The takeover bungle that has put Osim International under investor scrutiny took a turn towards resolution yesterday after chief executive Ron Sim decided to compensate shareholders who sold their stock below the latest offer price.
This could involve Mr Sim forking out about $150,000, a move welcomed by market watchers and shareholders alike.
The announcement was made yesterday morning in a filing to the Singapore Exchange (SGX) by Vision Three, the investment vehicle Mr Sim is using to buy out Osim.
"(Vision Three) will make a payment on a goodwill basis to all shareholders who sold their shares on the SGX Securities Trading on April 5 at a transacted sale price below $1.39," the statement noted.
"The additional payment will be made to all affected shareholders, regardless of whether they sold their shares to (Vision Three) or to third parties."
(Vision Three) will make a payment on a goodwill basis to all shareholders who sold their shares on the SGX Securities Trading on April 5 at a transacted sale price below $1.39. The additional payment will be made to all affected shareholders, regardless of whether they sold their shares to (Vision Three) or to third parties.
VISION THREE, Mr Ron Sim's investment vehicle that is involved in the takeover bid, in a filing to the Singapore Exchange
Mr Sim launched a bid late last month to take Osim private with an initial offer of $1.32 per share that was later raised to $1.37.
It was revealed last week that on April 5 a number of Osim shares were "inadvertently" purchased at prices ranging from $1.38 to $1.39, which were higher than the final offer of $1.37 then.
Vision Three later raised the final offer to $1.39 at the behest of the Securities Industry Council (SIC). This was to ensure equality of treatment, one of the key principles underpinning the takeover codes.
The compensation will cover the difference between $1.39 and all the transacted sale prices below that level. So a person who sold his 10,000 Osim shares at $1.375 on April 5 will receive a payment of $150.
Bloomberg data showed that 18,109,100 shares were sold at prices as low as $1.365 on the day, and the entire traded volume eligible for the compensation was $152,480.50.
The payment will be made via the Central Depository, with shareholders to be notified. No timeline was provided.
Yesterday's announcement will likely conclude an incident that drew scrutiny from the investor community, with many such as the Securities Investors Association Singapore (Sias) president David Gerald calling for Mr Sim to compensate.
"The quick response, and the fact that Mr Sim acceded to the community's request fully, is perhaps a bit of a surprise to many of us, but we are very pleased that minority shareholders will not lose out," Mr Gerald told The Straits Times.
"We also hope that such an error will not happen again. But to be fair, this is a very rare incident - in fact, this is the first time for me in my 16 years at Sias."
Shareholder and activist investor Mano Sabnani was also pleased. "It's a very good gesture, especially if Mr Sim's decision was not forced by the SIC. Anyway, an error was committed and they are correcting it. All's fair and good," he said.
Meanwhile, it remains unclear how the error happened and which party was responsible.
Credit Suisse, which manages the takeover deal and issues all the SGX statements on behalf of Vision Three, declined to comment.
But Gibson Dunn partner Robson Lee said it will be unusual if Credit Suisse did not have oversight on the process.
"In a takeover, when you have a financial adviser managing the entire exercise, any share purchase will certainly be coordinated. That's how we get daily updates on share purchases," he said.
At the last update on the takeover, Vision Three has acquired 74.77 per cent of Osim's issued shares.
Offeree circulars had been sent out by April 15, and the offer will close on April 29, at 5.30pm.
Osim shares closed up half a cent, or 0.36 per cent, at $1.395 yesterday following the compensation announcement.