Consortium raises offer to privatise Hwa Hong to 40 cents per share

SINGAPORE (THE BUSINESS TIMES) – Sanjuro United, the bid vehicle of a group of substantial shareholders of Hwa Hong Corporation, has raised its privatisation offer for the property player to 40 cents from 37 cents.

The new offer price is 8.11 per cent higher than the previous offer and represents a premium of about 40.4 per cent over Hwa Hong’s net asset value per share as at Dec 31, 2021.

It also exceeds all of Hwa Hong’s closing prices in the nine-year period up to and including May 12, the last full trading day of the shares prior to the first May 17 offer announcement, the company said in a bourse filing on Tuesday (June 7).

Sanjuro said it does not intend to revise the offer price, but reserves the right to do so in a competitive situation. It reiterated that its offer, at present, is the only one available for acceptance for shareholders to realise their investment in the company.

The offeror is the bid vehicle of a consortium formed by shareholders of the company that collectively hold around 20 per cent of its shares. It includes Ely Investments, which is wholly owned by former group managing director Ong Choo Eng and his family; Ergonomix, which is wholly owned by Dymon Asia Private Equity (South-east Asia) Fund II; Roswell Assets and Crystalic Star Global.

The proposed privatisation came after Hwa Hong received a notice of compliance from the Singapore Exchange Regulation (SGX RegCo) on May 6 requiring the company to appoint an independent reviewer to review its internal controls, processes and practices relating to its board nomination process, including the selection and appointment of independent directors.

The company currently has no independent directors. At the beginning of May, Mr Mak Lye Mun stepped down as independent and non-executive director due to “disagreement with certain board members on the selection and appointment process of two new independent directors”.

On June 3, Hwa Hong, in consultation with SGX RegCo, appointed KPMG as its independent reviewer.

In its May 17 announcement, Sanjuro said the offer provides “a viable exit alternative for shareholders who do not wish to be subject to the risk of uncertainty in the direction and strategy of the company”. It plans to make Hwa Hong its wholly owned subsidiary and does not intend to preserve the listing status of the company.

Sanjuro has received irrevocable undertakings from shareholders of the company – which include members of the consortium – holding around 24.3 per cent of its shares to accept the offer. The offer is conditional upon Sanjuro and its concert parties holding more than 50 per cent of the total number of shares.

As at 6pm on June 6, the total number of valid acceptances and shares owned, controlled or agreed to be acquired represents about 24.7 per cent of the total number of shares. Sanjuro has received valid acceptances representing around 0.76 per cent of the total number of shares, which include acceptances received from parties acting in concert with the offeror, representing about 0.45 per cent of total shares.

OCBC Bank is the sole financial adviser to Sanjuro in connection with the offer.

Hwa Hong was trading 2.5 per cent higher at 40 cents at noon on Tuesday.


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