Frasers Property is making a second attempt to privatise Frasers Hospitality Trustby offering 71 cents per stapled security via a scheme of arrangement.
Frasers Property, the sponsor, tried to privatise FHT back in September 2022 at 70 cents per stapled security but was voted down by shareholders by a narrow margin.
The offer price of 71 cents implies 1.11 times P/NAV, which beats the implied P/NAV of other previous S-REIT privatisations' 1.04 times.
FHT last traded at 66.5 cents per unit before a trading halt was called on May 13.
FPL says that FHT will continue to face both macroeconomic headwinds and structural limitations, which may limit its ability to grow DPS and NAV.
In addition, it also faces various structural factors that have significantly impacted FHT’s trading performance and valuation adversely.
See also: Thai-listed stem cell company makes 25-cent conditional cash offer for 10% stake in Cordlife
“The decision to propose this scheme was not taken lightly," says Eric Gan, CEO of FHT's manager. "It reflects our commitment to act in the interests of our stapled security holders amid structural challenges and an increasingly complex global environment.
"While our portfolio has demonstrated resilience, sustained growth has been hampered by persistent FX headwinds, inflationary cost pressures, and broader geopolitical developments – from Brexit to escalating trade tensions and the evolving global tax regime.
The proposed scheme emerged as a viable and timely solution to unlock value with strong deal certainty for Stapled Securityholders to vote in favour of and realise their investments at a premium to NAV, says Gan.
See also: Privatisation offer for Sinarmas Land raised to 37.5 cents
“We have put forward an offer for FHT which safeguards the interests of FPL’s shareholders," says Loo Choo Leong, group CFO of Frasers Property.
"The arm’s length offer was arrived at after taking into consideration the financial and business effects of the privatisation to Frasers Property, both over the short and long term, in addition to a number of FHT financial reference points,” he adds.
"Hospitality is a core business for Frasers Property, and while we remain mindful of near-term challenges facing the hospitality sector, we maintain a long-term investment perspective. We will continue to apply our understanding of FHT's assets to drive performance via active asset and portfolio management," he says.
FHT units closed at 69 cents, up 3.01% while FPL closed at 82 cents.
