The executive director and CEO of Sin Heng Heavy Machinery together with United Hope are offering to take the company private at 58 cents per share in cash on March 14.
The offeror consortium is made up by two parties, CEO Tan Ah Lye’s private company TAL Holdings and United Hope, a private company owned solely by Teo Yi-dar. The two entities own a 76% and 24% stake in the offeror consortium respectively.
Sin Heng, which has been listed on the mainboard of the Singapore Exchange since Feb 3, 2010, is involved in the business of heavy recruitment rental, trading of new and used cranes and aerial lifts, and sales and distribution of spare parts.
Sin Heng has a total issued and paid-up capital of $43.1 million, comprising 114.8 million shares.
The offeror’s rationale for the privatisation are two fold. They say that it is an opportunity for shareholders to realise their investments in the shares at a premium over historical trading prices of the shares.
The offer price of 58 cents per share represents a 6.4% premium over the last transacted share price of 54.5 cents on March 13, and 5.8%, 4.3%, 7.6%, 11.8% and 19.3% over the volume weighted average price (VWAP) per share for the one, three, six, 12 and 24 month periods respectively.
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In addition, Sin Heng has had low trading liquidity, with an average daily trading volume of 40,540, 41,925, 33,269, 38,302 and 48,240 shares for the one, three, six, 12 and 24 month period respectively.
The privatisation offer will also allow Sin Heng greater management flexibility, and it will be less costly as the firm will not have to incur costs associated with being listed.
The offeror says that there are no current plans to introduce any major changes to the existing business in relation to the offer.
Tan owns a 28.94% stake in TAL Holdings, and the remaining stake is owned by his three sons, Tan Cheng Kwong, Tan Cheng Soon and Tan Cheng Guan all of whom own 16.92% in TAL, and his wife and daughter.
TALHPL says that the offer price is final and it does not intend to increase the offer price.
Shares in Sin Heng closed flat at 54.5 cents on March 14.
