The controlling shareholders of Best World International led by its two co-founders plan to call for an EGM so that they can delist the company.
Another group of shareholders are also calling for an EGM, so that they can draw attention to Best World's level of cash and dividend policy.
The company's shares resumed trading on November 2022 after a suspension of 42 months, after a short-seller attack prompted a review.
According to Best World, the delisting will be made via a selective capital reduction exercise to be offered to all other shareholders except for the controlling shareholders and their related parties.
Shares now held by shareholders who accept the offer will then be cancelled - assuming they gave the go-ahead for the selective capital reduction at an EGM to be called.
Best World is controlled by its co-founders, group CEO and MD Dora Hoan, and president Doreen Tan. The two hold co-chairman roles in the company as well.
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They hold their stake mainly via an entity in which they have deemed interests, called D2 Investment, which owns 44.79% of Best World shares. The company's long-time COO Huang Ban Chin, who holds another 5.41%, is part of this group as well.
Best World explains that it continues to expect growth headwinds in China where consumers prefer to save than spend, thereby hurting its business there.
"Barring any unforeseen circumstances, the company will continue to maintain a cautious outlook for the next 12 months."
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Best World says the privatisation will provide it with the necessary flexibility to optimise its resources to focus on the longer-term strategies of the business.
If the company is delisted, it can save on compliance and listing costs.
Also, the selective capital reduction exercise is an opportunity for eligible shareholders who may find it difficult to exit at "a fair market price" due to low liquidity.
In a separate announcement, the company says it received on March 21 a letter from a group of shareholders purportedly holding more than 10% of the shares, asking for an EGM to be held.
This group of shareholders want to remove the three independent directors Lee Sen Choon, Adrian Chan Pengee and Chester Fong Po Wai.
In addition, they want Best World to hire a "reputable independent financial adviser" to "advise the board on the appropriate cash reserves and dividend policy for the group".
On Feb 28, the company reported that earnings for FY2023 dropped 11.7% y-o-y to $120.4 million, on the back of revenue of $514.5 million, down 7.7%, as its business of selling healthcare and beauty products in China weather weak consumer sentiment.
As at Dec 31, 2023, cash and cash equivalents stood at $574 million. At current levels, its market price just below $800 million.
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Despite this cash balance, Best World is not planning to pay a dividend for FY2023.
The company says this is due to its "short and medium term commitment which include but are not limited to, working capital requirements and corporate actions capital needs, as well as taking into consideration the uncertain business climate."
According to Best World, this group of shareholders have also indicated that they are open to meeting the board to discuss their concerns and find common ground.
"The board is currently deliberating on the contents of the requisition letter and is seeking legal advice in relation to the requisition letter," says Best World.
Best World shares last changed hands at $1.77, comparable to the level at which it resumed trading 17 months ago.
