Roxy-Pacific CEO offers to privatise company at 48.5 cents per share

After the offer, Mr Teo Hong Lim will hold 37.2 per cent of the shares in the offeror. PHOTO: ROXY-PACIFIC HOLDINGS

SINGAPORE (THE BUSINESS TIMES) - Mainboard-listed 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 in a bourse filing on Monday (Sept 20).

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, 2021 - the last full trading day of the company prior to the announcement. It also represents a premium of 37 per cent over the 12-month volume weighted average price up to and including the last trading date.

The offer price also exceeds all previous closing prices of the company's shares in the three-year period up to and including the last trading date, and represents a 14.1 per cent premium over the three-year highest closing price of 42.5 cents.

The company's shares jumped on Monday, after the offer announcement, with the stock trading at 47 cents at midday, up 6.5 cents, or 16.1 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 hence 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 tightened border control measures, which the company expects will continue as business travel and retail tourism remain lacklustre amid the surge in Covid-19 cases due to the Delta variant.

The company also said it is unlikely to require access to Singapore equity capital markets to finance its operations as the company 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 (SGX) 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.

The offeror has secured irrevocable undertaking for 76.4 per cent of the shares, from Kian Lam Investment and Sen Lee Development - which hold 40 per cent and 11.2 per cent of the company's share capital, respectively - as well as from each of the consortium members except for the estate of Lin Chu Liat.

Each of the consortium members 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 which are 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 from SGX once it and its concert parties own or control more than 90 per cent of the shares, as the company is no longer able to comply with the free float requirement.

Roxy-Pacific noted that the offer price is final and the offeror does not intend to revise the offer price.

OCBC Bank is the sole financial adviser to the offeror in connection with the offer.

Shares of Roxy-Pacific last closed at 40.5 cents on Sept 14, before it called for a trading halt on Sept 15. Its shares resume trading on Monday.

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