Vard maintains valuation error by CIMB 'immaterial', no confusion on its delisting vote

File photo showing a VARD shipyard in Akura, Norway.
File photo showing a VARD shipyard in Akura, Norway.PHOTO: VARD HOLDINGS

SINGAPORE - Vard Holdings said on Friday (May 11) that an error in its independent financial adviser's (IFA) report would not have changed the adviser's opinion, and that there should have been no confusion at its recent shareholders' meeting about whether a delisting vote was taking place.

Vard issued its announcement in response to a Business Times article that reported on the shareholders' meeting, in which some shareholders had voiced concerns about whether the meeting and the vote were properly carried out. On Thursday, the Singapore Exchage (SGX) ordered Vard to hold a new extraordinary general meeting (EGM) to re-vote on the delisting proposal, citing the inaccuracy in the IFA's report.

The shipbuilding and repairing company said on Friday that the calculation error by CIMB Bank in the valuation multiples of the comparable companies table (such as Sembcorp Marine's historical price to net asset value multiple) "does not have a material impact" on CIMB's overall assessment, and that CIMB had maintained its opinion that the exit offer price was not fair but reasonable.

This is because even with a correction, the P/NAV multiple implied in the exit offer price continued to be well within the range of P/NAV multiples of the comparable companies. Given CIMB's confirmation that there was no change in the overall independent financial adviser (IFA) opinion, the independent directors thus confirmed during the EGM that there was no change to the independent directors' recommendation to the shareholders.

Vard also explained the IFA's conclusion that an offer is "not fair but reasonable", which bewildered some shareholders, saying that the two are "two different concepts".

"An offer is 'fair' if the price offered is equal to or greater than the value of the offeree securities, while in determining whether an offer is 'reasonable', the IFA should consider other matters as well as the value of the offeree securities. Such matters include, but are not limited to, the existing voting rights held by the offeror in the offeree and the market liquidity of the offeree securities."

It added that: "Where an IFA concludes that an offer is 'not fair but reasonable', it is on the basis that the IFA is of the view that despite the offer being 'not fair', the offer is 'reasonable' after taking into consideration other matters as well as the value of the offeree securities."

Regarding the confusion over whether the test resolution, the vote for adjournment and the vote for the delisting resolution was being carried out, the company maintained that it "does not believe there is any confusion that the delisting resolution was put to a vote".

It described in detail the chronology of events to substantiate this point, including the fact that "the board believes that it had meaningfully responded to relevant queries and prior to the poll, there was no indication that there was any new relevant question".

"The (Business Times) article mentioned that there are allegations of the poll being improperly conducted. This is inaccurate from the company's perspective," it added, saying that the chairman of the meeting, Roy Reite, had waited for most people to be back in the hall before he announced that the adjournment would not be voted on because the error in the IFA Letter was not material and due to systems limitation.

A test vote was then carried out and it was explained that the test vote is not in relation to the adjournment of the meeting. "Certain shareholders had queries and it was clarified that this was a test only," it said.

"The chairman proceeded to explain that the shareholders would now vote on the delisting resolution. The chairman was interrupted by demands for explanations as to why an adjournment would not be voted on. The chairman reiterated his earlier explanation and stated that he will not take any further questions on this issue...

"The chairman repeated the instructions for polling as a number of shareholders repeatedly attempted to disrupt and shout down the polling."

When the poll results were announced, some shareholders demanded for a re-poll as they had not voted. However, Mr Reite had already announced that the delisting resolution was carried and the EGM closed.

"In addition, shareholders had started leaving the EGM venue. A re-poll was therefore not appropriate or possible," the company said.