Vincent Tan will let his stakebe significantly diluted by a group of new investors and the management team ofthe High 5 bread maker.

Tan, who holds a direct and deemed interest of 17.35% in Silver Bird, largelythrough Berjaya Group, may see his stake reduced to 11.34% by a schemeannounced in February, that entails a 98% capital reduction, a rights issuewith warrants and the issuance of new shares to creditors for debt settlement.

That's not all.

Tan could see his holding diluted further to about 7.3%, after the newinvestors — comprising Covenant Equity Consulting Sdn Bhd and Sunsci HoldingsSdn Bhd, convert their redeemable preference shares into new equity in SilverBird, and by a proposed option that would allow them to purchase new sharesequivalent to 40% of Silver Bird's enlarged share capital, post-restructuring,over three years at par value.

The above proposal was announced in July and will be incorporated into thescheme, that will be tabled in a couple more months (at time of writing), toreplace the regularisation plan announced in February.

A dilution of such extent could be difficult for Tan to swallow. This isconsidering he and Berjaya could have lost about RM50 million from theirinvestment in Silver Bird, whose shares crashed after the RM112 million holewas discovered in the company two years ago.

Tan had bought into Silver Bird at a steep price. Bloomberg data showsthat Berjaya bought a total of 73.7 million shares in Silver Bird between 2007and 2009, at a minimum price of 70 sen each. As at end-2009, the stake wasworth RM55.67 million.

But after the bread maker got into serious trouble, Berjaya sold 15.4 millionshares in it in August 2012. In fact, it acknowledged losses amounting to RM44million from this investment, in its 4QFY2012 results.

As at the week prior to Aug 19, Berjaya's remaining stake in Silver Bird wasvalued at a mere RM5.54 million, based on the bread maker's share price of lessthan 10 sen.

Observers say Silver Bird could prove to be a synergistic asset for Tan,because the 7-Eleven convenience stores run by his Berjaya group nationwide areconsidered high-traffic vendors of the bread maker's products, helping reducethe rate of return and wastage.

Based on this, it is unlikely that Tan will just walk away from Silver Bird. Infact, the tycoon is credited for his perseverance in holding on to loss-makinginvestments for the long term, such as The Sun newspaper and Singapore-listedInformatics Education Ltd, which Berjaya acquired in 2004.

Just like Silver Bird, Informatics was hit by a major financial misstatementscandal, causing its share price to plunge. The stock has languished in pennystock territory since, yet Berjaya is still holding onto its 27.09% stake inthe company, according to Bloomberg.

Tan's media outfit Berjaya Media Bhd has also been through turbulent times. Thecompany, which primarily publishes The Sun, reported losses in three out thepast five financial years — the latest being a loss of RM43.55 million.

Observers say Tan could have something up his sleeve.

Berjaya has a representative on Silver Bird's board, which is working with theCovenant Equity-Sunsci team. And its stockbroking unit Inter-Pacific SecuritiesSdn Bhd, has just taken over as principal adviser to Silver Bird on itsrestructuring.

Meanwhile, the emergence of Sunsci's Loke Choon Jin as a new investor in SilverBird, is worth watching, as the Penang boy has not publicly disclosed his plansfor the company.

"While the dilution of shares [of the existing shareholders] is amatter of concern, the stakes of Covenant Equity and Sunsci will be keptseparate, as will the share allocation for the new management team. In the end,the shareholding in Silver Bird will stay diverse, and all shareholders willhave a say in the company," says a source.

"The option to acquire 40% of Silver Bird is structured over three years,giving the new managers plenty of time to turn the company around, which iswhat everybody wants."

sepaileman

ikut tekak aku gardenia sedap lagi dr mosimo

Magika

Kisah pasal High 5... tetapi fakta lain

According to filings with the Companies Commission of Malaysia, Gardenia Bakeries (KL) Sdn Bhd posted a pre-tax profit of RM34.8 million in 2012, on revenue of RM690.9 million. Clearly, rising costs eroded Gardenia's earnings because its pre-tax profit in 2011 was a much higher RM66.5 million, on revenue of RM696.6 million. Gardenia commands around 60% of the bread market.

