The shares of S i2i jumped yesterday after investor Blue Ocean Capital Partners called on the company's chairman to buy shareholders out at $3.77 apiece.
The stock surged 13 cents or 5.78 per cent to $2.38.
Mainboard-listed S i2i, a loss-making distributor of mobile prepaid cards for telcos in Indonesia, was placed on the watch-list of the Singapore Exchange in March 2015.
The company must bring its six-month average market cap above $40 million by March 3 next year, or face suspension and a possible delisting.
But time is not on S i2i's side, with its management failing to provide a "clear and cogent plan" to exit the watch-list after two years, Blue Ocean wrote in a Feb 21 letter to the S i2i board.
Blue Ocean executive director Daniel Lin told The Straits Times: "They actually have a lot less time than they think... Even if the company comes out and says it has found new opportunities, the reality of the market today is that it takes time, about 12 months to inject a new asset in."
While S i2i's market cap touched $32.6 million yesterday, it needs to trade around $2.92 a share for an extended period to reach $40 million.
Blue Ocean, in its letter, invited Dr Bhupendra Kumar Modi, S i2i's founder and chairman, to make a general offer for the company at $3.77 a share, which is S i2i's net tangible asset value.
Dr Modi, an Indian telecom tycoon turned Singapore citizen, owns 32.27 per cent of S i2i. The self-styled "technology futureprenuer" ranked 38th on Forbes magazine's list of Singapore's 50 Richest in 2016, with an estimated net worth of $645 million.
If Dr Modi demurs, Blue Ocean is proposing that its chairman, Mr Loo Cheng Guan, and Mr Lin be appointed directors in place of S i2i's four existing directors in order to spearhead an orderly winding-up of the company.
S i2i non-independent non-executive director Ashok Kumar Goyal told ST yesterday that the contents of the letter had been noted.
But S i2i shares have drifted steadily upwards since Dr Modi rejoined the board in September 2015, he said, adding: "Blue Ocean Capital Partners may be connected to the shareholders of a company called Globalroam Group, which owes approximately $3.88 million plus interest accumulated thereon to the company and it may be an act of prejudice against the company from their side to send this letter."
Last month, S i2i filed an originating summons against Globalroam in the Singapore High Court, in relation to the loan. On its website, Globalroam names an Andy Lim as a director. This is Mr Lin's father.
Blue Ocean holds less than 5 per cent of S i2i, but Mr Lin said he had made contact with other shareholders who gave Blue Ocean a "verbal go-ahead" to take action.
Outside of the Modi family, the Lee Foundation is S i2i's only other substantial shareholder, owning 12.95 per cent.
S i2i made a net profit of $1.89 million last year, up 97 per cent from a year earlier, as aggressive cost-cutting offset falling revenues.