Sunningdale chairman Koh Boon Hwee has successfully obtained shareholders’ approval to proceed with the privatisation of the company via offeror Sunrise Technology.
Sunrise is owned by Koh and Novo Tellus chairman Loke Wai San, who is also a non-independent director on Sunningdale’s board.
The duo teamed up to make an offer to privatise and delist Sunningdale in November 2020, making a final offer of $1.65 per share or 1,650 shares in Sunrise to shareholders.
In a release, Sunningdale revealed that just 51% of shareholders present and in proxy voted to approve the scheme, but the shares that were in favour of the scheme came up to 90.24%.
Earlier this month, Koh laid down his reasons for the offer, saying in a Feb 4 release, “Our reasons for proposing the transaction are simple: The world and the industry in which Sunningdale operates are in the midst of a significant transformation due to Covid-19 and escalating global trade tensions, and the company must pivot now and pivot fast.”
He foresees that Sunningdale will need additional, “significant” capital expenditure, especially in high-cost locations. This would build up diversified operations that can better withstand the trade tensions that persist even with a new man in the White House.
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“This will likely require substantial upfront cash outlays with little near-term payoff, and as a private entity, Sunningdale will have greater flexibility to navigate the shifting landscape market,” he adds.
See more: Sunningdale Tech needs to pivot fast; additional capex required: Koh Boon Hwee
The process was not entirely smooth for Koh and Loke. Earlier this year on Jan 14, activist investor Quarz Capital released an open letter to shareholders, questioning whether Koh was making a “lowball” offer to investors by not offering at Sunningdale’s book value.
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At the time, the offer to shareholders was for $1.55 per share, or 1,550 shares in Sunrise. It was raised to the current level on Jan 19.
Koh replied in an interview with The Edge Singapore that the offer had to be taken “holistically”, and pointed at metrics such as P/E ratio and EV/Ebitda, which were “in the ballpark” of precedent offers.
The letter from Quarz also threw a spotlight on the role of Loke’s redesignation as non-independent director after the offer was made, alleging that Loke as a then-ID, was to look out for the interests of minority shareholders.
Koh highlighted that Loke was brought on board Sunningdale and the offer due to his experience in turning around AEM Holdings (which Loke also chairs) when Novo Tellus invested in AEM in 2011.
In the interview, he also pointed out that this privatisation offer is not without risk down the road. In order to maximise the chances of this working, he needs to work with someone with the industry experience and not someone with just the money. If not, “almost all of the burden of the restructuring will be just on me”, he says.
In light of the successful vote, Sunningdale will stop trading on Mar 8, and will be delisted from the SGX on Apr 20. Shareholders who opted for the cash offer are expected to be paid by Apr 19.
See more: Quarz Capital Asia continues to sell stake in Sunningdale ahead of privatisation offer vote
