LHN to get $32 million cash infusion if LHN Logistics offer goes through

SINGAPORE - Real estate management services provider LHN said a Shanghai-listed company’s offer to buy over its indirect 84.05 per cent stake in LHN Logistics at 22.66 cents per share aligns with

the group’s long-term goal of enhancing shareholder value.

If the deal goes through, the transaction is expected to generate $32 million in cash proceeds for LHN. That would be equivalent to 23 per cent of LHN’s market capitalisation on June 1, it noted in a bourse filing on Friday.

Both LHN and LHN Logistics are listed on the Catalist board. LHN had spun off LHN Logistics – its logistics and transportation arm – in 2022, then said to “unlock shareholders’ value”.

In its latest statement, LHN executive chairman Kelvin Lim said: “The company and the board view the offer (if and when made)... as being in the best interest of the company and shareholders as a whole.

“We firmly believe that this transaction is the most strategic and prudent path forward, as it will enable us to channel resources to our other core business segments.”

LHN then stated three reasons why the proposed transaction is beneficial to shareholders.

One, LHN Logistics has been seeing low trading volumes since its 2022 initial public offering (IPO).

“The premium offered over the prevailing market prices in the transaction would enable LHN to immediately realise its entire investment, resulting in an estimated net gain of approximately $21 million from the disposal of its LHN Logistics shares,” it said.

Also, early investors and shareholders who participated in LHN Logistics’ IPO on April 29, 2022, at the price of 20 cents per share will be able to get a return of over 13 per cent with a holding period of slightly more than a year, it pointed out.

Lastly, the $32 million cash infusion can be channelled towards general working capital purposes, LHN added.

In an earlier announcement on June 4, LHN Logistics named the potential offeror – Milkyway Chemical, a chemical supply chain service provider in China.

It also said the offer price represents a 34.9 per cent premium over the closing price of 16.8 cents per LHN Logistics share as at close of trading on June 1. Seen against the counter’s six-month volume-weighted average price ending June 1, the offer is at a 44.5 per cent premium.

LHN shares closed flat at 35 cents on Friday, while shares of LHN Logistics ended unchanged at 21.5 cents, before the filing.

THE BUSINESS TIMES