INVESTORS who refused to sell their stock when retailer C.K. Tang delisted two years ago now have a far better offer to tempt them to part with their shares.
Often such minority shareholders of delisted firms are left with stock they cannot unload for love nor money, while being unable to share in the spoils of a firm’s profits.
But C.K. Tang, famed for its Orchard Road department store Tangs, will pay the 470 or so investors $1.30 per share – 56.6 per cent up on the 2009 exit offer of 83 cents.
Those investors hold about 1.8 per cent or 4.38 million shares, so the buyout will cost the firm about $5.69 million.
C.K. Tang said it initiated the move because some shareholders who missed the deadline for the 2009 buyout have come knocking on its door to sell their shares.
And as there are still stockholders, the firm must maintain the shareholder registry and hold annual general meetings.
Chief executive Foo Tiang Sooi said: ‘(We) try to reduce this administrative burden of ours so we can focus on our retail business.’
C.K. Tang’s new offer will be via a selective capital reduction exercise. This involves using company funds to pay for the shares, which will then be cancelled. This will lower the firm’s capital base.
The measure will go ahead if 75 per cent of the minority shareholdings represented at an extraordinary general meeting on Sept 15 vote in favour.
Even dissenting investors will then have their shares cancelled and the value paid out.
This exercise is technically different from the original delisting offer. Then, an investment vehicle run by majority shareholders Tang Wee Sung and younger brother Tang Wee Kit offered cash direct to minority investors for their stock.
After the August 2009 delisting, the controlling shareholders held about 97.8 per cent of C.K. Tang.
Some of the remaining small investors later sold their shares, giving the Tang brothers 98.2 per cent of the firm.
The new offer of $1.30 a share looks generous.
As of March 31, C.K. Tang’s net asset value per share was $1.02, up on the 93 cents two years ago, thanks to its performance and changes to its property’s valuation.
Its financial adviser, PricewaterhouseCoopers, has given the shares a fair market value of $1.13, and the $1.30 offer is 15 per cent above that.
‘With the exercise, the minority shareholders will have an opportunity to realise the value of their shares at an attractive premium,’ said Mr Foo.
He said the $1.30 deal is so much higher than the delisting price because market conditions affect how offers are determined at any given point.
‘You’ll have people accepting, you’ll have people not accepting. At that point in time, whoever accepted it agreed to the price. Those who did not, did not, for whatever reason,’ he added.
‘So, at this point in time, all we do is to put what we believe to be our best foot forward. It’s a win-win situation for everybody. As far as we are concerned, there is no hidden agenda.’
C.K. Tang has confirmed that there are no plans to redevelop the Orchard Road property in the foreseeable future.
At the delisting, some shareholders had been worried that the firm could cash in by redeveloping the prime real estate after buying them out.
jonkwok@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd.
Singapore Real Estate Highlights 
Posted on August 19, 2011
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