SINGAPORE (June 12): Digileap Capital, the partnership led by the family of Challenger Technologies founder Loo Leong Thye, is pushing ahead with plans to voluntarily delist the IT products retailer.
And it is not budging from its exit offer price of 56 cents per share, which some shareholders have deemed to be too low.
Digileap says Deloitte & Touche Corporate Finance, the independent financial adviser for Challenger, has opined that the financial terms of the exit offer are “fair and reasonable”.
Challenger’s non-conflicted directors have also recommended that shareholders to vote in favour of the delisting and accept the exit offer.
Digileap adds that both the delisting circular and exit offer letter will be dispatched to Challenger’s shareholders today.
DBS Bank has been appointed as financial adviser to the offeror Digileap for the delisting and the exit offer.
Challenger in March received the 56 cents per share cash offer from Digileap – a partnership between the Loo Family and Dymon Asia Private Equity (S.E. Asia) Fund II (DAPE II).
The offer represents a premium of 15.1% over the volume weighted average price (VWAP) of 48.7 cents for the 12-month period up to and including the last full market day.
It also represents a premium of approximately 110.1% to the net tangible asset value of Challenger as at Dec 31, 2018.
Challenger said then that the delisting would provide greater operational flexibility to manage the business, given the company is facing challenges from weak retail sentiment and industry disruption.
See: Challenger gets 56 cents delisting offer from founding Loo family and partners
However, Pangolin Investment Management, which holds a 2.94% stake in Challenger through its Pangolin Asia Fund, called on other shareholders to reject Digileap’s delisting offer
Pangolin says the offer price, which translates to a price-to-earnings ratio of 9.9 times, is too low and thus unfair to minority shareholders.
In a letter sent to The Edge Singapore, Pangolin called the offer “derisory”.
See: Challenger Tech's 2.94% shareholder says offer price too low, calls for higher dividend payouts
In a statement on June 12, Loo – Challenger’s executive director and chief executive officer, who is also the director of Digileap – revealed he had received two unsolicited offers from Pangolin over the past two years.
“I began exploring the possibility of a delisting after receiving two unsolicited offers from minority shareholder Pangolin Investment Management to sell its stake,” says Loo. “The first offer was received in October 2017 wherein Pangolin offered to sell its stake at $0.435 per share, and the second offer was received in March 2018 and did not state the price at which Pangolin would be willing to sell its shares.”
“Instead of doing a transaction with a single shareholder, I wanted to make an offer to all shareholders and began looking for a partner to start this process,” he adds.
See: More #QuestionsForChallenger after its AGM
As at 12.30pm, shares in Challenger are trading 1.8% down at 54.5 cents.
