The Lee family that controls 800 Super Holdings has made a voluntary conditional offer for the Catalist-listed rubbish collection firm in a bid to delist it.
The Lees are offering 90 cents in cash for each 800 Super share, a deal that values the company at $161 million. They do not intend to increase the offer price, 800 Super announced in a regulatory filing yesterday before the market opened.
The offer price represents a premium of 16.1 per cent to the company's last traded price of 77.5 cents on April 26, the last full day on which they were transacted. 800 Super had called for a trading halt last Monday morning after its shares rose 4.52 per cent in early trading. They had surged 10.71 per cent in the previous trading session on April 26.
The offer price is also a 17.6 per cent premium to 800 Super's weighted average price per share over the past 12 months. The shares closed eight cents or 9.88 per cent higher at 89 cents after trading resumed yesterday.
The Lee family controls about 77.6 per cent of the company. Their offer is conditional upon receiving not less than 90 per cent of the total number of issued shares as at the close of the offer.
800 Super executive chairman Lee Koh Yong said: "Privatising will enable 800 Super to save on expenses relating to the maintenance of a listed status and allow the company to focus its resources on operational matters amid the competitive business landscape.
"The offer represents an opportunity for shareholders to realise their entire investment at a premium to historical trading prices. It also provides shareholders with a means for a clean cash exit that would otherwise not be available given the low trading liquidity of the shares."
The Lee family is tapping private equity firm KKR to finance the offer. KKR will provide a combination of debt and structured equity financing from pools of capital, including KKR's Private Credit Opportunities II fund and proprietary investment vehicles. If the offer becomes unconditional, the offeror will issue fixed rate bonds due 2023 and about 22.2 million convertible preference shares that KKR's funds will subscribe to. A share charge has been entered into between the offeror and KKR in connection with the funding arrangements.
800 Super co-founder and chief executive Lee Cheng Chye said KKR's financing solution will enable the family to retain ownership.
An offer document will be sent to shareholders within the next three weeks. RHB Securities Singapore is the financial adviser to the offeror.
Mr Richard Leow, a former analyst who covered the stock for more than four years, said: "The privatisation makes sense on two fronts. The company has not raised any new capital from the equity market since its listing in July 2011, yet had associated expenses to remain listed.
"Timing is opportune, with the depressed share price. The current profitability is muted during the ramp-up phase of its projects, but it has actually bottomed, and financial year 2020 (end-June) should be a good year for the company."
800 Super owns an integrated facility in Tuas South that includes a biomass energy plant, a sludge treatment plant and an industrial laundry. This is an "exciting" business where the by-product from one process is used in the next, Mr Leow said.