The directors of GK Goh Holdings , Goh Geok Khim and Goh Yew Lin have made a voluntary conditional cash offer to acquire all the issued and paid-up shares they do not own in GK Goh Holdings. The offer was made via Verveine, a special purpose vehicle (SPV) equally owned by Goh Geok Khim and Goh Yew Lin.
Goh Geok Kim is GK Goh's executive chairman and founder while Goh Yew Lin, the managing director of the company, is his son.
The offerors intend to delist and privatise the company following the completion of the offer.
The offer price of $1.26 per share values the company at around $396.0 million and represents a premium of around 38.5% per share over the last-traded price per share on Feb 24, the last trading day before the trading halt on Feb 27. The offer price also represents a premium of 38.8% over the one-month volume weighted average price (VWAP) per share and a premium of 34.8% over the 12-month adjusted VWAP per share.
The offer price is also above the highest traded price of the shares of $1.23 in the last five years and implies a price to consolidated unaudited net asset value per share (P/NAV) of 0.97x, which is above the highest P/NAV of 0.90x during the five-year period up to and including the last trading day on Feb 24.
The company’s existing majority shareholder, GKG Investment Holdings Pte Ltd (GKGI), has entered into an irrevocable undertaking to accept the offer in respect of the all the shares it owns. This comes up to around 62.89% of the total number of shares in the company.
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The offer is conditional on the offeror holding 90% or more of the shares in the company at its close.
The offer price is said to be final although the offeror reserves the right to revise its offer price should a “competitive situation” come about.
If the free float requirement is not satisfied at the close of the offer with trading in shares on the SGX-ST suspended after that time, the offeror does not intend to support any action or take any steps to restore the free float of the shares or maintain the company’s listing status.
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For the FY2022 ended Dec 31, 2022, GK Goh reported a loss of $58.0 million compared to the earnings of $2.5 million in the year before, as its total costs surpassed its topline.
FY2022 loss per share stood at 22.98 cents.
FY2022 net asset value (NAV) per share stood at 128.23 cents.
“GK Goh Holdings Ltd was listed in 1990 with only the stockbroking business which I and my partners had founded in 1979. This grew into a leading regional securities business, which the company sold in 2005,” says Goh Geok Khim, director of the offeror.
“Since then, the company has been an investment company owning both operating businesses as well as a diverse portfolio of investments. The company already had a significant minority stake in Boardroom Ltd in 2005, and this was added to over the years as Boardroom expanded its corporate services businesses in Asia and Australia. In 2022, the company concluded the sale of Boardroom, repaying much of the company’s debt and leaving aged care as its remaining operating business. Financial investments now make up a majority of the company’s assets,” he adds.
“After much thought, I have concluded that it is now appropriate to offer the company’s minority shareholders, many of whom have been with us for decades, the opportunity to realise their investment in the shares and delist the company,” he continues. “The world is an increasingly uncertain place, and there are outsized macroeconomic and geopolitical risks which make it increasingly challenging to generate satisfactory long-term returns.”
"I want to acknowledge and thank all our past and present employees, clients, business associates and partners who have placed their confidence in us, and the company’s shareholders who have invested their capital in the company together with us. It is in this spirit that the offer is being made to all shareholders, at a price which we trust fairly reflects the value that we have built in the company over the years," says Geok Khim.
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Goh Yew Lin, the other director of the offeror, adds, “We are honoured and thankful for the trust and support of all who have participated with us in our journey as a listed company. The company’s share price has been trading for some time at a discount to book value. There is little trading liquidity in the shares. The offer will provide shareholders with the opportunity to realise their investment in the shares at a premium over the prevailing trading price of the shares, without incurring brokerage and other costs.”
He continues: “The delisting and privatisation of the company, if achieved as a consequence of the offer, will allow us to restructure the company’s asset mix. This will be a long process. Many of the company’s existing investments are in private equity and venture capital funds which will take time to mature, and which cannot easily be sold or redeemed. We also view the company’s aged care businesses and assets in Australia and Singapore as long-term in nature, requiring patience and determination to build value. An unlisted, private company would have greater flexibility to take strategic long-term decisions without as much pressure to deliver profits in the short term, or to incur costs relating to the company’s obligations as a listed company.”
United Overseas Bank Limited and Maybank Securities Pte. Ltd are the financial advisers to the offeror. Allen & Gledhill LLP and WongPartnership LLP are the legal advisers.
Shares in GK Goh Holdings closed at 91 cents on Feb 24 before its trading halt on the morning of Feb 27.
