On Feb 7, the Riady family was busy buying out Auric Pacific Group and launching a takeover offer for Healthway Medical Corp (HMC), Singapore's largest private clinic chain. Nine days later, that was followed by its mainboard-listed property group OUE mounting a surprise takeover offer of International Healthway Corp.
"It was pure coincidence that the Auric and HMC buyouts were done on the same day. We wanted to launch the Auric offer earlier but the Securities Industry Council had not yet given its approval. We were on our way back from a ski holiday in Vancouver when we got the news," Auric's CEO Andy Adhiwana said.
He believes his father-in-law, Dr Stephen Riady, also a controlling shareholder of Auric, would like to enter the healthcare sector as he is "a big supporter and bullish on the industry in Singapore".
Low trading volume was among reasons cited for taking Auric private after having been listed on the Singapore Exchange for almost 20 years. "Auric has net cash of $90 million and no loans, yet our shares were traded at a big discount to fair value. We were in the process of turning around our business, and management felt it was best to privatise, so we can devote our time solely to business development rather than listing compliance."
Listing compliance also costs about $1 million a year, but that was not a determining factor.
"We can avoid having to cater to short-term investor interests that require improved earnings on a quarterly basis. We can focus on longer-term projects that yield no immediate financial gains, but will deliver attractive returns in three to five years. If say, you want to build a factory in another country that takes at least 12 to 18 months and then another year to bear fruit, many shareholders don't have that patience, and so the stock will be traded at a discount."
Auric will meet shareholders today at 9am at Orchid Country Club to decide on its selective capital-reduction scheme. This refers to an effort by a company to buy back shares from certain shareholders and cancel the shares after that. It is to give the remaining shareholders an opportunity to realise their investment, given the lack of a public market for the shares.
The firm is offering to buy out the 2 per cent of shares still in public hands after the successful takeover by its major shareholder to take it private in April. The offer price of $1.65 a share is the same as the takeover price. Independent financial adviser MS Corporate Finance said the offer is pegged at a 16.5 per cent premium over the revalued net asset value per share.
If the exercise is successful, the remaining shareholders who hold 2.55 million shares will receive $4.21 million in cash.