Published July 15, 2009

Is CK Tang value fully reflected?

Minority owner says it's not; independent directors say core business to stay

By JAMIE LEE

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The minority shareholder who spearheaded a bid to block the proposed delisting of CK Tang said yesterday that, following the proposal, he had mopped up more shares and tried to rally other shareholders to fight the privatisation move.

A question of value: Minority shareholder Mr Goei has initiated a petition to say property is undervalued

Alan Goei, a director of investment firm Goldhill Developments, told BT that he had bought more shares at 82-83 cents, raising his stake to about one per cent.

He said he then tried to contact other shareholders to oppose the proposed delisting. The move to take CK Tang private cannot go through if shareholders representing at least 10 per cent of the issued shares vote against it.

'I was trying to defer the delisting,' said Mr Goei, whose company was involved in the construction of United Square, or what was formerly known as Goldhill Square.

But he said the 'game is up' since the Tang brothers already own close to 90 per cent of the company.

Mr Goei, who spoke out during the meeting with Securities Investors Association (Singapore) (SIAS) on Monday and initiated a petition to the regulators claiming that the flagship store was undervalued, said the value of the property was not being fully reflected by the company.

This was in response to the latest announcement from CK Tang's independent directors, who said yesterday in a regulatory filing that the company has no plans to detract from its retail business.

This means that the building can be valued for its existing use without taking into account re-development potential.

The company reiterated that because the retail business was founded by the father of Tang Wee Sung and Tang Wee Kit, there is no intention to discontinue the retail operations in the Orchard Road premises, to sell or to re-develop the Orchard Road premises.

CK Tang will also keep its offer price of 83 cents a share, a company spokesman told BT. This was despite calls from minority shareholders to raise it to 93 cents or match the company's net tangible asset per share.

Mr Goei asked: 'Is the company presenting the full value of the property without considering the potential (of redevelopment)?' He added that the company may choose to re-develop the property after the delisting goes through.

SIAS president David Gerald said that he did not agree with the delisting.

'They (Tangs) need to convince shareholders that that there are bona fide reasons,' he told BT.

Mr Goei also questioned why the firm did not need access to the capital markets, despite having substantial borrowings.

Given the trend of property companies issuing rights shares to raise cash, CK Tang could also propose a rights issue to lower its borrowings, Mr Goei said.

CK Tang's secured group borrowings comprise $136 million of bank term loans as at March 31, 2009 - the same amount of loans held last year.

The company will hold an extraordinary general meeting on Friday to determine if the delisting proposal will go through.