The family of Amara Holdings
Amethyst Assets, a special purpose vehicle majority owned by Teo and his siblings, Susan Teo, Teo Kwee Chuan and Corinne Teo, made an offer to acquire all the shares that the Teo family does not already own in the company.
As at Nov 14, Amara had an issued and paid-up share capital comprising 574.97 million shares, which excludes the 1.97 million treasury shares. As at the same date, Amethyst Assets and its shareholders had executed irrevocable undertakings in favour of the offeror. The Teos’ stake totals some 302.3 million shares, representing a 47.42% stake in Amara.
The offer consideration represents a 70.5% premium over the volume-weighted average price (VWAP) for the shares traded in Amara over the past one month.
However, the offer price is also below Amara’s book value of 69 cents.
According to the filing by the company’s offeror, the trading volume of the company’s shares had been low in the 12-month period up to its last full trading day on June 15. Amara’s average daily trading volume had averaged some 31,473 shares over the 12-month period.
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The offer also provides shareholders an “opportunity to liquidate and realise their investments” at a premium over the historical traded prices of the shares, which may otherwise not be available given their low trading liquidity, says the offeror.
“The offeror believes that privatising the company will give the offeror and the management of the company greater control and flexibility to manage the business of the group, respond to changing market conditions and optimise the use of the company's management and resources,” it adds, highlighting that the offer is being made with a view if privatising and delisting the company.
Given the existing "higher-for-longer" interest rate environment caused by inflationary pressures, higher borrowing costs are likely to negatively impact profitability of the hospitality company. The offeror explains that renewal of the company’s aged assets is a necessity to maintain its edge in a highly competitive hospitality market, with the requisite capital expenditure requirements from such a renewal amidst higher costs of capital potentially limiting profitability in the near term.
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Amethyst Assets, in its filing, says it intends to make Amara its wholly-owned subsidiary following the completion of the offer. It also intends to exercise its right of compulsory acquisition under Section 215(1) of the Companies Act and does not intend to support or take any step, including the placing out of shares by the offeror, for the public float to be restored or for any trading suspension of the shares by the SGX-ST to be lifted.
Shares in Amara last traded at 46 cents before its trading halt on the morning of Nov 10.
