Less than a month after a privatisation offer by Teckwah Industrial Corporation was launched, another local company might be joining the growing list of companies going down this same route.
See: Teckwah chairman Chua offers to privatise company at 65 cents per share
A group of investors led by SK Jewellery’s co-founders, the Lim family, is offering to buy out minority shareholders at 15 cents per share. The announcement, made before the market opened on Sept 2, caused the company’s share price to double.
At 15 cents, the offer values SK Jewellery, which has a share base of 562.5 million, at an estimated $84.4 million.
The offer price represents a 70.5% premium over the last traded price per share on August 27, and a premium of approximately 89.9%, 94.8%, 89.9% and 54.6% over the volume-weighted average price (VWAP) per share for the one-, three-, six-, and 12-month periods up to and including August 27.
According to SK Jewellery, the offer price is final, and will not be further revised.
The offer is made by Orogreen Investment, a vehicle set up to make this acquisition. Lim and concerted parties already control 82.61% of the shares.
Besides Lim Yong Guan, co-founder and non-executive chairman of SK Jewellery, Orogreen Investment is also owned by Lim Yong Sheng, co-founder, executive director, and CEO. Lim Liang Eng is the third co-founder, executive director, and COO of the group.
The Lims plan to delist the company in a bid to gain greater control and management flexibility to manage the business of the group.
The offer was also made to save compliance and associated costs in maintaining its listed status. Furthermore, the group says it has not carried out any exercise to raise equity capital on the SGX-ST since its listing in 2015.
“The company is unlikely to require access to Singapore equity capital markets to finance its operations in the foreseeable future as the company has various other available funding sources such as bank credit facilities,” it says.
“In addition, maintaining a listing on the SGX-ST does not serve a material purpose from a fundraising perspective as the company’s declining share price has made it challenging for the company to raise equity capital. Accordingly, it is not necessary for the Company to maintain a listing on the SGX-ST,” it adds.
SK Jewellery said the offer presents shareholders with a “clean cash exit opportunity” to realise their entire investment, and that the trading volume in its shares have been “low”.
“The offer therefore provides shareholders with an opportunity to realise their entire investment in the shares at a premium over the prevailing market prices which may not otherwise be readily available to shareholders given the low trading liquidity of the shares,” it says in a September 2 filing.
Under the offer agreement, each management shareholder has agreed to be allotted and issued new ordinary shares in the capital of Orogreen Investment for a subscription price that will be set-off in full against the offer price consideration.
Soo Kee Capital, which is wholly-owned by SK Jewellery, has also tendered all its shares to Orogreen Investment in acceptance of the offer.
SK Jewellery, which was incorporated in 2012, was listed on the Catalist board of the Singapore Exchange Securities Trading Limited (SGX-ST) in 2015.
As at 10am, shares in SK Jewellery were trading at a 52-week high of 14.6 cents, 5.1 cents higher, or 53.7% up from its last close of 9.5 cents.
