The 15 cents per share offer price values the company at S$84m and exceeds the highest closing price of the Catalist-listed jeweller' s shares in the more than two years preceding the last trading day on Aug 27.

 

SHARES of Catalist-listed SK Jewellery Group reached a two-year high on Wednesday after the jeweller' s co-founders offered to take the company private at 15 Singapore cents per share.

 

The counter hit an intra-day high of 14.9 cents on Wednesday, up 56.8 per cent or 5.4 cents as at 1.05pm, just shy of the offer price. The last time the counter closed near this level was in late July 2018.

 

The offeror in the voluntary conditional cash offer, OroGreen Investment, was incorporated by the co-founders Lim Yong Guan, Lim Yong Sheng and Lim Liang Eng, who are respectively the company' s non-executive chairman, chief executive and executive director respectively.

The 15 cents per share offer price values the company at S$84 million and exceeds the highest closing price of the Catalist-listed jeweller' s shares in the more than two years preceding the last trading day on Aug 27, the company said in a regulatory update on Wednesday.

 

It represents a premium of 70.5 per cent over the last traded price per share on Aug 27, and represents a premium of 89.9 per cent, 94.8 per cent, 89.9 per cent and 54.6 per cent respectively over the volume-weighted average price per share for the one-month, three-month, six-month and 12-month periods up to and including Aug 27.

 

The offer is conditional upon OroGreen Investment and parties acting in concert with it achieving shareholding of not less than 90 per cent as at the close of the offer. OroGreen Investment does not intend to revise the offer price it is is final, SK Jewellery said.

 

The co-founders and shareholder Soo Kee Capital, which is wholly-owned by the former, have provided undertakings to OroGreen Investment to tender all their respective shares in acceptance of the offer.

 

Together, they hold about 82.6 per cent of the total number of issued shares.

 

SK Jewellery said the offer presents shareholders with a clean cash exit opportunity to realise their investment in the shares at a premium over prevailing trading prices, without incurring brokerage and other trading costs. The trading volume of the shares has also been low.

 

The offeror believes privatising the company will provide the offeror and the company with greater control and management flexibility to manage the group' s business, respond to changing market conditions and optimise the use of the company' s management and resources.

 

Moreover, the company has not carried out any exercise to raise equity capital on the Singapore Exchange since its 2015 listing.

 

It said it is unlikely to require access to the Singapore equity capital markets to finance its operations in the foreseeable future, as it has various other available funding sources such as bank credit facilities.

 

Delisting will also enable SK Jewellery to save on expenses and costs relating to maintaining its listing status and channel such resources to its business operations, it said.

 

DBS is the sole financial adviser to OroGreen Investment.

 

For the six months ended June 30, SK Jewellery posted a 81.6 per cent drop in net profit to S$514,000, from S$2.8 million a year ago.

 

Its revenue fell 44.2 per cent year on year to S$39.8 million from S$71.4 million. This was mainly due to the decline in retail sales amid the Covid-19 pandemic outbreak which led to the closure of the group' s retail stores to comply with preventative measures carried out by the governments of the markets it operates in.

 

In a profit warning in June, SK Jewellery said revenue generated via its online platforms represented " only a fraction" of its physical store sales because jewellery remains a high-touch-point transaction.

 

In the same month, the company said it would focus on cost control and investing in digital transformation such as strengthening its online presence, to weather the negative impact of the Covid-19 pandemic.