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Oxley, UE shareholders block purchase of WBL shares from Yanlord Perennial

IN A surprise turn of events, minority shareholders of United Engineers (UE), including property developer Oxley Holdings, have foiled a bid by UE's new shareholder, Yanlord Perennial Investment (YPI), and UE's former shareholder, OCBC, to sell their WBL shares to UE.

Out of the 171.3 million UE shares that voted on the deal during an extraordinary general meeting on Friday, 67.44 per cent rejected it.

Oxley has a 15 per cent stake in UE, or just over 95.7 million shares.

Oxley chief executive Ching Chiat Kwong told The Business Times by phone: "Because this is a major investment by Oxley into UE, our board advised that we should get an independent party to review the deal.

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"We appointed a corporate advisor to evaluate the deal and it took them two weeks to assess the deal. They came out with a very comprehensive report that was tabled to the Oxley board to evaluate.

"The decision by the board was made yesterday night. Fairness is quite relative, but from the report, but the majority of the board concurred that we should not support the deal. We have to abide by the decision."

Mr Ching added: "My relationship with YPI will be the same. We are a listed company and we should protect our shareholders' rights. I think they will understand."

UE said it will be issuing a press release on the EGM outcome soon.

YPI has controlled the board of UE since late last year. It owns a 33.5 per cent stake in UE, which it purchased from the OCBC group and its founding Lee family for S$2.60 a share last July, a discount to the market price.

At the same time, YPI agreed to buy 10 per cent of WBL for S$2.07 a share. YPI also committed to acquire another 19.9 per cent of WBL from OCBC down the road.

In December, the new board of UE proposed that UE make a cash offer for WBL at the same price YPI had paid, "taking into account that certain WBL shareholders had publicly disclosed that they were willing to divest their shares".

These interested person transactions required the approval of UE's minority shareholders.

Last week, The Business Times questioned if UE was paying a fair price for WBL.

Currently, UE owns 67.6 per cent of WBL. If it had paid S$2.07 a share for the rest of WIBL, UE would only have received a 21.6 per cent discount to WBL's net asset value per share of S$2.64 at the end of last year.

In fact, companies of a comparable size to WBL that develop properties in China trade at a mere 0.5 times price-to-net tangible assets.

Since UE will not be buying the OCBC group's 19.9 per cent stake in UE, it will fall upon YPI to do so.

Trading of UE shares was halted on Friday. They last traded at S$2.56 on Thursay.

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