SINGAPORE - Poor interest from minority shareholders has resulted in Chip Eng Seng insiders taking up the bulk of shares in its controversial rights issue.
The property and construction group said on Monday night (Oct 14) after trading closed that controlling shareholders, company chairman Celine Tang and her husband Gordon Tang, will subscribe for some 73.3 million rights shares or 46.85 per cent of all the rights shares being issued, as part of their sub-underwriting agreement.
This will bring their shareholding in the mainboard-listed company to 36.35 per cent from 29.73 per cent before the rights issue.
The 1-for-4 rights issue announced in August saw total valid acceptances and excess applications of about 83.2 million or 53.15 per cent of all shares offered, Chip Eng Seng said in Monday's filing.
This number includes the irrevocable undertakings from the Tangs and chief executive Raymond Chia to subscribe for their share of the rights, which account for approximately 31.51 per cent of all shares offered.
The rights were offered at 63 cents per share, higher than Chip Eng Seng's market price of 62.5 cents on Monday.
The Business Times (BT) reported last month that some shareholders at Chip Eng Seng's extraordinary general meeting held to vote on the rights issue were unhappy as they felt the offer was not priced to attract full subscription, while the Tangs stood to receive a sub-underwriting fee of $1 million or 1.5 per cent of the gross proceeds from the underwritten rights shares.
The structure also allowed the Tangs to raise their stake in Chip Eng Seng beyond 30 per cent without triggering a mandatory general offer.
BT also reported last month that the Securities Industries Council, which administers Singapore's takeover code, was looking into the circumstances that saw the billionaire couple emerge as Chip Eng Seng's substantial shareholders in October last year. They spent $201 million in married deals with members of Chip Eng Seng's controlling Lim family that were done at $1.08 per share, a premium to the market price.
However, the Tangs chose not to buy out the Lim family's entire stake, instead buying enough to take their stake to 29.73 per cent. By keeping their ownership below 30 per cent, they avoided having to buy out Chip Eng Seng's minority shareholders at the same price that the insiders were bought out, said BT.
Gordon and Celine Tang reside in Singapore, and are reportedly close to the Bush family and Thailand's former prime minister Yingluck Shinawatra.
The couple are also controlling shareholders of Singapore-listed property developer SingHaiyi Group, of which Mrs Tang is managing director. Neil Bush, the brother of Jeb and former US president George W. Bush, chairs SingHaiyi.
The Tangs also own stakes in Singapore-listed Suntec Reit, ARA US Hospitality Trust, Eagle Hospitality Trust, Cromwell European Reit, OUE Commercial Reit and OKH Global.
Chip Eng Seng said the bulk of the $96.3 million in net proceeds from the rights issue will be used for its property development business here and overseas.
Separately on Monday evening, the company announced a a 70-30 joint venture with partner Tropical Developments to acquire a lagoon in the Maldives. Chip Eng Seng will make an initial capital contribution of US$7 million to the joint venture, and intends to develop the lagoon into a five-star resort.
Tropical Developments is incorporated in Singapore and affiliated to the current lessee of the lagoon. It is also an affiliate of Amin Construction, which was the main developer and contractor for Chip Eng Seng's first hospitality project in the Maldives.