Digileap Capital has proposed to delist Challenger Technologies from SGX and make an exit offer of S$0.56 a share for all of the shares of the electronics retailer, it said in a filing to SGX after the market close on Wednesday.
The exit offer exceeds the shares’ highest price since mid-2014 and is a 15.1 percent premium over the volume weighted average price of S$0.487 for the 12-month period through 15 March, the last full market trading day before the shares were placed on a trading halt, the filing said.
The offer is conditional on approval of the delisting resolution at an extraordinary general meeting of Challenger, but if the resolution is passed, the stock will be delisted no matter how many shareholders accept the exit offer, said the filing, which is a joint announcement from Digileap Capital and Challenger.
Holders of 78.64 percent of Challenger’s shares have agreed to vote in favor of delisting resolution and accept the exit offer, it said. The shareholders are Loo Leong Thye, Ong Sock Hwee, Loo Pei Fen and Loo Wei Kiat, collectively the Loo family, and Ng Leong Hai, it said.
The delisting resolution needs approval of at least 75 percent of the issued shares, with less than 10 percent voting against it, the filing said.
Digileap Capital is a 70:30 partnership between the Loo Family and Dymon Asia Private Equity, respectively, it said.
The delisting is being sought because Challenger hasn’t raised cash on SGX since 2007 and isn’t likely to require access to Singapore’s capital markets in the foreseeable future, the filing said.
“The delisting will eliminate the costs of compliance with the listing rules and regulations, thereby allowing Challenger to focus its resources on its business operations,” the filing said.
It added that delisting would allow Digileap Capital and company management more flexibility to manage the business and make operational changes.
“The company is facing challenges due to weak retail sentiment and industry disruption. To navigate this challenging environment, changes to the business may need to be implemented and dividends could be affected during such time,” the filing said.
It also pointed to low trading liquidity, with the average daily trading volume of just 38,501 shares over the past year, it said.
DBS Bank has been appointed as financial adviser to Digileap for the delisting and exit offer, the filing said.
Challenger requested a lifting of its trading halt, effective at market open on Thursday.