SINGAPORE (THE BUSINESS TIMES) - Shares of commodities trading group SP Corp soared after news of a privatisation offer from property developer Tuan Sing Holdings.
In a joint announcement issued on the Singapore bourse on Saturday (Aug 20), Tuan Sing proposed to acquire and privatise SP Corp via a scheme of arrangement, with an offer of $1.59 in cash for each scheme share.
SP Corp shares last traded at 59 cents on Aug 18 before the announcement. The scheme consideration is equivalent to SP Corp’s book value per share as at June 30, 2022.
On Monday, the shares jumped 97 cents, or 164.4 per cent, to close at $1.56 with 451,100 shares traded.
Tuan Sing’s shares rose one cent, or 2.7 per cent, to 37.5 cents.
Tuan Sing currently holds about 80.2 per cent of SP Corp’s total issued share capital, or about 28.1 million shares.
SP Corp is engaged in the trading of coal, rubber and metals, as well as other commodities and products used in the energy, metal and automotive industries in Asia.
Tuan Sing will be funding the acquisition using internal cash resources.
Given that SP Corp has not carried out any fund-raising exercise on the Singapore Exchange (SGX) in recent years and is unlikely to require access to the Singapore capital markets for funds, there is no need to maintain its listing status on the SGX, the parties said.
The acquisition will also allow Tuan Sing to reduce the duplication of compliance and associated costs in maintaining the listing status of both companies. Delisting SP Corp will help Tuan Sing save on costs associated with complying with listing and other regulatory requirements, as well as the human resources needed for such compliance, they said.
Tuan Sing also believes that the proposed privatisation will allow its company's and SP Corp's management to consolidate and optimise the use of their capital and management resources.
The companies said the scheme is an opportunity for shareholders to exit their entire investments without incurring brokerage and other trading costs, which may otherwise be difficult due to low trading liquidity.
For a scheme proposal to be approved, the Companies Act provides that a majority of shareholders representing at least three-fourths in value of the shares held by shareholders present and voting at a scheme meeting, either in person or by proxy, must vote in favour of it.
UOB is financial adviser to Tuan Sing, while Ernst & Young Corporate Finance has been appointed independent financial adviser to SP Corp directors considered to be independent for the purpose of the scheme, so that they can make a recommendation to scheme shareholders.
• With additional information from The Straits Times