Offer of 46¢ a share to take Rotary Engineering private

Rotary chairman Roger Chia's name is associated with Jurong Island and oil storage.
Rotary chairman Roger Chia's name is associated with Jurong Island and oil storage.

Rotary Engineering's controlling shareholder, the Chia family group, and an investment arm of the Oman government have made a cash bid to take the mainboard-listed company private.

The takeover vehicle Orochem is offering 46 cents per share.

Orochem is 64.7 per cent owned by members of the Chia family and 35.3 per cent held by Oman Investment Fund. It currently holds 60.63 per cent of Rotary shares.

It has given irrevocable undertakings to accept the offer, the mainboard-listed firm announced in a pre-market filing yesterday.

With such a large chunk of the shares to be tendered in favour of the offer, this raises the chance that the privatisation will go through.

The offer price represents a premium of about 21 per cent over the stock's last full-day traded price of 38 cents and a premium of 25 per cent over the volume-weighted average price of 36.8 cents for the three months leading up to the stock's trading halt on Sept 29.

Rotary said Orochem does not intend to revise the offer price.

The shares jumped 8.5 per cent to 44.5 cents yesterday before closing 9.8 per cent or four cents higher at 45 cents.

The Chia family group includes Rotary chairman Roger Chia Kim Piow, his brother and executive director Chia Kim Chua, and his spouse and non-executive director Jenny Wong. The Chia family group, together with investment vehicle REL Investments, owns about 39.25 per cent of Rotary shares.

Oman Investment Fund, which is part of the investment arm of the Omani Ministry of Finance, holds another 21.38 per cent of Rotary shares.

Rotary said the offer will close at least 14 days after the offer documents have been dispatched. An independent financial adviser to the independent directors will need to be appointed to give a recommendation on the offer.

Orochem says the offer is a chance for shareholders to realise their investments in Rotary at a premium over historical prices.

Trading volume has been relatively low. Orochem said that an average of 329,500 shares have been traded per day this year, or only 0.06 per cent of the total stock.

The delisting will allow management "greater operational flexibility to manage the business of the company, optimise the use of its management and capital resources, and facilitate the implementation of any operational change", the statement said.

Orochem added that Rotary has not raised cash on the Singapore Exchange since 2007 and is unlikely to need access to the capital markets to finance its operations in the forseeable future.

Rotary recently completed a multimillion-dollar project on Jurong Island that included the construction of a tank farm with 19 tanks for clean petroleum products storage and pump stations.

Mention chairman Mr Chia's name and people will tend to associate him with Jurong Island and oil storage.

Over the years, Rotary has grown as the petrochemical industry centred on Jurong Island expanded. Rotary has also expanded overseas.

A version of this article appeared in the print edition of The Straits Times on October 03, 2017, with the headline 'Offer of 46¢ a share to take Rotary Engineering private'. Print Edition | Subscribe