Shares in Penguin International BTM closed 11.5 cents higher or 16.2% up at 82.5 cents on May 5, after the company announced its privatisation offer earlier the day before.
Penguin International, on May 4, announced that Aleph Tav (the offeror) intends to make a voluntary unconditional cash offer of 82 cents per share for all the remaining shares it does not own in the company.
The offer price represents a 16.64% premium over Penguin’s one-month volume weighted average price of the one-month period prior to the last trading day on May 4, before Penguin’s trading halt.
The offer price was also determined on the basis that the shares will be acquired with the right to receive any distribution that may be declared, paid or made by the company on or after the offer announcement date. This includes the first and final dividend of 2.25 cents per share for the FY2022 ended Dec 31, 2022.
This means that the actual offer price payable to shareholders who accept the offer will be 79.75 cents per share after receiving Penguin’s FY2022 dividend.
This isn’t the first time the company has made an offer to its shareholders in a bid to delist the company. In January 2021, Penguin had made a voluntary cash conditional offer of 65 cents per share to its shareholders. At the time, the offer closed in April 2021 with the offeror, Emet Grace, holding around 80.05% of the shares at the relevant time. Emet Grace was an investment holding company that was formed during the first privatisation offer in January 2021.
Aleph Tav is another investment holding company formed in March for the second privatisation offer. Its shareholders are Fairy L.P., Penguin’s executive chairman Jeffrey Hing Yih Peir and Penguin’s managing director James Tham Tuck Choong. Fairy L.P. has a 40% stake in the offeror, while Hing has a 55% stake. Tham’s stake in Aleph Tav is 5%.
The board of directors in Aleph Tav are Hing, Tham and Keith Tan Keng Soon. Tan is a non-independent non-executive director of Penguin. He is also the founding partner of Dymon Asia Capital and the chairman of the Dymon Asia Private Equity Investment Committee.
According to Penguin, the offeror intends to delist the company and make it its wholly-owned subsidiary. The offeror also does not intend to take any step to restore the public float should the number of publicly-traded shares fall below the regulatory 10%.
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Subject to normal business conditions and other than in the normal course of business, the offeror does not intend to make major changes to Penguin’s business, its management team, redeploy its fixed assets, or terminate the employment of its employees.
“Nonetheless, the offeror retains the flexibility at any time to consider any options or opportunities which may present themselves and which the offeror may regard to be in the interests of the company,” reads Penguin’s offer statement.
In connection with the offer, Emet Grace has agreed to accept the offer for the 176.2 million shares it owns in Penguin, or 80.05% of the company’s total share capital.
Audrey Hing Zeng Min, Hing’s daughter, has also provided an irrevocable undertaking in favour of the offeror with her 4.3 million shares, which represent 1.95% of the total share capital in Penguin.
Each of the irrevocable undertakings will terminate or lapse if the offer is withdrawn or lapses, other than as a result of a breach by Emet Grace or the younger Hing.
Save for the irrevocable undertakings, no one else has done so.
In its statement via its advisor W CapitalMarkets, the offer was made because of low trading volume. During the one-, three- and six-month periods up to May 4, Penguin has an average daily trading volume of 6,050 shares, 7,856 shares and 6,867 shares respectively. For the 12-month period, the average daily trading volume of Penguin’s shares stood at 9,973 shares.
“The offer therefore provides shareholders who find it difficult to exit the company as a result of the low trading volume in the shares,” reads the offer statement.
