THE minority shareholders of Singapore-listed real estate firm Top Global finally approved on Tuesday the proposed acquisition of PT Suryamas Dutamakmur Tbk, an Indonesian-based property developer in which Top Global's majority shareholders have vested interests.
A letter from Top Global's board of directors to its shareholders, dated Sept 29, stated that the acquisition will enable the company to tap Suryamas' "huge land-bank" and diversify into the Indonesian property market.
Of the minority shareholders present at Top Global's extraordinary general meeting (EGM) on Tuesday, 62.4 per cent (owners of about 556 million shares) voted in favour of acquiring a 71.52 per cent stake, or 3.4 billion shares, in Suryamas.
Top Global's executive chairwoman, Sukmawati Widjaja, and her son, CEO Hano Maeloa, who jointly own 53 per cent of the company and 50.93 per cent of Suryamas, abstained from voting. But on Oct 2, Mr Maeloa had sold 300 million of his Top Global shares to an undisclosed investor.
With the resolution carried forth, a "win-win situation" has emerged for both Top Global and Suryamas, said Mdm Sukmawati. Now she and her family are set to own approximately 82 per cent of Top Global, and Suryamas will become its subsidiary.
Still not all minority shareholders were convinced of the acquisition's benefits to Top Global. To close this deal, an allotment of 19 billion new Top Global shares will be given to Mdm Sukmawati, a change from the initial consideration* of 13 billion shares and five billion options as stated in the share purchase agreement.
While there was no change to the purchase consideration of almost S$153 million, the consideration shares were issued at an issue price of S$0.008 (the result of dividing the purchase consideration by 19 billion shares), instead of the original issue price of S$0.0118 as was initially contemplated under the share purchase agreement, thus diluting the value of each Top Global share and ultimately minority shareholders' existing stake in the company.
At the EGM, minority shareholder Michael Mok brought the matter up with the board. "On the valuing of Top Global, you use VWAP (volume-weighted average price). . . Originally, you (were going to) pay a price that was going to be S$0.0118, later on you changed it to S$0.008. In other words, you bring down the value of Top Global to a much lower level, roughly about 47 per cent lower.
"Now, if you were to use the same method, VWAP, for Suryamas, the value should be roughly about S$64 million, not (almost) S$154 million. In other words, on one hand, (for) Top Global you deflate the value, (for) Suryamas, you inflate the value. So you end up giving the shareholders of Suryamas (for example, Mdm Sukmawati) plenty of shares, and dilute ours. So I find that a little bit unfair."
In response, Top Global's chief operating officer and executive director, Jennifer Chang, said: "We didn't value Top Global, we only valued Suryamas. So right now, if you give (Mdm Sukmawati) the number of shares using net tangible assets as a value, you think she can sell and fetch the same value in the market when she didn't collect any cash? It is merely shares that she's taking . . . why don't you look at the land bank, put your focus on the huge land bank because it is not easy to acquire land in Indonesia."
*The initial consideration to be paid to Mdm Sukmawati was 13 billion shares and five billion options, instead of the previously stated 13 billion shares and five million options.