Silverlake Axis, on Aug 26, announced that it is offering 36 cents per share to its shareholders in a bid to take the company private. The 36 cents will be paid in cash, which represents a premium of 28.1% over the volume-weighted average price (VWAP) per share for the one-month period including Aug 23. The consideration also represents a premium of 25.0%, 31.9% and 31.9% over the VWAP per share for the three-, six- and 12-month period respectively.
Alternatively, Silverlake Axis 5CP ’ shareholders may opt to receive a mix of 30 cents in cash and one new redeemable preference share in the capital of the offeror. The redemption amount for each new share in the offeror is 18 cents.
The offeror, E2I Pte. Ltd. and its shares will not be listed on any securities exchange. The shares will be mandatorily redeemed by E2I five years after its issuance at the redemption amount.
About the offeror
E2I was incorporated on July 10 this year to undertake the offer. It has an issued and paid-up share capital of $2 comprising two ordinary shares, both owned by Zezz FundQ Pte. Ltd.
Goh Peng Ooi, the group executive chairman and founder of Silverlake Axis, his daughter Shiou Ling and Ng Lip Chi, Lawrence, are directors of E2I. Shiou Ling is also the executive director and deputy CEO of Silverlake Axis. E2I does not own any shares in Silverlake Axis.
Zezz FundQ is a controlling shareholder of Silverlake Axis. It has 603 million ordinary shares in the company and 8.3 million redeemable convertible preference shares in the company. Goh, owns 100% of the ordinary shares held by Zezz FundQ while Merit Sigma Pte. Ltd. owns 100% of the redeemable convertible preference shares (Merit Sigma RCPS).
The directors of Zezz FundQ are the elder Goh, Shiou Ling, Kim Kenny and Ng. Merit Sigma is wholly-owned by Asean private equity fund Ikhlas Capital Singapore Pte. Ltd. The directors of Ikhlas Capital are Nazir Razak, Kim, Gita Wirjawan, Cesar Purisima and Mok Cheok Meng Tony. The directors of Merit Sigma are Tay Ek Ming and Elaine Bee Choo Tan
As at Aug 26, Zezz FundQ owns 1.86 billion shares, or 74.07% of the shares in Silverlake Axis. The number does not include treasury shares. Goh owns a direct stake of 630,400 shares, or 0.03% of the total stake in Silverlake Axis.
See also: Broadway Industrial Group offer turns unconditional; offer will now close on Dec 23
Offer rationale
According to Silverlake Axis, the trading volume of its shares has been low with an average daily trading volume of about 435,309 shares over the one-month period. Over the past three, six and 12 months to Aug 23, the company’s shares were trading at a volume of 674,255 shares, 947,576 shares and 754,290 shares respectively. Each of these represents less than 0.04% of the total number of shares in the company.
As such, the cash consideration presents shareholders with a “clean cash exit opportunity” to realise their investment.
The consideration is about 2.7 times the company’s net asset value (NAV) per share of 13.5 cents or 45.1 sen as at June 30.
The company will be delisted and privatised upon the successful completion of the offer. The delisting and privatisation of Silverlake Axis will give E2I and the company greater control and flexibility to utilise and deploy its available resources.
In addition, Silverlake Axis says it will be able to save on compliance costs and human resources associated with maintaining its listed status.
For the FY2024 ended June 30, Silverlake Axis reported earnings of RM103.3 million ($31 million), 39% lower y-o-y. Revenue inched up by 2% y-o-y to RM783.5 million although gross profit fell by 9% y-o-y to RM410 million.
Shares in Silverlake Axis closed at 30 cents on Aug 23. The company called for a trading halt on the morning of Aug 26.
