Published November 20, 2008

More companies may privatise in gloomy market

By LYNETTE KHOO

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(SINGAPORE) There could be more companies taking the road to privatisation given the poor value ascribed to them by continued market battering.

King's Safetywear is being delisted today and Courts Singapore will soon be taken off the trading board as the curtains draw down on their takeover offers.

Industry players say there is a pipeline of companies looking to delist and buyers looking to privatise listed companies.

Some privatisations could be due to consolidation in certain sectors as margins are shaved.

'There will be some who will be privatised simply because their trading prices are at such low levels that it only makes sense, especially for majority shareholders who have been thinking about this for a long time,' said Stamford Law director Ng Joo Khin.

'If this irrational market condition continues, there will be more people who will be more than willing to cash out,' he added.

King's, which manufactures and markets industrial safety footwear, received an exit offer from Safe Step Group Ltd (SSGL) at 43.8 cents in cash for each share in September.

Its shares were suspended after the takeover offer closed on Tuesday. Safe Step's stakeholdings, including valid acceptances, reached 98.95 per cent, triggering a mandatory takeover for the remaining shares it did not already own.

The offer price represented a 12.31 per cent premium over King's last traded price of 39 cents before the announcement.

Also in September, Courts Singapore received a takeover offer from Singapore Retail Group (SRG), which had raised its stake in Courts to 90.03 per cent, at 55 cents per share. By yesterday, SRG had received valid acceptances of 8.52 per cent, bringing its stakeholdings to 98.55 per cent. But SRG is extending the closing of its offer from yesterday to tomorrow as its stakeholding is still short of the 99 per cent threshold to exercise mandatory takeover of the remaining shares.

Another company heading for privatisation is Colex Holdings, whose financial woes led to a scheme of arrangement with majority shareholder Bonvests Holdings. The SGX-listed investment holding firm, which holds 77.36 per cent of Colex, offered to pay 14 cents for each target share.

Bargains have emerged from the indiscriminate market sell-offs and privatisation becomes 'a very distinct possibility', observed Himanshu Shah, president and chief investment officer of US-based fund Shah Capital Management. More companies may go private if the market continues to head down.

Besides privatisation, some companies may also exercise share buybacks to lend support to their share prices. These shares could be kept as treasury shares to be offered to investors at a certain price or to employees as share options, Mr Ng said.

Meanwhile, the takeover offer by Star Publications (Malaysia) for Cityneon will close today. By Tuesday, Star's stakeholding in Cityneon, including valid acceptances, was 98.12 per cent.

Cityneon shares have been suspended after the public float fell below the 10 per cent threshold. But it is not the intention of the offeror to delist the company and it will take necessary measures to maintain Cityneon's listing, said ANZ Singapore director Loy Chia. ANZ is the adviser for the deal.

Yellow Pages (Singapore), which dropped out of the bidding war for Cityneon after Star raised its bid from 58 cents to 61 cents, sold its 39.24 per cent stake to Star.