The investors&rsquo watchdog says the offer is &lsquo not fair and not reasonable&rsquo

 

[SINGAPORE] The bid from Tal United to acquire Sin Heng Heavy Machinery at S$0.58 a share mid-last month has been described as a &ldquo lowball offer&rdquo by the Securities Investors Association (Singapore), which has advised shareholders to reject the offer.

 

This is on the grounds that Sias&rsquo appointed independent financial adviser (IFA) has assessed the offer to be &ldquo not fair and not reasonable&rdquo .

 

The IFA found the offer price to be below the median and mean of the share to net asset value (NAV) ratios of &ldquo selected comparable transactions&rdquo .

 

In a statement on Monday (Apr 21), Sias founder and chief executive David Gerald noted that the current offer price is at a 41 per cent discount to the estimated NAV of S$0.98 per share. This figure would be even higher if a dividend of S$0.05 were to be excluded from the offer price.

 

Additionally, Sin Heng displayed positive performance from FY2022 to FY2024. In those three financial years, the group&rsquo s net profits went from S$3.65 million in FY2022 to S$6.27 million in FY2024.

 

The group also declared dividends in financial years, with a dividend yield ranging between 7.6 and about 11 per cent.

 

Tal United had previously said the price was final and would not be revised. The offer closes at 5.30pm on Apr 30.

 

Gerald said that it is in the best interests of all minorities to collectively send a message to the offeror that they &ldquo will not accept such a lowball offer&rdquo . No action is required from the shareholders to reject the current offer.

 

&ldquo We believe the company has incurred unnecessary costs to respond to this offer by TAL United. While any party has the right to make an offer to shareholders, Sias urges all offerors to act responsibly and fairly.&rdquo

 

Sin Heng Heavy Machinery receives privatisation offer with S$0.58 per share cash option

He added that if Tal United remained sincere in taking Sin Heng private, he believed that it should consider a revalued NAV of S$1.15 a share as a starting point.

 

Tal United is a consortium formed between companies Tal Holdings (TALHPL) and United Hope (UHPL), which are controlling shareholders of Sin Heng.

 

In a previous bourse filing in March, Tal United said its offer to delist and privatise the heavy equipment rental business was aimed at providing &ldquo greater control and management flexibility to manage the business of the group, respond to changing market conditions and optimise the use of the company&rsquo s management and resources&rdquo .

 

Sin Heng has a total issued and paid-up share capital of about S$43.1 million, comprising nearly 114.9 million shares.

9.4  Compulsory Acquisition 

Pursuant to Section 215(1) of the Companies Act, in the event the Offeror receives valid acceptances pursuant to the Offer or acquires or agrees to acquire Shares during the Offer period other than  through valid acceptances of the Offer in respect of not less than 90.00% of Shares  (other than those Shares already held by the Offeror, its related corporations or their respective nominees as at the date of the Offer),  the Offeror would be entitled to exercise its right to compulsorily acquire all the remaining Shares from Shareholders who have not accepted the Offer (&ldquo Non-Accepting Shareholders&rdquo ) on the same terms as those offered under the Offer. > > > (So 90% of the balance shares NOT HELD by the Offeror, ie they need at least 90% of the other shareholders to agree before  the compulsory takover. Correct me if I' m wrong pse. Thanks)

 

In such event, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from SGX-ST. 

 

Non-Accepting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Offer Price in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90.0% or more of the total number of issued shares of the Company.  Non-Accepting Shareholders who wish to exercise such right are advised to seek their own independent legal advice.

Based on the latest announced audited financial results of the Company for FY2024, the Company recorded a NAV and NTA position of approximately S$107.54 million and S$103.09 million respectively, equivalent to approximately a NAV value of S$0.99 per Share and a NTA value of S$0.95 per Share as at the Latest Practicable Date.