Challenger seeks to delist with S$0.56 exit offer price

CHALLENGER Technologies announced Wednesday that it intends to delist, with Digileap Capital making a cash exit offer for all of the electronic retailer's shares at an exit offer price of S$0.56 per share. The offeror is a partnership between the Loo family and Dymon Asia Private Equity, via Dymon Asia Private Equity (S.E. Asia) Fund II.

The proposed voluntary delisting is conditional on the Singapore Exchange's approval of Challenger's application, and a resolution being passed at an extraordinary general meeting.

If the latter resolution is passed, Challenger will be delisted irrespective of the number of acceptances received for the exit offer. Four members of the Loo family, including Challenger chief executive officer Loo Leong Thye and Ng Leong Hai, who together hold 78.64 per cent of the total shares, have provided undertakings to vote in favour of the delisting resolution and accept the exit offer.

The exit offer price represents a premium of 15.1 per cent over the volume-weighted average price of 48.7 Singapore cents for the 12 months up to and including the last full market day, as well as a premium of 110.1 per cent to the net tangible asset value of Challenger as at Dec 31, 2018.

It also "represents an opportunity for shareholders to realise their entire investment in Challenger, which may otherwise be difficult due to the low trading liquidity of the shares", said the company.

Among the reasons given for the proposed delisting are that "Challenger has not carried out any exercise to raise cash funding on the SGX-ST since 2007 and is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future". Delisting will eliminate listing compliance costs and allow the company to focus resources on business operations.

Delisting will also provide "greater operational flexibility to manage the business, optimise the use of its management and capital resources, and facilitate the implementation of any operational changes", said Challenger. Noting that the company is facing challenges from weak retail sentiment and industry disruption, it added that to tackle this, "changes to the business may need to be implemented and dividends could be affected during such time".

More information on the exit offer will be set out in a circular and letter to shareholders. DBS Bank has been appointed financial adviser to the offeror for the delisting and the exit offer.