CDL seeks shareholders’ nod to buy back shares, which could raise Kwek family’s stake to 55.5%
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A recent tussle for control of CDL between Mr Kwek Leng Beng (right) and his son Sherman Kwek sent the company's shares tumbling.
PHOTO: LIANHE ZAOBAO FILE
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SINGAPORE – City Developments Limited (CDL), the Singapore hotel and property group that was embroiled in a recent boardroom feud, is seeking shareholders’ approval to buy back the company’s shares.
In a letter to shareholders on April 8, CDL executive chairman Kwek Leng Beng said the company is seeking shareholders’ approval at its annual general meeting on April 23 to renew a share purchase mandate.
This would allow the company to buy back up to 10 per cent of its ordinary shares from the market, as well as an additional 10 per cent of its preference shares.
This could see the Kwek family’s controlling stake in CDL increase to 55.51 per cent from 49.29 per cent as at March 10, helping it stave off unwanted takeovers, as it moves to steady the ship after a recent tussle for control of the company
In Singapore, a mandatory takeover offer is triggered when a bidder, alone or in concert with others, acquires 30 per cent or more of the target company’s voting rights.
A takeover is also triggered if those holding between 30 per cent and 50 per cent of voting rights acquire more than 1 per cent in additional shares within a six-month period.
A bidder and people acting in concert must make a voluntary general offer when they hold more than 50 per cent of the voting rights.
Based on available information, CDL has 893.4 million ordinary shares and 268 million preference shares.
If its share purchase mandate is approved and exercised in full, CDL could buy back as many as 89.3 million ordinary shares and 26.8 million preference shares.
This could see the proportion of shares held by the public cut to about 45.09 per cent, from 50.58 per cent currently.
Under the Companies Act, preference shares that are purchased by the company will be cancelled immediately. Ordinary shares purchased by the company may be held or dealt with as treasury shares or cancelled.
As preference shares do not carry general voting rights, there will be no takeover code implications arising from CDL’s purchase of preference shares following the share purchase mandate.
An application was made to the Securities Industry Council, which has confirmed that Hong Leong Investment Holdings (HLIH) – CDL’s controlling shareholder – is not obliged to make a takeover offer for CDL.
In his letter, Mr Kwek Leng Beng said the directors are not aware of any major shareholders who would become obliged to make a mandatory takeover offer for CDL. He added that the share buyback will enhance CDL’s earnings per share and net asset value per share.
The share buyback will give CDL and its directors an alternative to return surplus cash, “exercise greater control over the company’s share capital structure”, as well as bolster the confidence of shareholders, he said.
The company intends to use internal resources and/or external borrowings to fund the share buyback.
CDL is also seeking shareholders’ approval for the planned renewal of interested-party transactions, such as arrangements or deals it makes with interested parties, including its controlling shareholder, HLIH.
It said that due to the size of HLIH and the diversity of the activities of CDL and its subsidiaries, it is likely that interested-party transactions may arise.
The people who are considered independent for the purposes of this proposed mandate are directors Philip Lee, Philip Yeo, Colin Ong, Daniel Marie Ghislain Desbaillets, Chong Yoon Chou, Carol Fong, Wong Ai Ai, Jennifer Duong Young and Wong Su Yen.