Massimo's producer The Italian Baker Sdn Bhd made a loss of RM8 million on revenue of RM101.6 million last year, and RM4.7 million on revenue of RM14.4 million in 2011.



--> keuntungan gardenia menurun kerana peningkatan kos
--> massimo rugi 8 juta

kucingTomey

belaka yahudi..boikot.....simpati pada palestin..


haji hamzah,
baru pulang beli marlboro

Acong

yg nie best...... sambal bilis... bukan iblis....

rospinki

Roti gardenia sedap..tp la ni makin nipis dan lembut sgt..ke makin kecik? High 5 td aku try nmpk lebih baik dari gardenia..tebal dan tidak terlalu lembut. Tp rasa tk selemak gardenia.

lavagold

Acong posted on 8-10-2013 10:52 PM
yg nie best...... sambal bilis... bukan iblis....

hah...tau pun...lu nak murah kan???...

makan roti krim ni aje la...

Acong

lavagold posted on 8-10-2013 10:55 PM
hah...tau pun...lu nak murah kan???...

makan roti krim ni aje la...

murah ke?

Acong

sepaileman posted on 8-10-2013 10:37 PM
ikut tekak aku gardenia sedap lagi dr mosimo

massimo ada bau pelik...!!

lavagold

rospinki posted on 8-10-2013 10:55 PM
Roti gardenia sedap..tp la ni makin nipis dan lembut sgt..ke makin kecik? High 5 td aku try nmpk leb ...

nak murah, nak tebal, nak lembut...

buat sendiri la....

lavagold

Acong posted on 8-10-2013 10:56 PM
murah ke?

masih mahal ke pada lu....

noor2

Acong posted on 8-10-2013 10:52 PM
yg nie best...... sambal bilis... bukan iblis....

..............lawaknya..

masa_lalu

lepas kes kilang roti yg buat high 5 tu kotor terbongkar aku mmg takkan beli dah jenama tu
pilihan aku gardenia... ada jagung.. ikan bilis.. paling best  butterscotch

salimrock

lavagold posted on 8-10-2013 10:57 PM
nak murah, nak tebal, nak lembut...

buat sendiri la....

ha.ha...

dulu ada topik pasal roti ni, ada org kata boikot roti, pasal dia buleh buat sendrik..

kalo buleh buat sendrik sama level dgn gardenia takpe la jugak

petola

pilih ajelah mana2 yg kenan kat tekak..

ada org nak supaya kita bikin pilihan ikut kaum padahal semuanya kroni umno belaka
high5 tu vincent tan punya kroni umno malah ada th bagai
gardenia syed bukari melalui bernas kroni besar umno
massimo robert kuok penerima faedah subsidi gandum paling besar melalui federal flour mill

jadi pilih ajelah ikut tekak
roti bukannya wadah untuk berjihad..

lavagold

salimrock posted on 8-10-2013 11:12 PM
ha.ha...

dulu ada topik pasal roti ni, ada org kata boikot roti, pasal dia buleh buat sendrik.. ...

xceli boleh buat sendir roti krim ni...

simple je....n memang murah....

totokreturn

petola posted on 8-10-2013 11:13 PM
pilih ajelah mana2 yg kenan kat tekak..

ada org nak supaya kita bikin pilihan ikut kaum padahal s ...

Ops... tambah skit bang pet... gardenia kroni besor umno, syed mokhtar tapi company gardenia kepunyaan cina singapore.... mana2 roti pun semua syarikat cina juga...hehehe

cmf_herrhughie

massimo mmg sedap

gardenia kualiti drop drastically

salimrock

petola posted on 8-10-2013 11:13 PM
pilih ajelah mana2 yg kenan kat tekak..

ada org nak supaya kita bikin pilihan ikut kaum padahal s ...

kalo makan roti the loaf TUn Dr Mahathir punya.......

the load mahadey punya kan?

cmf_herrhughie

pilihan saya mengikut taste:

1) Massimo
2) Gardenia
3) High 5 (not tasty at all)
4) The Loaf? mahal dan low kualiti (pernah try di Langkawi, so overrated)