Published July 30, 2009

Investors' body hits out at Tangs' exit offer

CK Tang minority investors should have been offered a higher price, it says

By JAMIE LEE

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(SINGAPORE) The Securities Investors Association (Singapore), or SIAS, has hit out at the delisting proposal by the Tang brothers, saying that the exit offer has ignored the interests of minority shareholders.

SIAS's call: At a meeting with minority shareholders, Mr Gerald (right) said minority investors have been treated with no dignity and urged all shareholders to attend tomorrow's EGM and be 'one-minded' in opposing the delisting of CK Tang

The investor rights watchdog has requested a meeting with the board of directors before tomorrow's extraordinary general meeting (EGM), after attempts by a vocal minority shareholder, Alan Goei, late last week to meet the directors failed.

'This is a legitimate protest that must be taken into account,' said SIAS chief executive David Gerald at a meeting with some 15 shareholders yesterday.

'Minority shareholders have been treated with no dignity,' he said, while urging all shareholders to attend the EGM and be 'one-minded' in opposing the delisting.

Mr Goei presented a property valuation done by a professional valuer that prices the flagship store at $394 million, beating the earlier valuation of $340 million.

He declined to reveal the valuer's company as the valuation was done as personal favour and the valuer was from a rival firm of Jones Lang LaSalle, which did the valuation for CK Tang's board of directors.

The valuation was based on the property's existing use but assumes a monthly rental of $12.30 per square foot that is based on the rental charged at Isetan and Takashimaya, Mr Goei said.

Taking this rental rate would also assume that part of the department store is sub-leased to other tenants.

The current lease amount for the department store was not revealed in the valuation report requested by the directors.

The Tang brothers - Tang Wee Sung and Tang Wee Kit - have maintained that there are no plans to redevelop the property or to evolve from the department store concept as these are the wishes of their father, who founded the business.

But Mr Goei said that while he is running a private real estate business set up by his father, there should be a 'different treatment' from family-run companies that went public.

Based on Mr Goei's valuation report, Mr Gerald said that the exit price of 83 cents per share could have been higher and urged board members to reconsider the exit price.

The board showed poor corporate governance by not maximising shareholders' value in considering such rental ideas from the shareholders, he added.

Mr Goei told other shareholders yesterday that he had written to chief executive Foo Tiang Sooi last Friday for a meeting with the directors. He said he has not received a reply.

During the meeting, Mr Goei flashed some of the 104 photos he took of Orchard Road on Saturday night, reiterating that with the revamp of the shopping belt, CK Tang should command a higher value.

A group of shareholders - including Mr Goei - have also written to the Securities Industry Council through their lawyers to seek clarification on the delisting. Mr Goei declined to elaborate.

Meanwhile, acceptance level for the de-listing has reached 89.51 per cent. Once the Tang brothers hold control of 90 per cent of the shares, their third privatisation attempt would become a sure win.

One observer noted that if minority shareholders are still unhappy with the exit price, they can choose to hold on to the untraded shares and demand for a higher buyback price privately if the Tangs redevelop the property later and raise its net asset value.

CK Tang has declined comment. The board had earlier said that it would ask regulators if more information needs to be presented and is likely to address this, as well as the valuation report, tomorrow.