Tue, Nov 16, 2021

A spokesperson from Keppel Corporation and Keppel Pegasus has called Keppel&rsquo s final offer &ldquo a compelling one and a win-win proposition&rdquo following Cuscaden&rsquo s raised offer for Singapore Press Holdings (SPH) on Nov 15. In a bourse filing on Nov 16, Keppel reiterated that its final consideration of $2.351 per share represents a 57% premium to SPH&rsquo s &ldquo undisturbed trading price&rdquo on March 30.

BOTH the scheme meetings in relation to the proposed privatisation of Singapore Press Holdings (SPH) should be held at the same time for shareholders to decide, said Cuscaden Peak on Tuesday (Nov 16).

 

The Cuscaden consortium - comprising Hotel Properties (HPL), its managing director Ong Beng Seng, as well as two Temasek-related entities CLA and Mapletree - is battling Keppel Corporation to acquire SPH, with both offerors seeking to do so via a scheme of arrangement.

 

According to the indicative timeline set out by SPH, the scheme meetings will take place sequentially. Shareholders will vote on Keppel' s scheme first, by Dec 8.

 

They would be allowed to vote on the Cuscaden scheme only if the Keppel scheme is voted down, and the indicative timeline has set the second scheme meeting for January next year.

 

" We want our meeting to be held at the same time as Keppel' s," said Christopher Lim, group executive director at HPL, during a media briefing on Tuesday. " In our view, that is the only fair and appropriate procedure - to put the two schemes together side by side, to be decided upon by shareholders at the same meeting at the same time, not 8 weeks later.

 

" We are actually disappointed that we are not able to hold our scheme meeting at the same time as Keppel," he said, adding that the consortium will explore all other options it can to change the situation.

 

On Monday (Nov 15), Cuscaden raised its offer for SPH by giving shareholders the option of either an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.

 

SPH has said that this consideration is a superior offer to Keppel Corp' s revised final offer - which is S$2.351 per share, consisting of S$0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit - made last week.

 

Lim added that Cuscaden has not declared its offer to be final, unlike Keppel. " Our offer is not subject to that restriction of not being capable of being revised upwards," he said. " I' m not saying that we will. But I' m just saying that is the position."

 

Even though the SPH directors are not recommending shareholders vote in favour of the Keppel offer, SPH must still hold a scheme meeting to get shareholders' votes on Keppel' s proposed scheme of arrangement in line with the implementation agreement signed.

 

Under the supplemental letter signed on Nov 9 as part of Keppel' s revised offer, it was indicated that the Keppel scheme meeting shall be held prior to any scheme meeting to be held in relation to any competing offer. SPH shall not take any action to hold an alternative scheme meeting within 8 weeks from the date of the Keppel scheme meeting, but this could be waived if shareholders do not approve of the Keppel scheme.

 

When asked on Monday whether the Keppel scheme meeting could be called off, SPH chief executive Ng Yat Chung said at a briefing that the ultimate decision would be for Keppel to take and that SPH has not received any indication that Keppel has decided otherwise.

 

" I apologise if it' s a bit inconvenient for shareholders&hellip we are where we are today, because at any one time, the company wants to put the best available offer on the table for the shareholders," he had said.

 

HPL' s Lim noted that this means shareholders who find the Cuscaden scheme more attractive cannot simply wait to vote on the scheme, as they would need to first turn down the Keppel scheme at the earlier meeting or the Cuscaden scheme would not have a chance.

 

" The bigger issue, to me, is that shareholders may not understand how things work because - don' t forget - there are about 60,000 shareholders for SPH, and they are all largely retail shareholders. Not all of them are able to comprehend such complicated schemes."

 

He said: " The 8 weeks restriction is something that Keppel and SPH has agreed to. It' s got nothing to do with takeover code. It' s got nothing to do with the stock exchange regulations. It is purely a commercial thing that has been agreed."

 

He added that Cuscaden is also " very well-prepared" to make submissions to the Singapore Exchange on its circular, but the Keppel Scheme meeting would need to take place first before the consortium would be allowed to do so.

