Keppel to continue arbitration as SPH files to terminate bid

Keppel Corp said yesterday morning that it will continue with its arbitration proceedings against Singapore Press Holdings, after SPH filed notice to terminate Keppel's takeover offer and let its shareholders vote on a rival bid from Cuscaden Peak.

On the same morning, Cuscaden said any action that delays the vote on its bid would go against the interest of SPH shareholders.

Keppel said in its filing with the Singapore Exchange yesterday that it had received a termination notice from SPH after it filed notice to start arbitration proceedings against SPH.

The termination notice stated, among other things, that the Securities Industry Council (SIC) - the regulator for takeovers and mergers - had no objections to SPH's exercise of its right to terminate the implementation agreement with Keppel, and that not all the conditions of the Keppel scheme had been satisfied on or before the Feb 2 cut-off date.

Earlier in December last year, the SIC had thrown out a clause in Keppel's offer that restricted SPH from holding a scheme meeting to vote on a rival offer within eight weeks from the Keppel scheme meeting. Mr Christopher Lim, group executive director of Hotel Properties (HPL) and spokesman for Cuscaden, said in a statement yesterday: "With the latest SIC ruling, SPH and Cuscaden can move forward expeditiously to table the Cuscaden offer for SPH shareholders to vote."

But Keppel's unit for the takeover bid, Keppel Pegasus, said SPH should not have consulted with SIC on the termination, "given the prevailing circumstances where the Keppel scheme should have been put to shareholders of SPH for their consideration".

Keppel also said the SIC ruling does not affect Keppel Pegasus' rights under the Keppel implementation agreement, which sets out the terms and conditions for how the offer for SPH, which has shed its media business, would be carried out.

It said it would continue with the arbitration proceedings to enforce its rights and seek various reliefs against SPH, including specific performance of SPH's obligations.

Mr Lim said in his statement: "Any attempt to delay the Cuscaden scheme process goes against the interest of SPH shareholders and deprives them of the opportunity to vote in favour of the Cuscaden scheme and receiving value in their investments promptly. We are aligned with SPH shareholders' interests and will continue to work closely with SPH to ensure that our offer can be tabled to SPH shareholders as soon as possible."

In its filing on Wednesday, SPH noted that the implied value of Cuscaden's offer is superior to that of Keppel's.

Cuscaden - a consortium backed by HPL, billionaire businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree - had raised its offer for SPH to $2.40 a share, comprising $1.602 cash and 0.782 of an SPH Reit unit . This was after Keppel made a final offer of $2.351 per share, consisting of $0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit.

As at Wednesday, the implied valuation of Cuscaden's offer is $2.36 for an all-cash consideration and $2.361 for a combination of cash and SPH Reit units. This is higher than the implied valuation of the Keppel offer at $2.318. SPH's price was $2.33 on Wednesday.

"The Cuscaden scheme, which offers the optionality of an all-cash consideration or a cash and units consideration, provides an opportunity for SPH shareholders to crystallise their investment in SPH at superior value," Mr Lim said. "We have been steadfast in our commitment to deliver a compelling offer to SPH shareholders and our implementation agreement with SPH remains in full force."

Shares of SPH were unchanged at $2.33 yesterday, while Keppel closed one cent down at $6.03.