Lianson Fleet Group Berhad: Key Shareholder Proposals That May Affect Share Value

Introduction

Lianson Fleet Group Berhad (LFG) has issued a comprehensive circular to its shareholders ahead of its Fourteenth Annual General Meeting (14th AGM) scheduled for 29 June 2026. The circular details two major proposals: 1) The Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs), and 2) The Proposed Renewal of Authority for the Company to Purchase Its Own Shares (Share Buy-Back Authority).

Both proposals, if approved, could have significant implications for the company’s governance, financial flexibility, and possibly its share price. Here is an in-depth look at the details and implications for investors.

1. Proposed Renewal of Existing Shareholders’ Mandate for RRPTs

Key Points

• Nature of Mandate: This mandate allows LFG Group to continue entering into recurring related party transactions in the ordinary course of business, provided terms are not more favourable to related parties than those available to the public.
• Scope and Value: The main related party involved is Liannex Corporation. The principal RRPT is the time charter for the supply of marine transportation fleet from Lianson Fleet to Liannex Corporation. The estimated aggregate value for the coming year is RM175 million, compared to RM85 million previously estimated and an actual transacted value of RM33.14 million in the last cycle.
• Interested Parties: Major shareholders and directors with interests include Lim Han Weng, Liannex Corporation, Liannex Maritime, Lim Chern Wooi, Lim Chern Yuan, and others. They and their connected persons will abstain from voting. The circular details their direct and indirect shareholdings.
• Governance and Safeguards: The company has put in place robust review procedures, with quarterly oversight by the Audit and Risk Management Committee (ARMC). Transactions are benchmarked against market rates, and at least two comparisons with third-party transactions are required where feasible.
• Disclosure: Detailed disclosures of RRPTs will be made in the annual report, including the type and parties involved.
• Rationale and Benefits: The renewal is intended to ensure operational efficiency, allowing LFG to transact with related parties without repeatedly seeking shareholder approval, thus saving administrative costs and time.
• Impact: The mandate is not expected to materially affect the group’s gearing, issued share capital, or substantial shareholders’ shareholdings, but could positively contribute to earnings and net assets if the RRPTs are value accretive.
• Shareholder Action: The proposal is subject to approval at the forthcoming AGM. Interested parties will abstain from voting, and shareholders are urged to read the full circular before casting their votes.

Potential Price-Sensitive Elements

• The size and continuity of RRPTs, especially the RM175 million estimated value, could materially impact LFG’s earnings and cash flows.
• Any significant changes in the terms or volumes of these transactions, or a failure to renew the mandate, could impact LFG’s revenue visibility and valuation.
• Strong governance disclosures and abstention by interested parties may boost investor confidence in the company’s transparency and fairness.

2. Proposed Renewal of Share Buy-Back Authority

Key Points

• Buy-Back Limit: The company seeks authority to buy back up to 10% of its issued shares at any time, compliant with the Companies Act, Bursa Malaysia listing requirements, and relevant laws.
• Quantum and Funding: The maximum number of shares that can be bought back is based on the current issued shares (1,169,240,661 shares), adjusted for treasury shares and potential conversion of warrants. As of the latest practicable date, LFG holds 792,000 treasury shares.
• Treatment of Purchased Shares: The board may choose to cancel, hold as treasury shares, resell, distribute as dividends, or use the shares for employee share schemes or as purchase consideration.
• Purchase and Resale Price: Purchases cannot exceed 15% above the five-day weighted average market price. Resale or transfer of treasury shares must not be below the five-day weighted average, or a 5% discount if certain conditions are met.
• Financial Impact:
  • Reduces working capital and may affect future dividends due to use of retained earnings.
  • If shares are cancelled, the EPS will improve, which could positively impact the market price.
  • Public shareholding spread is 32.65%, and LFG will not buy back shares if it would breach the 25% public float requirement.
  • Retained profits as of 31 December 2025 were RM7.71 million, which may be used for the buy-back.
• Advantages: Potential to stabilise share price, enhance EPS, improve investor confidence, and provide flexibility for future corporate actions.
• Disadvantages: May reduce funds available for business operations or dividends, and limit future investment opportunities.
• Mandatory General Offer (MGO) Risk: If a buy-back causes a party’s holdings to breach the 33% or 2% creeping threshold, an MGO is triggered unless an exemption is granted. The company is mindful to avoid this scenario.
• Historical Activity: In the past 12 months, LFG bought 792,000 shares as treasury shares at an average price of around RM1.89, spending RM1.48 million.
• Share Price History: LFG’s share price has ranged from RM0.70 to RM2.25 in the past year, with the last traded price at RM1.83.

Potential Price-Sensitive Elements

• The authority to buy back up to 10% of shares, especially if exercised during undervaluation, could significantly boost LFG’s share price through reduced supply and higher EPS.
• Treasury shares may be used for dividends, employee schemes, or resale on the market, potentially supporting short-term share price performance.
• The company’s commitment to not breach the public float and trigger an MGO is important for minority shareholders.
• The actual quantum and frequency of buy-backs, and their impact on liquidity and share price, will be closely monitored by the market.

3. Other Material Contracts and Litigation

Material Contracts

• Major Share Acquisitions: LFG entered into several significant acquisitions over the past two years, including acquiring 100% of Lianson Fleet, 51% of Yinson Power Marine, 70% of Regulus Offshore, and other related entities, primarily paid in new LFG shares at an issue price of RM0.88 per share. These acquisitions could expand LFG’s scale and earnings base in marine and offshore services.

Material Litigation

• Arbitration with Sarawak Shell Berhad: Subsidiary Icon Offshore Group Sdn. Bhd. (IOG) is engaged in an arbitration with Sarawak Shell regarding vessel provision under a 2018 contract. The disputed claim is RM10.1 million, with full provision already made in FY2024. The board does not expect any further adverse financial impact from the case.

Conclusion and Shareholder Action

Both proposals are subject to shareholder approval at the 14th AGM on 29 June 2026. The outcomes may influence LFG’s financial flexibility, capital structure, and governance, all of which are potentially price-sensitive. Shareholders, particularly those not classified as interested parties, should carefully review the proposals and consider their likely impact on LFG’s future performance and share value.

Disclaimer

This article is for informational purposes only and is not investment advice or a recommendation to buy or sell any securities. Investors should conduct their own research or consult their financial advisor before making any investment decisions. The analysis is based on publicly available information as at the date of the company’s circular and may not reflect subsequent developments.

View LIANSON FLEET GROUP BERHAD Historical chart here