Major shareholder moves to take GP Hotels private

GP Hotels, one of Singapore's largest hotel chains, operates 23 economy-tier and mid-tier hotels under the Fragrance and Parc Sovereign brands.
GP Hotels, one of Singapore's largest hotel chains, operates 23 economy-tier and mid-tier hotels under the Fragrance and Parc Sovereign brands.PHOTO: GLOBAL PREMIUM HOTELS

Shares rise 12.5% after Fragrance boss launches cash offer of 36.5 cents a share

Shares of Global Premium Hotels (GP Hotels) jumped yesterday after majority shareholder and real estate tycoon Koh Wee Meng launched a cash offer to take the firm private.

The stock rose four cents, or 12.5 per cent, to 36 cents - just below the offer price of 36.5 cents a share.

Mr Koh already controls 71.86 per cent of GP Hotels.

If his bid succeeds, the hotel chain operator will be delisted after listing on the Singapore Exchange just five years ago.

One of Singapore's largest hotel chains, GP Hotels operates 23 economy-tier and mid-tier hotels under the Fragrance and Parc Sovereign brands, with 1,983 rooms in total.

Low trading liquidity was cited as one of the reasons for the proposed delisting, together with the fact that the company had not carried out any exercise to raise equity capital since 2012.

At 36.5 cents a share, the offer represents a premium of 18.5 per cent over the volume-weighted average price in the past month, 21.7 per cent over the three-month average and 23.3 per cent ahead of the six-month average.

But one analyst pointed out that Mr Koh's offer "seems a little low" at nearly a 50 per cent discount to book value. GP Hotels reported a net asset value per share of 69.31 cents as at Dec 31.

Mr Koh tried to acquire GP Hotels in 2014, offering 33 cents a share when the asset value per share was 64 cents.

The independent financial adviser then called the offer fair but "not so compelling".

GP Hotels was spun off from property and hospitality company Fragrance Group, so some attention has inevitably fallen on the former parent, in which Mr Koh has accumulated an 85.6 per cent stake after making occasional share purchases in recent months.

Mr Koh is also the executive chairman and chief executive of Fragrance Group.

Yesterday, Fragrance shares rose 0.3 cent, or 1.79 per cent, to 17.1 cents. In comparison, the net asset value per share is 15.5 cents - so privatisation may not be such a sweet deal for Mr Koh in this respect.

Analysts noted that unless pressures like Qualifying Certificate extension charges present a problem, Mr Koh is unlikely to take Fragrance private.

Besides, Fragrance has diversified into Australia and Britain and sold almost all of its residential units in Singapore.

It has only one ongoing development project, City Gate, in which it has 50 per cent interest. These units are 86 per cent sold.

Spokesmen for GP Hotels and Fragrance both declined to comment.

A version of this article appeared in the print edition of The Straits Times on February 25, 2017, with the headline 'Major shareholder moves to take GP Hotels private'. Print Edition | Subscribe