Bonvests proposes privatisation offer of Colex via scheme of arrangement 

CATALIST waste management company, Colex has announced a proposed privatisation offer by Bonvests Holdings for the shares not held by Bonvests and its subsidiary Coop International by a scheme of arrangement.

The offeror holds 79.7 per cent of Colex, and Colex executive chairman, Henry Ngo, is also the executive chairman of Bonvests.

Bonvests is offering S$0.23 in cash per share, which represents a 25 per cent premium to the last traded price of S$0.184 or 13.3 per cent premium to the three-month volume weighted average price up to 10 October. The cash offer also represents a price to net asset value of 1.62 times, which the offeror claims exceeds regional precedent waste management transactions and listed companies at 1.44 times and 1.2 times respectively.

“We believe that the privatisation of Colex is necessary in providing it with the operational and financial flexibility to navigate this challenging operating environment.,” said Gary Xie, joint managing director, Bonvests.

The offer to take Colex private stems from the increasingly challenging operating environment for the waste management company with no assurance of returning to profitability in the near term. There is increased competition for the National Environment Agency’s (NEA) public waste collection (PWC) licences for domestic and trade premises.

The company’s PWC contract for the Jurong sector has expired in March 2020, coupled with stiff competition for its contract cleaning segment, the contribution from the waste collection segment has been declining. Colex was loss making for FY 2021, exacerbated by the roll back of temporary government grants. The next tender cycle for NEA only commences in 2025.

With Colex having not tapped on the capital markets to raise funds and being unlikely to do so, the listing status serves limited purpose while incurring listing costs. A privatisation will give the management flexibility in navigating the challenging environment ahead and save on costs associated with listing.

Bonvests claims that this is an opportunity for shareholders to exit and realise their investment at a premium. The offer implies a total return of 80.2 per cent for shareholders over a 36 month period including the S$24.5 million paid in dividends.

“Together with Bonvests, the proposed Privatisation provides us the best chance of navigating Colex through this period. Having evaluated the offer put forth by Bonvests Holdings Limited, we believe that the proposed privatisation is the best option for Scheme Shareholders to immediately realise their investment,” said Ding Chek Leh, executive director, Colex.

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Shares of Colex last traded at S$0.184 on 10 October.