Buy-out offer for Kingboard Copper 'not fair but reasonable', says IFA

THE buy-out offer for mainboard-listed Kingboard Copper Foil Holdings is "not fair but reasonable", the independent financial adviser (IFA) has said, in a circular on Thursday.

SooChow CSSD Capital Markets (Asia) advised the company's independent directors to recommend that shareholders accept the deal, which dangles S$0.60 in cash for each share.

Controlling shareholder Kingboard Laminates Holdings' previous offer of a lower S$0.40 a share failed in 2017 when it was deemed neither fair nor reasonable.

But the IFA, laying out its analysis of the latest bid, noted that the offeror and its concert parties already control 88.41 per cent of the company.

The offeror intends to privatise the company and will exercise its right of compulsory acquisition once it is able to do so, the IFA also noted.

"The offer represents a realistic opportunity for shareholders to realise their entire investment in cash, taking into account the low trading liquidity prior to the offer announcement date," SooChow CSSD Capital Markets (Asia) said in its letter to the independent directors.

The description of "not fair but reasonable" - which was recently applied to Nojima Asia-Pacific's offer for Courts Asia by KPMG Corporate Finance - has previously raised minority shareholders' hackles, during other privatisation attempts on the Singapore bourse.

The Securities Industry Council regards an offer as "fair" if the offer price is equal to or more than the value of the target securities that are the subject of the offer.

Meanwhile, the IFA should weigh factors such as the offeror's existing voting rights and the market liquidity of the securities in passing judgment on whether the offer is "reasonable".

Bourse filings show that Kingboard Copper's net asset value stood at HK$3.8027 (S$0.656) per share as at Dec 31, 2018.

Offeror Kingboard Laminates Holdings is majority-owned by Hong Kong's Kingboard Holdings, which makes and sells laminates, printed circuit boards, chemicals and magnetic products.

Kingboard Copper closed flat at the offer price of S$0.60 on Thursday.