SINGAPORE (THE BUSINESS TIMES) - BreadTalk Group founder George Quek, his wife Katherine Lee and a substantial shareholder on Tuesday (Feb 25) announced a voluntary conditional cash offer to acquire all issued ordinary shares in BreadTalk at $0.77 apiece, with the aim of delisting the food and beverage player.

This also comes as BreadTalk sank into the red for its fiscal fourth quarter and 2019, according to its financial statements released late on Monday night.

The offeror is BTG Holding Company, a special purpose vehicle owned by Dr Quek, who is BreadTalk's founder and chairman; Ms Lee, who is BreadTalk's deputy chairman and executive director; as well as Minor International, a Thai-listed hospitality and leisure company.

The offer price of $0.77 per share represents a premium of about 19.4 per cent over the closing price of $0.645 on Feb 21, and a 30.1 per cent premium over the one-month volume weighted average price.

In a regulatory filing, BreadTalk said the offer is an attractive opportunity for shareholders to exit their investment in the shares at a premium without incurring brokerage and other trading costs.

The offeror believes that privatising BreadTalk will give the company more flexibility to address challenges it is facing, manage the business and optimise the use of BreadTalk's management and resources.

If delisted from the Singapore Exchange (SGX), BreadTalk will also be able to save on expenses and costs relating to the maintenance of a listed status and channel these resources to its business operations.

Furthermore, the company has not carried out any exercise to raise equity capital on the SGX in the last 10 years. It is unlikely to require access to Singapore equity capital markets to finance its operations in the foreseeable future, seeing as it has other available funding sources such as bank borrowings, BreadTalk said.

The offer is conditional on the offeror receiving valid acceptances which will result in the offeror and concert parties holding more than 90 per cent of the total number of shares in issue as at the offer's close.

Each of Dr Quek, Ms Lee, Square Investment (an investment vehicle jointly owned by Dr Quek and Ms Lee) and Primacy Investment (a subsidiary of Minor International) has given an irrevocable undertaking to tender all the shares they hold in acceptance of the offer. They will also reinvest the consideration due to them to subscribe for new shares in the offeror.

As at Feb 24, these undertaking shareholders collectively own about 397.1 million shares, or about 70.53 per cent of BreadTalk.

Before the offer was announced, BreadTalk on Monday night reported a net loss of $8.1 million for the three months ended Dec 31, 2019, versus a net profit of $8.9 million a year ago.

This translated to a loss per share of 1.44 cents for Q4, compared with an earnings per share of 1.58 cents in the year-ago period.

Revenue rose 10.1 per cent to $170.4 million for the quarter, from $154.8 million.

For the full year, the group posted a net loss of $5.2 million, versus a net profit of $15.2 million a year ago.

This was mainly attributable to $6.1 million in one-off fixed-assets impairment due to premature outlet closures, inventory obsolescence, and franchise income doubtful debt provisions.

Also dragging BreadTalk's FY2019 performance were the widening losses at the bakery business in China and Thailand, widening losses across several brands such as Wu Pao Chun and Song Fa due to "challenging operating environments", and a "significant deterioration" in the financial performance of the Hong Kong bakery and food atrium businesses due to the social unrest in that region, the company said.

Looking ahead, BreadTalk noted that the operating environment faced by the group remains challenging across key markets, including Singapore, China and Hong Kong.

The Covid-19 outbreak has added further challenges to the group's operations, and the uncertainty in Hong Kong will continue to have a negative impact to its business in the territory, BreadTalk said.