Roxy-Pacific gets management-led bid to take company private at premium

Singapore one dollar bill

TKL & Family has made a bid to take Roxy-Pacific Holdings private at S$0.485 a share, in a pre-conditional voluntary general offer for all of the  property and hospitality company’s shares, according to a filing to SGX early Monday.

Based on 1.3 billion shares outstanding, according to SGX data, back of the envelope calculations suggest the bid values Roxy-Pacific at S$630.5 million. SGX data put the market capitalisation at S$531.73 million.

The offeror is a vehicle of a consortium formed by 11 individuals, including Roxy-Pacific’s Chairman and CEO Teo Hong Lim, the filing said.

The offer price marks a 19.8 percent premium over the shares’ closing price of S$0.405 on 14 September, the last full trading day prior to the announcement, the filing said. The offer is also a 20.9 percent premium over the one-month volume weighted average price for the share up through 14 September, the filing said.

The bid exceeds all closing prices for the shares in the past three years, and is a 14.1 percent premium over the highest closing price over the past three years of S$0.425, the filing said.

“The offer represents a unique cash exit opportunity for shareholders to liquidate and realise their entire investment at a premium, an option which may not otherwise be readily available due to the low trading liquidity of the shares,” the offeror said in the filing.

TKL & Family said the offer price is final and won’t be raised.

Covid-19 impact

The offeror pointed to the current challenging macro and operating environment due to Covid-19 as the rationale for the bid.

As a result of the ongoing Covid-19 pandemic, the construction of development projects continues to face prolonged challenges due to global supply chain disruption and labour crunch, leading to rising material and labour costs as well as higher tender prices for new projects. The company may also face increasing risks of delays in project completion and potential penalties from late delivery exacerbated by the increasing risk of default by construction contractors.

In addition, the Covid-19 pandemic continues to hinder the company’s hotel operations, as countries around the world impose lockdowns and tightened border control measures. Continued weakness is expected in the hospitality industry as business travel and retail tourism remain lacklustre due to the surge in Covid-19 cases accelerated by the Delta variant.

The offeror said it secured irrevocable undertakings for 76.44 percent of Roxy-Pacific’s shares, with the bid conditional upon receiving valid acceptances of at least 90 percent of the total shares by the close of business on 20 February.

TKL & Family intends to delist the shares, the filing said. Once acceptances reach 90 percent, TKL & Family would be able to compulsorily acquire any remaining shares.

The filing noted Roxy-Pacific hasn’t raised equity capital on SGX since the company was listed in 2008, and it was unlikely to require access to Singapore’s equity capital markets ahead as it has other funding sources, such as bank borrowing facilities. In addition, delisting would allow the company to save on expenses related to its listed status, the filing said.

OCBC Bank is the sole financial adviser to TKL & Family, the filing said.