Trans-Cab pulls plug on IPO over insurance premium

Taxi operator Trans-Cab has called off its initial public offering (IPO), just days after it announced its float.

The company withdrew its listing plans after new information relating to outstanding insurance premiums surfaced.

In a statement to the authorities yesterday, Trans-Cab - Singapore's second-largest cab operator - said it had been unaware that there was an additional insurance premium of $1.83 million that was pending.

"This is a premium adjustment rendered by the insurer, based on cumulative accident claims against the company's taxi fleet," it said.

"The amount is a preliminary estimate provided by the insurer and has not been reviewed and accepted by the company."

The figure of $1.83 million is much lower than a purported insurance debt of $50 million that a person by the name of S.S. Phoa claimed in a letter Trans-Cab owed.

The letter, addressed to the Singapore Exchange just a few days after Trans-Cab first announced on Nov 3 its intention to go public, alleged that with the IPO, Trans-Cab would be "transferring" the debt to the public.

The amount is said to be owing to First Capital Insurance.

The Straits Times contacted First Capital last week for comment. But the insurer got back only yesterday.

"It is not true," said its senior manager, Mr H.P. Tan. "However, due to client confidentiality, we are unable to comment on matters relating to Trans-Cab."

Trans-Cab managing director Teo Kiang Ang was unreachable for further comment yesterday.

But in its statement yesterday, Trans-Cab said that because of the impending close of the public offer at noon today, and taking into account the time needed to evaluate this new information "holistically", it has decided not to proceed with the IPO at this point.

The company added that it intends to complete its full-year audit at its year end on Dec 31, and it will evaluate its options after that.

There have been a number of IPOs that were called off here because of unfavourable conditions in recent years.

In 2012, M&L Hospitality Trust tried to list, but abandoned the plan when book building failed to find a satisfactory price.

In the same year, Formula One also put the brakes on its floating plans.

Trans-Cab has a fleet of 4,700 taxis. Last year, it generated $36.3 million in after-tax profit, which was a 22.1 per cent margin on revenue.

It priced its IPO at 68 cents a share, with 8.8 million shares available to the public.

Together with 65 million shares taken by cornerstone investors and 94.2 million placement shares for institutional investors, the company expected to raise about $100 million in the exercise.

christan@sph.com.sg