BT Explains: The fine print on the SPH privatisation deal

Tan Nai Lun
Published Thu, Nov 18, 2021 · 03:42 AM

    THE stakes have been raised in the battle for Singapore Press Holdings (SPH) T39 .

    Cuscaden Peak, a consortium comprising Hotel Properties, its managing director Ong Beng Seng, and 2 Temasek-related entities CLA and Mapletree, is offering each SPH shareholder the choice between an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.

    Keppel's offer is S$2.351 per share, consisting of S$0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit.

    Shareholders will have to vote at both Keppel's and Cuscaden's scheme meetings, even if they prefer the Cuscaden offer, as shareholders will first need to vote down the Keppel Scheme at the Keppel scheme meeting before the Cuscaden scheme meeting can be convened.

    In a bourse filing on Thursday (Nov 18), SPH, which publishes The Business Times, answered some frequently asked questions regarding the offers.

    Why has SPH's board preliminarily recommended to vote down Keppel's scheme and to accept Cuscaden's revised offer, before the independent financial adviser had opined on it?

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    Independent directors of SPH have noted that Cuscaden's offer is the highest currently. Shareholders will have "full optionality and greater value certainty".

    If the Keppel scheme meeting is unsuccessful, Cuscaden will likely hold its scheme meeting around January 2022. The Cuscaden scheme's effective date and completion is then expected to be in February 2022, subject to receipt of all requisite regulatory approvals and court sanction.

    If shareholders vote in favour of Keppel's scheme, its effective date and completion is expected to be in January 2022.

    When will Cuscaden's offer trigger a mandatory general offer for SPH Reit?

    Should 30 per cent or more shareholders elect for the all cash consideration under Cuscaden's offer, it will trigger the mandatory general offer as Cuscaden's stake in SPH Reit will go above 30 per cent.

    If the mandatory general offer goes through, the offer will be priced at S$0.964 in cash per SPH Reit unit.

    Are there any other options for Keppel should they wish to come back to bid for SPH?

    Keppel has an option to switch to a general offer for SPH prior to its scheme meeting. The pricing for the general offer, however, will be unchanged, as Keppel has said its increased consideration is final.

    The scheme meeting is expected to be held by Dec 8. If Keppel fails to secure shareholders' approval, it will not be able to make another offer until a year later.

    What are the break fee considerations for both offers?

    SPH has to pay a break fee of S$34 million to Keppel, equivalent to around 1 per cent of the aggregate consideration of Keppel's initial offer, if a competing offer becomes effective or unconditional.

    There are no break fee clauses in Cuscaden's offer.

    Cuscaden had said earlier that its scheme consideration would not be reduced or otherwise adjusted for the S$34 million break fee payable to Keppel. This means that the break fee has already been factored in under the consortium's offer for SPH.

    SPH shareholders would hence not see any impact from the break fee on Cuscaden's all-cash consideration of S$2.36; or the cash and units consideration of S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.

    What if shareholders were to choose to vote down both offers?

    Should shareholders choose to vote down both offers, SPH will remain listed, and its board will "stand ready to move forward on our own".

    "Continuing the business on our own is an option on the table," SPH said, noting that all its businesses under continuing operations, excluding the media business, showed improvements in FY 2021 ended August. Its management is also committed to continue its growth strategies for its retail and commercial, purpose built student accommodations, aged care and digital businesses.

    How will the lifting of the Newspaper and Printing Presses Act (NPPA) affect the offers?

    The NPPA will be lifted after SPH completes its media business restructuring around Dec 1, and further details will be announced in due course.

    Once the NPPA is lifted, any investor would be able to take a position of more than 5 per cent in SPH.

    Shareholders have asked if this could jeopardise the privatisation offers, but SPH said it is not in a position to comment. Shareholders were advised to exercise caution when dealing in the shares of SPH given the ongoing developments of the situation.

    Both the Keppel and Cuscaden schemes require the approval of at least 75 per cent of the total number of votes cast by shareholders at the meeting. Also, more than half of the individuals or entities voting at the meeting must be in favour of the scheme.

    To block either scheme, an individual and his concert parties would in theory have to acquire more than 25 per cent of SPH. But if not all shareholders vote, the scheme could be blocked by a party with a smaller stake.

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