A consortium comprising Aspial and JK Global Investment is seeking to acquire all of AF Global Limited’s shares at 11 cents apiece via a scheme of arrangement. JK Global Investment is wholly-owned by Koh Wee Meng, founder, executive chairman and CEO of previously-listed Fragrance Group, which was privatised in October 2021.
The consortium is a special purpose vehicle (SPV) incorporated for the purposes of the acquisition. Aspial and JK Global Investment each hold 50% of the shares within the consortium. The board of directors comprises Koh and his younger brother, Koh Wee Seng, CEO of Aspial.
Based on the 288.7 million scheme shares held by shareholders as at Oct 8, the consideration is will cost the consortium some $31.8 million. Aspial already owns 440.7 million shares or a 41.75% stake in AF Global, while Wee Meng owns 326.3 million shares, or 30.91% of AF Global.
Should the scheme be approved, the consortium intends to delist AF Global. The scheme is conditional upon several factors, including its approval by AF Global’s shareholders holding 75% of the total amount of shares issued.
According to the announcements made on Oct 8, the proposed privatisation will allow the consortium and AF Global’s management more flexibility to manage its business and optimise capital resources without the costs and regulatory restrictions that come with a listing on the Singapore Exchange (SGX).
AF Global’s listing status also serves “limited purpose” since it has not tapped on the equity capital market to raise funds since 2010 and is unlikely to do so.
The transaction is deemed to be an interested person transaction (IPT) between Aspial and Wee Meng, although the former is exempted from the requirement to obtain its shareholders’ approval under rule 906(1)(b) of the listing manual as they fall under the exemption under rule 916(2) and 916(3).
Rule 916(2) exempts transactions if the risks and rewards are “in proportion to the equity of each joint venture partner” and are “not prejudicial to the interests of the issuer and its minority shareholders”. Rule 916(3) exempts the compliance of Rule 906 if the loan provided to a joint venture with an interested person is extended by all joint venture partners in proportion to their equity and on the same terms among others.
The offer price of 11 cents represents a premium of about 23.6% over AF Global’s closing price of 8.9 cents on Sept 29, which is the last undisturbed trading day before AF Global announced that it was continuing to review opportunities to unlock shareholder value.
It also represents a premium of 37.5%, 41%, 50.7% and 52.8% over the one-, three-, six- and 12-month VWAP of 8 cents, 7.8 cents, 7.3 cents and 7.2 cents respectively.
Shares in AF Global closed at 9.6 cents on Oct 7, while shares in Aspial Corp closed at 10.3 cents.
