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Lee Kim Tah founding family seeks delisting

Offer of S$1.08 a share works out to a 6.4% premium to last traded price
Friday, September 26, 2014 - 00:00

THE family behind homegrown developer and construction firm Lee Kim Tah Holdings is taking the company private by offering S$1.08 per share in cash, valuing it at S$546 million.

Through investment vehicle Lee Kim Tah Investments, the founding Lee family already owns 71.34 per cent of the company, whose key asset is a half-stake in Jurong Point.

The privatisation offer for the usually thinly traded stock was not surprising to market watchers, given how the Lee family had been shoring up its stake in the last few years.

Representing the offeror, OCBC Bank said that the Lee family intends to delist the company from the Singapore Exchange and exercise its rights of compulsory acquisition.

Lee Kim Tah has not carried out any equity fund-raising in the last 10 years, OCBC pointed out. "The offeror is of the view that since the company is unlikely to require access to such equity fundraising in the foreseeable future, it is therefore not necessary for the company to maintain its listing on SGX."

Irrevocable undertakings by parties acting in concert with the offeror to accept the offer represent about 11.24 per cent interest in Lee Kim Tah.

The offer price of S$1.08 per share works out to a 6.4 per cent premium to the last traded price on Sept 24, and a 12.34 per cent premium to the three-month volume weighted average price of shares traded prior to the announcement date.

A spike in trading activity since mid-August drove the stock to an all-time high of S$1.015 or 8.96 times of earnings per share on Wednesday, before a trading halt was imposed after market close.

OSK-DMG analyst Goh Han Peng said that he had arrived at a fair value estimate of S$1.40 for the stock based on sum-of-the-parts valuation of the company's investment portfolio.

"Some assets are modestly undervalued," he said, adding that the controlling shareholder probably "saw some value and wanted to capture the value as a private entity".

Founded by its late chairman, Lee Kim Tah, the company was the first few construction firms to be listed on the Singapore Exchange when it went public in 1984.

Lee Kim Tah had its roots in supplying materials and labour to the British army that was then stationed in Singapore in the 1920s before becoming a major construction player. It further diversified into investment and property development in the 1970s.

Its overseas assets now include several investment properties in Australia's Sydney and Gold Coast, a 48 per cent stake in Marco Polo Xiamen Hotel in China, and a 75 per cent stake in an integrated township in Chennai, India. It has also undertaken development projects in the UK.

Lee Kim Tah was pivotal to the birth of the Real Estate Developers' Association of Singapore, when it led a small group of developers in 1958 to start what was then known as the Singapore Land and Housing Developers' Association.

Property firms closely held by founding family members have been touted as privatisation candidates. A spate of delistings last year also included one of Singapore's oldest companies, Guthrie GTS, which owns the other 50 per cent of Jurong Point.

Companies related to veteran banker Wee Cho Yaw have also come into focus, with UOL Group's takeover offer for Pan Pacific Hotels Group in May last year, and United Industrial Corporation's offer for Singapore Land in February.