PCRD urged to make 'truly fair' bid in the event of privatisation
Call made by an institutional investor as stake held by Richard Li-controlled vehicles tops 86%; PCRD has clarified in May that it was not aware of any privatisation proposal
By Melissa Tan
JUN 4, 20155:50 AM
Singapore
NOTING that Pacific Century Regional Developments (PCRD) was "reducing its free float rapidly" and appeared to be headed for privatisation, an institutional investor has called for a "truly fair" offer to be made to minority shareholders in the event of a delisting.
The call comes as vehicles controlled by Richard Li, son of Hong Kong tycoon Li Ka-shing, saw their stakes in the mainboard-listed investment holding group move close to the 90 per cent delisting threshold. PRCD are now also hovering at a near 13-year high.
But there appears to be no certainty of a privatisation. PCRD, responding on May 2 to an article in BT in April ("Pacific Century headed for delisting"), had said: "The company wishes to clarify that it is not aware of, and has not received, any proposal in relation to privatisation of the company. In addition, the company is not aware of any restructuring plan involving the company and its subsidiaries."
PCRD has continued to buy back shares, pushing the share price higher. It picked up over 3.5 million shares for around S$1.6 million altogether last week, going by recent Singapore Exchange (SGX) filings. The stake of Mr Li's vehicles in the group is now above 86 per cent.
The stock price also reached S$0.48, its highest since May 2002, on Tuesday before shedding half a cent to finish at S$0.475 on Wednesday. PCRD shares have leapt about 79 per cent since S$0.265 at the start of the year.
However, institutional investors in PCRD are saying that the group could actually be worth about 25 per cent more than the current share price.
One of these investors is Singapore Tong Teik (STT), linked to veteran rubber trader Oei Hong Bie, which drew attention late last year when it was involved in a tussle over the delisting of engineering and construction firm UE E&C and which appeared to have its eye on privatisation plays.
Through its investment manager Ascapia Capital, Singapore Tong Teik said in an open letter to PCRD's board that the group was actually worth at least S$0.57 per share. This valuation could be easily calculated since most of PCRD's assets are in liquid publicly-listed stocks such as PCCW Limited and HKT Trust, it added.
Noting that PCRD was "reducing its free float rapidly" and appeared to be headed for privatisation, Ascapia portfolio manager Wesley Widjaja said in the letter that minority shareholders "are often ignored during the delisting process" and "often lack the resources to dispute the outcome, even though they have received an inequitable bargain", and asked the board to consider offering minorities a "truly fair price" for their shareholdings.
"A decision by the company or its acquirers to repurchase the outstanding free float for a truly fair price would send a positive message to the markets that corporate governance and minority shareholders do matter to PCRD and its controlling shareholders."
Mr Widjaja told The Business Times on Wednesday that PCRD has not responded to Ascapia's letter, which was dated May 26.
PCRD's most recently announced share buyback was for about 1.33 million shares at S$0.47 apiece, or roughly $626,000, on May 29. It also bought back around 2.21 million shares at S$0.46 each for about S$1.02 million on May 26.
The group got shareholders' nod at an extraordinary general meeting in April for a fresh mandate to buy back a further 10 per cent stake in the group. This was after it exhausted its maximum 10 per cent buyback limit that it had been allowed in its previous mandate, which had been approved in April 2014. However, it can only buy back up to around 4 per cent more before its free float falls below 10 per cent, which would trigger a suspension from trading and possible eventual delisting from the SGX.
The company's net asset value per share was S$0.432 as at March 31 though the group's was lower at S$0.322 as at the same date, according to PCRD's first-quarter results released in May.
