Singapore Paincare shares jump after Sias says privatisation offer price should be higher

SINGAPORE - Shares of Singapore Paincare Holdings rallied on June 5 following a recommendation from the Securities Investors Association (Singapore), or Sias, to the company’s shareholders over a privatisation offer.

The Catalist-listed counter was up 7 per cent, or 1.1 cents, to 16.8 cents at the midday trading break.

Minority shareholders of Singapore Paincare should wait for a report to be released by an appointed independent financial adviser (IFA) before selling their shares on the open market, said Sias on June 4.

Shareholders who do sell on the open market will not have recourse if the privatisation offer price is subsequently revised upwards, Sias added.

It also reminded shareholders that “for a delisting to take place, the IFA has to conclude that the offer is both fair and reasonable”.

Singapore Paincare, a local medical services company, has received a privatisation offer from Advance Bridge Healthcare at 16 cents a share, valuing the company at about $27 million. This was announced after the firm

requested a trading halt on May 27.

 

The offer represents a 27 per cent premium over its last traded price and 77.8 per cent above its share price in March 2024, when a potential deal was first announced. Singapore Paincare will be delisted from the Singapore Exchange’s Catalist board if the deal is successful. 

According to guidelines by Singapore Exchange Regulation, an offer is “fair” if the value of the offer price is greater than or equal to the value of the securities subject to the offer. Securities are tradeable financial assets such as shares in a company.

How “reasonable” an offer is depends on factors such as the concentration of pre-existing voting power in the securities of the issuer, the market liquidity of those securities and the likelihood of an alternative offer being made.

Sias noted that Singapore Paincare was listed at 22 cents per share in July 2020 during Covid-19, when valuations were depressed and when the Straits Times Index (STI) was trading at around 2,500.

Sias added that the company now wishes to delist at 16 cents per share when the STI is trading at around 3,900.

The company’s initial public offering (IPO) price of 22 cents was also a 123 per cent premium on the group’s unaudited net asset value per share of about 9.86 cents on Dec 31, Sias noted.

It added that the price offered under the scheme of arrangement is at a slight discount to the company’s audited net asset value per share of 16.6 cents as at June 30, 2024, while the unaudited net asset value stands at 16.3 cents per share as at Dec 31, 2024.

“If the same IPO premium was to be applied now, the privatisation price should be around 36 cents to 37 cents,” Sias said, noting that “well-managed healthcare companies generally trade at premiums to their net asset value”.

It added that the deal is conducted through a scheme of arrangement, which means the approval of the scheme has to be approved by more than 50 per cent of those present and voting at the scheme meeting, and by more than 75 per cent in value of the shares held by shareholders voting.

“Sias would like to remind all offerors to treat shareholders fairly... As such, they should therefore make offers that are fair and reasonable when subsequently delisting,” it said.