On June 6, OCBC and GEH announced that GEH’s shareholders will have two options to resolve the company's trading suspension: to privatise at a higher offer price or resume trading in GEH’s shares.
Under the first option, OCBC will make a conditional exit offer to require the remaining shares in the company at $30.15 per share, marking an 18% premium to the previous offer price of $25.60 per share. The new offer also implies a P/EV and P/NAV of 0.8 times and 1.6 times respectively.
Independent financial adviser (IFA) Ernst & Young has deemed the offer to be fair and reasonable. The latest offer is conditional upon GEH’s shareholders holding at least 75% of the company’s shares to approve the resolution.
Should the delisting resolution not go through, GEH will seek its shareholders’ approval to resume trading by meeting the free float requirement. This will be done via a 1-for-1 bonus issue resolution to satisfy the requirement. Under this option, shareholders may choose to receive bonus ordinary shares or bonus unlisted Class C non-voting shares that can be converted to ordinary shares.
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The proposal will also require approval from at least 75% of GEH’s shareholders, including OCBC, which intends to elect receiving the Class C shares. The Class C shares are deemed as preference shares and will not form part of the free float calculation although OCBC will be able to receive the same dividends and distributions as ordinary GEH shareholders.
Assuming all of GEH’s minority shareholders opt to receive the ordinary bonus shares, the company’s free float is expected to increase to 11.8%, above the regulatory minimum of 10%, notes the RHB team.
OCBC, on May 10, 2024, launched a $1.4 billion voluntary unconditional general offer to acquire the remaining 11.6% stake it does not own in GEH. At the time, the bank offered GEH’s shareholders $25.60 per share to take the company private. The previous offer represented a 37% premium to GEH’s closing price on May 9 and a P/EV and P/BV of 0.7 times and 1.54 times respectively.
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The previous offer closed on July 12, 2024 with OCBC holding a 93.7% stake. Shares in GEH had been suspended since July 15, 2024.
GEH has been given until Sept 30 by the Singapore ExchangeSecurities Trading Limited (SGX-ST) to complete the proposed transactions.
RHB has maintained its “neutral” call on OCBC with an unchanged target price of $17.50.
As at 9.30am, shares in OCBC are trading 7 cents lower or 0.43% down at $16.30.
