Challenger majority stakeholders make S$0.56 per share cash offer to privatise company 

MAJORITY shareholders of consumer electronics retailer Challenger Technologies : 573 0% have made a voluntary unconditional cash offer of S$0.56 per share to take the company private. 

The offer is being made with a view to delist the company from the Singapore Exchange (SGX), as indicated by a bourse filing on Tuesday (May 30) afternoon. 

The offeror, DigiTech Holding, is the bid vehicle of a consortium formed by Challenger’s majority shareholders that collectively hold around 54.4 per cent of the company’s shares. The consortium comprises Asia Consumer Electronics, a special purpose vehicle (SPV) linked to Dymon Asia Private Equity, and Fortuna Capital, an SPV wholly owned by Challenger chief executive Loo Leong Thye.

The rest of the Loo family holds a 10.4 per cent stake in the company. 

At S$0.56 a share, the offer price represents a premium of 3.1 per cent over the volume weighted average price (VWAP) for the shares traded in Challenger over the past one month. It also represents a 4.5 per cent, 6.7 per cent and 5.9 per cent premium over VWAP per share for the three-month, six-month and 12-month periods, respectively. 

The filing indicated that the trading volume of Challenger’s shares has remained low, with an average of about 94,335 shares being traded over the one-month period. This represents less than 0.03 per cent of the total number of issued shares for the same period.

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The trading volume also excludes the sale of 9.2 million units at S$0.50 per share to Digileap Capital, a partnership between the Loo family and Dymon Asia Private Equity. This was done in January via a married deal, which is an off-the-market share transaction between two parties on an agreed price. 

The privatisation offer therefore provides shareholders with a “clean cash exit opportunity” to realise their investment at a premium – something that might otherwise “not be available given the low trading liquidity of the shares”, said the offeror.

It added that the move will give the company more flexibility in managing its business, as well as optimising the use of its management and capital resources to implement any operational changes. 

This is especially crucial in the near to mid-term, as operational costs increase, it said. “Coupled with weak retail sentiment and industry disruption resulting from the rise of e-commerce, the company has experienced a decline in revenue over the last five years.”

DigiTech Holdings also intends to exercise its right to compulsorily acquire all shares not already acquired under the offer, before delisting from the SGX. 

In 2019, Challenger had attempted to delist from the SGX, with Digileap Capital making a cash exit offer of S$0.56 per share. The voluntary delisting was voted down by minority shareholders who believed that the exit offer price was too low.  

Challenger had called for a trading halt in the late afternoon of Monday (May 29). Its shares last traded flat at S$0.55.

On Tuesday night, the company requested the trading halt to be lifted.