Temasek's offer for SMRT 'fair and reasonable', says independent financial adviser, vote meeting on Sept 29

Temasek Holdings' offer of $1.68 a share for SMRT Corp has been deemed fair and reasonable.
Temasek Holdings' offer of $1.68 a share for SMRT Corp has been deemed fair and reasonable.PHOTO: REUTERS

SINGAPORE - Temasek Holding's S$1.68 a share offer for SMRT Corp is "fair and resonable", said the independent financial adviser (IFA) to the rail company's independent directors in a detailed scheme document to minority shareholders released on Tuesday (Sept 6).

The date for a meeting when minority shareholders will vote on the offer has been set for Sept 29. Temasek, which already holds 54 per cent of SMRT shares, will abstain from voting.

Temasek in July announced its S$1.18 billion buyout offer for the troubled rail company which has seen multiple breakdowns on its lines in the past few years. If it succeeds, SMRT will be delisted from the Singapore Exchange (SGX), 16 years after it went public.

One of the concerns shareholders have raised since then is why Temasek is pursuing the privatisation deal through a scheme of arrangement rather than a general offer, and whether the offer price of S$1.68 per share is fair.

In a scheme of arrangement, for Temasek's bid to succeed, a simple majority, or more than 50 per cent of shareholders present in person or by proxy at the scheme meeting, have to vote for it. These shareholders will have to hold at least 75 per cent of the value of SMRT shares held by all shareholders present at the meeting.

In contrast, a general offer will succeed only if Temasek manages to secure 90 per cent of the outstanding minority shareholder votes, a significantly higher threshold.

Some shareholders have also asked why there are no special dividends from the sale of SMRT's rail operating assets to the Land Transportation Authority (LTA) for S$991 million under the proposed New Rail Financing Framework (NRFF).

The scheme document outlines Temasek's proposal in detail and seeks to address these concerns.

It also urged shareholders to appoint a proxy to vote at the meeting if they are unable to attend. The last date and time for lodgement of the proxy form in Sept 27, 3.30 pm.

The scheme meeting will be convened on Sept 29, 3.30 pm, at The Star Theatre, Level 5 of The Star Performing Arts Centre at 1 Vista Exchange Green. It will be held on the same day and venue and directly after an extraordinary general meeting on the NRFF, which will begin at 2.30pm.

Rothschild, the IFA to SMRT, said that from a financial point of view, the scheme is "fair and reasonable".

The independent directors (ID) of SMRT, in turn, said they agreed with the recommendations of the IFA, and "unanimously recommend" that shareholders vote in favour of the scheme at the meeting.

The IDs added: "Scheme shareholders should also be aware and note that there is no assurance that the trading volumes and market prices of the scheme shares will be maintained at the current levels prevailing ... if the scheme does not become effective.

"In the event the scheme becomes effective, it will be binding on all scheme shareholders whether or not they were present in person or by proxy or voted at the scheme meeting. Scheme shareholders should also be aware and note that there is currently no certainty that the scheme will become effective and binding."

Scheme shareholders who have received a scheme document can either attend the scheme meeting in person, or appoint a proxy to vote at the meeting.