Roxy-Pacific CEO looks to privatise company at 48.5 cents a share

Property developer Roxy-Pacific Holdings has received a pre-conditional voluntary general offer from TKL & Family for all the issued ordinary shares in the company.

The offeror is the bid vehicle of a consortium formed by 11 individuals, including the chairman and chief executive of Roxy-Pacific, Mr Teo Hong Lim.

The privatisation will allow shareholders to realise their investment at an attractive price and compelling premium amid low trading liquidity, as well as exit their investment as the company is facing a challenging macro and operating environment driven by the Covid-19 pandemic, Roxy-Pacific said yesterday.

At 48.5 cents per share, the offer price represents a premium of 19.8 per cent over the stock's closing price on Sept 14 - the last full trading day prior to the announcement.

The offer price, which Roxy-Pacific said is final, also exceeds all previous closing prices of the company's shares in the three-year period up to and including the last trading date.

The company's shares jumped yesterday, after the offer announcement, with the stock closing at 47 cents, up 6.5 cents, or 16 per cent.

Roxy-Pacific said construction of its development projects continued to face prolonged challenges amid the pandemic, due to global supply chain disruption and a labour crunch, which also led to rising material and labour costs as well as higher tender prices for new projects.

The company may face increasing risks of delays in project completion and potential penalties from late delivery, exacerbated by the increasing risk of default by construction contractors.

The pandemic has also hindered Roxy-Pacific's hotel operations amid lockdowns worldwide and tighter border controls.

The company also said it is unlikely to require access to Singapore equity capital markets to finance its operations as it has other available funding sources such as bank borrowing facilities. It has not carried out any exercise to raise equity capital on the Singapore Exchange since its listing on the mainboard in March 2008.

Roxy-Pacific said the offeror expects that privatising the company will provide it with more flexibility to manage the business of the company and optimise its management and resources during this time of economic uncertainty.

The offeror also intends to continue the existing activities of the company and has no intention to introduce any major changes to the business, redeploy its fixed assets or discontinue employees other than in the ordinary course of business.

It has secured irrevocable undertaking for 76.4 per cent of the shares, from Kian Lam Investment and Sen Lee Development, as well as from all of the consortium members except for the estate of Lin Chu Liat.

The consortium members have agreed to subscribe for new shares in the offeror after the close of the offer, set off against the obligations to pay Kian Lam Investment, Sen Lee Development and the consortium members for their shares tendered in acceptance of the offer.

After the offer, Mr Teo will hold 37.2 per cent of the shares in the offeror. He previously held 11.9 per cent of shares in Roxy-Pacific.

The offeror intends to delist the company once it and its concert parties own or control more than 90 per cent of the shares, as the company will no longer be able to comply with the free float requirement.

THE BUSINESS TIMES