LHN Group 41O , on June 9, announced that it has received a notice of intention to make a voluntary conditional general offer for LHN Logistics from Milkyway International Chemical Supply Chain Pte. Ltd.
LHN Logistics is the 84.05%-indirectly owned subsidiary of LHN Group while Milkyway International Chemical Supply Chain Pte. Ltd. is a wholly-owned subsidiary of Shanghai-listed MilkyWay Chemical Supply Chain Service Co., Ltd.
Milkyway is offering 22.66 cents per share for the shares in LHN Logistics, which values the latter at around $38 million. The offer price represents a 35% premium over LHN Logistics’ closing price of 16.8 cents per share as at June 1. The offer price also represents a 45% premium over the six-month volume weighted average price (VWAP) ending on June 1.
If completed, the proposed transaction is expected to generate approximately $32 million in cash proceeds for LHN, or 23% of its market capitalisation of $139 million as of close on June 1. In its statement, LHN says it is expecting to net a $21 million gain upon the disposal of LHN Logistics.
In its June 9 statement, LHN Group says the proposed transaction is considered to be beneficial to it and its shareholders for a few reasons, LHN Logistics’ low trading volume being one of them.
It adds that LHN Logistics, which was spun off for its own listing from LHN in April 2022, was done to unlock value for the group’s shareholders.
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“Early investors and shareholders who participated in LHN Logistics’ initial public offering (IPO) price of 20 cents on April 29, 2022, will be able to, subject to the offer being made and completion of the proposed transaction, enjoy a return of over 13% with a holding period of slightly more than a year,” notes LHN Group.
The group says it could also use the $32 million for general working capital purposes.
“The company and the board view the offer (if and when made) presented by Milkyway International Chemical Supply Chain Pte. Ltd. as being in the best interest of the company and shareholders as a whole,” says Kelvin Lim, executive chairman of LHN Limited. “We firmly believe that this transaction is the most strategic and prudent path forward as it will enable us to channel resources to our other core business segments.”
Shares in LHN Group closed flat at 35 cents while shares in LHN Logistics closed flat at 21.5 cents on June 9.
