THE founder of Mainboard-listed Luzhou Bio-Chem Technology Limited wants to take the company private in a deal that values it at S$17.8 million, so as to gain greater management flexibility and control over the company.

 

Niu Ji Xing, who is also Luzhou' s executive chairman and chief executive, on Tuesday launched a voluntary conditional general offer via investment holding company Starnova, of which he is the sole director. Starnova is offering to acquire all the ordinary shares in Luzhou at S$0.03 apiece. The offer price is final and Starnova does not intend to revise it.

 

As of the announcement, Luzhou had an issued and fully paid-up share capital of 308.7 million yuan (S$60.89 million) comprising 594 million shares. The deal thus values the company at about S$17.8 million.

 

Mr Niu and investment holding company Faith Corporate International Limited, of which he is the sole director, hold a combined 41.2 per cent stake in Luzhou and have undertaken to accept the offer.

 

According to the exchange filing, the reason for the privatisation is to provide the offeror and the company with " greater control and management flexibility" in utilising and deploying the company' s resources. It will also facilitate the implementation of strategic initiatives and/or operational changes to " achieve greater efficiency and competitiveness" .

 

The offeror added that if Luzhou is delisted, it will be able to dispense with compliance costs associated with maintaining a listed status, and channel such expenses towards business operations.

 

It also noted that Luzhou has not carried out any fund-raising on the Singapore Exchange since 2015.

 

For shareholders, Starnova said the offer is an opportunity for them to exit their investment, given the stock' s " low trading liquidity" . For instance, the average daily trading volume for the past one month represents only 0.12 per cent of the total number of issued shares.

 

Also, the offer price represents a premium of approximately 87.5 per cent, 130.8 per cent, 150 per cent and 150 per cent over the volume-weighted average price (VWAP) per share for the one-month, three-month, six-month and 12-month periods respectively up to and including June 26.

 

Luzhou, said to be one of the largest producers of maltose-related products and other corn sweeteners in China, listed on the main board in 2006.

 

Its counter closed unchanged at S$0.015 on Tuesday, before the announcement.