F&N, Myanmar firm bound for court again over brewery stake

A long-drawn battle over Myanmar Breweries (MBL) is coming to a head, with both stakeholders preparing to face off in court.

Myanma Economic Holdings (MEHL) asked the Singapore High Court on Wednesday to force the sale of a 55 per cent stake in the brewer held by Fraser and Neave (F&N) to be completed by Aug 20.

MEHL has also filed an application for an interim injunction requiring F&N, its joint venture partner in the firm, to sell its stake for 500 billion kyat (S$540 million).

F&N is refusing to budge from its earlier position that any sale of the stake should be completed at the estimated fair value of US$560 million (S$770 million).

It insisted that the sum was determined by the jointly appointed independent valuer.

"It is our position that by choosing to refuse to complete the sale at US$560 million, MEHL has... breached its obligations," F&N said yesterday in a filing to the Singapore Exchange (SGX).

The exchange rate to be used for the deal has been a sore point between the joint venture partners.

While F&N says the 2013 US dollar/Myanmar kyat exchange rate must be used, MEHL has demanded that the deal be completed based on the official exchange rate as stated by Bloomberg on the day before the sale is closed.

MEHL's desired exchange rate would yield about US$401 million, well under what F&N is demanding.

The two firms have been at loggerheads since 2013, when F&N was taken over by parties linked to Thai tycoon Charoen Sirivadhanabha.

MEHL, which holds a 45 per cent stake in MBL, said the takeover breached the joint venture agreement, which, in turn, entitled it to buy its partner's stake.

It initiated legal proceedings and won but that triggered the dispute over the exchange rate.

An arbitral tribunal was appointed to settle the dispute over the estimated fair value of the F&N stake, which was nominated at 500 billion kyat by an independent valuer last month.

"MEHL stands ready and willing to conclude the sale and purchase of F&N's stake in MBL at 500 billion kyat within the 30-day period ordered by the arbitral tribunal," MEHL director Nay Wynn had said.

But F&N said MEH's refusal to complete the deal at US$560 million is a breach of its legal obligations. "The company has notified MEHL that it ... shall remain a shareholder of MBL," F&N said in its SGX filing yesterday.

Myanmar Brewery, which makes Myanmar Beer, Myanmar Double Strong and Andaman Gold, is the country's runaway leader, with an 83 per cent share of the beer market by volume.

Losing the MBL stake would deprive F&N of a significant growth driver and its only alcohol product as it sold its stake in Tiger Beer maker Asia Pacific Breweries in 2012 to Heineken.

A version of this article appeared in the print edition of The Straits Times on August 01, 2015, with the headline 'F&N, Myanmar firm bound for court again over brewery stake'. Print Edition | Subscribe