A consortium formed by the three largest shareholders of Teckwah Industrial has announced a voluntary conditional cash offer of 65 cents per share to take Teckwah private, in a bourse filing late on Wednesday.
The offeror has already secured irrevocable undertakings of 58.04 per cent of shares, with the offer conditional on receiving valid acceptances of 90 per cent and above.
Clementine Investments is the bid vehicle for a consortium formed by Chua Seng Tek Holdings, Lee Kay Huan Holdings and Airjet Investments, which intends to delist the company from the Singapore Exchange to enable "more flexibility to manage the business of the company and optimise the use of the company's management and resources during this time of economic uncertainty".
Teckwah, a packaging, printing and logistics firm, is led by chairman and managing director Thomas Chua, the eldest son of the late Chua Seng Tek, who founded the company.
The offer price of 65 cents in cash per share represents premiums of approximately 30 per cent over the closing price on July 27 and 42.5 per cent over the 12-month volume-weighted average price. The offer price exceeds the highest ever closing price of 55.5 cents per share on Aug 4 and Aug 7.
The offeror will not deduct the interim dividend of 0.5 Singapore cent per share from the offer price. Shareholders will still be entitled to the interim dividend if they accept the offer.
The offer price is said to be final and will not be revised by the offeror.
The offeror said this is an "attractive opportunity" for shareholders to exit their entire investment in cash with price certainty and without incurring brokerage costs.
It added that this may otherwise be difficult because of the low trading liquidity of the shares and the challenging macro and operating environment due to the Covid-19 pandemic and the unresolved trade negotiations between China and the United States.
The announcement came after Teckwah's half-year results, where it posted a net profit of $5.29 million for the half year ended June 30, up 16.2 per cent from a year ago, on the back of an increase in other income received from government support schemes to deal with Covid-19.
Revenue ticked down 2.5 per cent to $76.69 million, dragged down by a decline in its packaging printing-related business, which makes up about half of its revenue.
Teckwah Industrial was recently in the cross hairs of activist shareholder Quarz, which wrote in a letter on July 28 that the firm should return more cash to shareholders as dividends, to address what Quarz sees as a lack of cash discipline and operational efficiency.
Quarz is the fourth-largest shareholder of Teckwah with a stake of more than 6 per cent.
Teckwah stressed the need for a sound cash management policy but Quarz was not convinced.
"We are working on a list of proposals to unlock shareholder value at Teckwah, and will be sharing them with the public and fellow shareholders in due course," said Quarz, in an earlier statement.
Teckwah had requested for a trading halt on Tuesday. It last traded at 55 cents.
THE BUSINESS TIMES