SINGAPORE - News of the proposed privatisation of British hotel operator GL Limited sent shares of the Guoco Group unit soaring to a 10-month high on Friday (Jan 15) after it lifted its trading halt.
GL shares hit an intraday high of 71 cents, up nearly 27 per cent or 15 cents on the local exchange, after the trading halt was lifted shortly after noon.
The stock closed at 70 cents - its highest since around last March - on trade of 7.18 million.
Guoco Group, which has a 70.84 per cent interest in GL, said on Friday that its wholly-owned unit GuocoLeisure Holdings will make a voluntary conditional offer of 70 cents a share for all GL stock.
It will then privatise and delist the firm from the Singapore Exchange.
GL said the move will provide greater flexibility to help it navigate "a challenging and unprecedented operating environment" resulting from Covid-19, Brexit and low oil and gas prices.
Guoco's proposed offer represents a 25 per cent premium over the last transacted price of 56 cents per share on Jan 14.
It also represents a premium of 28.2 per cent over the one-month, volume-weighted average price up to the last trading day and 33.3 per cent over the three-month average price.
GL said the proposed offer is conditional upon GuocoLeisure Holdings receiving acceptances of no less than 90 per cent of the shares.
It noted that the proposed offer "represents an opportunity for shareholders to realise their investment at a premium amid a challenging operating environment for the company".
GL said its core British hotel business has been severely impacted by pandemic-driven restrictions, resulting in most of the company's hotels being closed during the first half of 2020.
On Wednesday, the firm posted a net loss of US$19.8 million (S$26.3 million) for the six months to Dec 31, 2020, against a profit of US$26.9 million in the same period a year earlier.
The pandemic continues to curtail demand for UK hotel rooms, especially in the light of the renewed government-imposed lockdowns this month, while uncertainties in a post-Brexit environment may also take a toll on business travel and retail tourism, GL added.
The company's energy business, which depends on royalty income from its entitlement to Australia's Bass Strait oil and gas production, has also been hit due to lower crude and gas prices.
GL did not declare a dividend for the 2020 financial year due to the need to conserve cash for its operations.