 

When asked why Cuscaden did not make its offer earlier, Lim noted that there was no firm deadline indicated prior to Keppel' s revised offer. He added that theirs was a consortium of three large property companies, and the range of assets owned have synergistic value to SPH. He also emphasised that the value of their original S$2.10 all-cash offer was also not a small amount of money.

 

The difference in completion timeline between the two schemes is " very marginal" , Lim added. " We have already made all the submissions that are required to be made, and everything is at quite an advanced stage of approval."

SHARES of Singapore Press Holdings (SPH) SPH: T39 +1.72% jumped as much as 2.1 per cent on Tuesday (Nov 16), after offeror Cuscaden Peak raised its bid and Keppel Corporation Keppel Corp: BN4 0% maintained that its offer is final.

 

Keppel Corp and Keppel Reit Keppel Reit: K71U +1.72% also saw some lift in their prices following the latest developments, but SPH Reit declined as much as 1 per cent.

 

SPH, which publishes The Business Times, jumped as much as 2.1 per cent or S$0.05 to S$2.38 as at 9.48 am. The counter later closed 1.7 per cent or S$0.04 higher at S$2.37 on Tuesday, with 22 million shares changing hands. 

 

SPH Reit SPHREIT: SK6U 0% reached a high of S$1.03 shortly after the market opened on Tuesday, up 1 per cent or S$0.01. It later lost some ground to reach a low of S$1.01 by the midday trading break. It later lost some ground to reach a low of S$1.01 by the midday trading break, before closing flat   at S$1.02 on the day. 

 

SPH, along with SPH Reit, resumed trading on Tuesday after calling for a trading halt on Monday.

 

Keppel Corp hit a high of S$5.34 as at 9.56 am, gaining 0.6 per cent or S$0.03, before closing flat at S$5.31 on Tuesday. 

 

Meanwhile, Keppel Reit rose 0.9 per cent or S$0.01 to S$1.17 as at 9.01 am, before climbing further to close 1.7 per cent or S$0.02 higher at S$1.18.

 

Keppel Corp on Tuesday reiterated that its offer for SPH is " firm and irrevocable" and provides the shortest time in payout by mid-January 2022 for SPH shareholders.

 

Its statement comes a day after the consortium comprising Hotel Properties HPL: H15 -3.47%, businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree, raised its offer for SPH. Just days before, Keppel Corp raised its bid after Cuscaden made its surprise offer for SPH' s non-media business.

 

Cuscaden Peak is now offering each SPH shareholder the option of an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.

 

The Cuscaden scheme is expected to be completed by February 2022, but its scheme meeting can only proceed if SPH shareholders vote against Keppel' s offer at Keppel' s scheme meeting to be held by Dec 8.

 

In a report dated Nov 15, CGS-CIMB said SPH shareholders will likely go for Cuscaden&rsquo s revised scheme. Its research team believes Keppel is unlikely to counter with a higher offer and may instead look for other assets. 

 

&ldquo With this deal likely to be off for Keppel, the group may have to look harder to find similar assets that yield recurring income,&rdquo CGS-CIMB said. 

 

It noted that Cuscaden&rsquo s deal is positive for Keppel Reit as it will remove the price overhang on the real estate investment trust (Reit). In contrast, the deal is negative for SPH Reit as the price would be capped at the mandatory offer price of S$0.964 by Cuscaden in the near term.

 

&ldquo However, the potential higher free-float and merger between SPH Reit and any of the Reits (MCT/CICT) under Cuscaden would serve as a re-rating catalyst for SPH Reit,&rdquo CGS-CIMB&rsquo s research team said. 

 

UOB Kay Hian (UOBKH) said Cuscaden&rsquo s offer is superior to Keppel&rsquo s revised cash-plus-stock offer of S$2.351 per share. Both options presented by Cuscaden also give SPH shareholders higher total/cash consideration and price stability.

 

Echoing the sentiment, CGS-CIMB said Cuscaden&rsquo s offer also gives shareholders the chance to participate in the potential future growth of SPH Reit. 

 

The new revised offer by Cuscaden values SPH at 1.1 times its book value and 21.5 times or 21.8 times UOBKH&rsquo s earnings estimate.