Dr. Koh Wee Meng, the executive chairman and CEO of property developer Fragrance Group, will be privatising the group.
Koh has, through JK Global Treasures, has made a voluntary conditional offer to its shareholders on July 9, where JK Global Treasures will be acquiring all the issued and paid-up share capital in Fragrance Group at an offer price of 13.8 cents per share in cash.
As at Dec 31 2020, the company's book value was 19.2 cents, down from 20.6 cents as at Dec 2019.
The offer requires an acceptance rate of 90%.
As at July 9, Koh, as well as other parties aligned with him, hold a total of 5.76 billion Fragrance shares representing 85.75% of all the shares issued.
Through the filing, Koh reserves the right to revise the acceptance condition – subject to the consent of the Securities Industry Council, by reducing the offer threshold to over 50% of the total number of Fragrance shares.
Should the acceptance condition be revised, the revised offer will remain open for another 14 days.
Shareholders who have accepted the initial offer will be allowed to withdraw their acceptance within eight days.
Premium offer price
The offer price represents a premium of 16.9% over Fragrance’s closing price of 11.8 cents per share on July 8.
It represents a premium of 19%, 19%, 20% and 21.1% over the one-, three-, six- and 12-month volume weighted average price (VWAP) of 11.6 cents, 11.6 cents, 11.5 cents and 11.4 cents respectively.
As at July 9, Fragrance has an issued and paid-up share capital of $150 million comprising 6.71 billion shares, with 6.4 million treasury shares.
The group has not granted any options or issued any rights, warrants, or other securities convertible into, exercisable or redeemable for any shares in Fragrance.
The group currently has six directors, including Koh and his wife, Lim Wan Looi, who is the group’s executive director.
See also: Fragrance Group's Melbourne development project receives practical completion certificate
JK Global Treasures was incorporated in Singapore in November 2017. Its principal activity is investment holding.
As at July 9, JK Global Treasures has an issued and paid-up share capital of $1 million comprising 1 million shares.
Dr. Koh is the sole shareholder and director of JK Global Treasures.
Offer rationale
According to Fragrance, the offer will allow shareholders to realise their investment at a premium. It also presents an opportunity to shareholders who may find it “difficult” to exit their investment in the company due to low trading liquidity.
The group notes that the trading volume in its shares has been “generally low” with an average daily trading volume of around 141,523 shares during the one-month period, 143,540 shares in the three-month period, 142,159 shares during the six-month period and 108,820 shares during the 12-month period.
Since its initial public offering (IPO) in 2005, Fragrance has not carried out any exercise to raise equity capital on the SGX-ST.
According to the filing, Koh feels Fragrance is unlikely to require access to Singapore’s equity capital markets to finance its operations “in the foreseeable future”.
As such, he does not believe that it is necessary for Fragrance to remain listed on the SGX-ST.
Irrevocable undertaking
Koh and Lim have both provided an irrevocable undertaking to accept the offer pertaining to the shares held by them.
As at July 9, Koh holds some 5.02 billion shares in Fragrance representing around 74.71% of the shares issued. Lim holds a total of 735 million shares representing 10.94% of the issued fragrance shares.
In addition, Koh will tender his shares in Fragrance unconditionally in acceptance of the offer. He will also waive his right to receive the cash consideration within the stipulated timeline under the code.
Koh has agreed that payment for the deferred consideration shares will be deferred to three months after the close of the offer.
Lim will be tendering the shares held by her for cash.
The irrevocable undertaking will lapse if the offer is lapsed or withdrawn.
Shares in Fragrance last closed at 11.8 cents on July 8, before its trading halt on the morning of July 9.
