KUALA LUMPUR, May 15 — The May 14 Extraordinary General Meeting (EGM) of Jobstreet Corporation will see another step in the sale of the company’s online search business to Australia’s Seek – and likely questions from shareholders about the future of the Malaysian company.

Jobstreet announced in February that it is going to sell its online employment search businesses to Seek Asia, a subsidiary of ASX-listed Seek Group, which owns the Australian job site.

That includes the Philippine business, in which Jobstreet first has to buy out the other shareholders, which is why the EGM has been called.

Seek has valued the total transaction at RM1.7 billion, and says it intends to merge Jobstreet and its main rival, JobsDB, in which it took a 60 per cent stake in 2010.

Jobstreet said Seek Asia, a subsidiary of Seek Ltd, will hold about 75 per cent of the merged company, with News Corp owning about 12 per cent, and public/private equity firm Tiger Global 9 per cent, and Macquarie Capital 4 per cent.

Jobstreet operates a website where users can search for jobs.

It also provides offline recruitment services.

1. What is the real fair value of Jobstreet’s search business?

Jobstreet has been valued at RM1.7 billion by Seek, but does its management think it is a fair value?

Has a valuation been carried out by a third party? We couldn’t find reference to this.

2. Why not make Seek launch a general offer?

If Australia’s Seek wanted to buy the business, why sell them the business and be left with an empty shell?

Contrary to a Wall Street Journal article, it appears Seek is not bidding for the 78 per cent of shares it doesn’t already own, but is buying only the underlying businesses.

Why not tell Seek to launch a bid for the shares on the market?

Perhaps because it would force an independent valuation to be done.

This question may also be answered in part by the commentary in the shareholder’s circular, which says the Jobstreet sites are facing stiff competition from LinkedIn and other internet-based services.

It forecasts only moderate growth in view of this threat.

In other words, Jobstreet was glad to be selling out. Perhaps they even sought offers, although none others had been received, according to the circular to shareholders.

But this leads to the next question:

3. What does Seek see in this business that Jobstreet Corporation doesn’t?

Seek said in its announcement that it expects “the combined impact of a strong earnings outlook and the use of an efficient capital structure to deliver significant value for Seek shareholders.”

But on page 72 (22) of JobStreet’s circular on 29 April to shareholders, it said: “Despite the gradually improving economic state of affairs, we note that a real and potential threat to the online job portal business of the Disposal Companies is posed by social media and aggregator websites.”

It went on to say that social media websites such as LinkedIn are occupying a major part of the daily activities of people and are used by businesses to recruitment.

Jobstreet ended its prospects statement by saying there is no assurance that the track record and profitability of the companies it is disposing will continue in the face of such increasing competition.

Although Seek is saying it will look forward to better earnings from JobStreet, the seller of the businesses to Seek is saying these businesses are under threat.

Seek forecasts “strong earnings outlook” while Jobstreet settles for “moderate” growth.

4. How will the RM1.7 billion in special dividends for shareholders translate into per share?

This should be easy – just divide the RM1.7 billion by the number of shares outstanding.

But it is hard to gauge the value as the company was still issuing new shares to employees exercising their rights to the shares, as part of its Employee Share Option Scheme (ESOS).

5. Have all options been exercised?

The last issue was on 26 March, with 370,000 shares issued. And before that, it issued about 2.9 million new shares on 18 March.

Are all the ESOS shares exercised yet?

6. When will the bonus dividend be paid?

Meanwhile, when can shareholders expected to receive the RM1.7 billion?

When the deal was announced in February, Jobstreet said it intends to distribute to shareholders the RM1.7 billion in two months.

The deal has not closed due to the delay in acquiring its Philippines subsidiary.

7. When will it close its acquisition of its Philippines subsidiary?

After announcing the news of the acquisition, Jobstreet got busy acquiring shares it did not own in its subsidiaries in Vietnam, Philippines and Indonesia, as it is disposing these subsidiaries to Seek.

So far it has completed the acquisitions of its Vietnam and Indonesia subsidiaries.

Which leaves its subsidiary in the Philippines.

It had to extend the deadline to 18 June because it could not finish the acquisition within 60 days from the proposed acquisition.

The length of time it takes for the Philippines acquisition will affect the time it takes for the dividends to be paid to shareholders.

Will it be able to finish the acquisition by 18 June?

8. What is stopping the Singapore regulator from approving this deal?

Seek told the Macquarie Australia Conference, in slides disclosed May 7, that regulatory approval from Singapore was still outstanding.

Will it get this approval in time for the EGM?

9. What will happen to the listed entity of Jobstreet after this deal?

Upon selling its online recruitment businesses, (which make up more than 80 per cent of JobStreet’s income) to Seek, Jobstreet will no longer have the same amount of income as it once had.

It said it will likely be classified as a PN17 company.

PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia.

PN17 generally refers to companies that have some financial difficulties.

How does Jobstreet intend to exit its PN17 status?

It says it’s going to look for other companies to invest in.

Shareholders will want to know an answer to this question on May 14.

10. Has the best time for minority shareholders to exit Jobstreet passed?

Jobstreet’s price reached a one-year-high of RM2.78 on 17 February, one day before the stock was suspended from trading.

The news for the acquisition by Seek was announced on 19 February.

The stock price has since dropped and is now hovering around RM2.40.

After distributing the bonus RM1.7 billion dividend to its shareholders, Jobstreet will likely be classified as a PN17 company.

PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia.

PN17 generally refers to companies that have some financial difficulties.

With this new label, which is often viewed as negative, it is likely that the share price of Jobstreet will continue to drop.

How can minority shareholders exit their investment in Jobstreet with a smile on their faces?

We do not know yet the value per share of the RM1.7 billion bonus dividend.

We also do not know if JobStreet’s share price will fall further.

But it is hard to imagine that it will rebound to the high of RM2.78 per share that some investors sold them at on 17 February.

Has the best time to exit Jobstreet already passed?

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

So far, we have not had a reply (which is why you are seeing this message). — Investor Central

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