SPH REIT appoints independent financial adviser for potential chain offer from Cuscaden Peak

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SPH REIT said Friday it has appointed PrimePartners Corporate Finance as its independent financial adviser (IFA) for its independent directors on a possible chain offer from consortium Cuscaden Peak. 

Cuscaden Peak is one of two bidders, with Keppel Corp. the other, competing to acquire SPH, the sponsor of SPH REIT. 

If Cuscaden Peak’s offer succeeds and the consortium ends up holding at least 30 percent of SPH REIT after the deal is completed, it would be required to make a chain offer for all of SPH REIT’s units.

The consortium’s ownership level of SPH REIT post-completion could vary between 20 percent and 66 percent, depending on SPH shareholders’ choice between the two bid options.

The minimum offer price would be S$0.964 a unit in cash, and the consortium wouldn’t be required to make a higher offer. 

In addition to advising SPH REIT’s independent directors on the offer, the IFA will also report on the distributions the REIT may make to unitholders during the period, the filing said. 

After the IFA and the auditor have completed their respective reports on the fiscal first quarter distribution, the REIT will issue the notice of book closure date and the distribution payment date, the filing said.

Competition for SPH on hold

The competition for SPH appears to be in stasis. 

In December, SPH said it would seek clearance from regulators and the court to convene a meeting for its share to vote on the Cuscaden Peak offer “as soon as reasonably practicable” after a Securities Industry Council (SIC) ruling that Keppel couldn’t force a slow walk on that vote in favor of voting on the Keppel offer first. 

However, the SPH shareholder votes appear to remain on hold by a “specified event” delay, which could include seeking regulatory approval, such as from the SIC, or waiting for a final opinion from the independent financial advisor (IFA); SPH has not clarified what has caused the delay.

SPH’s independent directors have preliminarily recommended shareholders accept Cuscaden’s eleventh-hour bid, calling it “superior,” to Keppel’s.

Cuscaden Peak’s bid — which values SPH at S$3.9 billion — will give shareholders the choice of either S$2.40 a share, including S$1.602 in cash and 0.782 SPH REIT unit valued at S$0.798 each, or an all-cash offer of S$2.36, based on unit prices at the time the offer was made.  

Previously, Keppel Corp. had sweetened its bid to acquire SPH to S$2.351 a share, in a cash-and-share offer, topping its previous bid of S$2.099 and a competing bid of S$2.10 in cash from Cuscaden Peak. Keppel’s second offer had increased the cash component by S$0.20 a share, to S$0.868, as well as including 0.596 Keppel REIT unit and 0.782 SPH REIT unit.

Who is Cuscaden Peak?

The consortium bidding against Keppel, called Cuscaden Peak, includes Tiga Stars, a wholly owned subsidiary of tycoon Ong Beng Seng’s Hotel Properties, and Adenium, which is a wholly owned subsidiary of Temasek portfolio company CLA Real Estate Holdings, as well as Mapletree Investments‘ indirect wholly owned subsidiary Mapletree Fortress. Mapletree Investments is wholly owned by Singapore state-owned investment company Temasek.

Cuscaden Peak is 40 percent owned by Tiga Stars, 30 percent by Adenium and 30 percent by Mapletree Fortress. Tiga Stars is 70 percent owned by Hotel Properties, with the remainder held by Como Holdings, which is ultimately owned by Ong Beng Seng, who is the controlling shareholder of Singapore-listed Hotel Properties. Adenium is wholly owned by CLA Real Estate Holdings, which is an independently managed portfolio company of Temasek.