Citic Envirotech parent to offer S$0.55 a share to take company private

Singapore

THE majority owner of mainboard-listed Citic Envirotech plans to take the water treatment company private in a deal valuing it at S$1.34 billion, according to a pre-conditional exit offer launched on Wednesday.

Citic Group Corp's Citic Environment Investment Group is dangling S$0.55 in cash for each share, through CKM (Cayman) Company.

It noted that the price tag marks a premium of about 68.5 per cent over the three-month volume-weighted average up to the last full trading day on Nov 1, as well as a price-to-net asset value ratio of 1.15 times.

The counter, which halted trading Monday, last closed at S$0.37.

The offeror said that it does not plan to roll out major changes to Citic Envirotech's business.

But it believes that the company "is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future", so it will not be necessary for Citic Envirotech to maintain a listing here.

With a delisting, the owners and management would have more control and flexibility over the company and could save on compliance costs with a delisting, the offeror added, laying out the rationale for its offer.

Novus Corporate Finance has been named the independent financial adviser to the independent directors for the exit offer, and the circular, with its opinion on whether the offer is fair and reasonable, is expected to be sent to shareholders in five weeks' time.

The exit offer is subject to the approval of various Chinese authorities, and also needs shareholder approval at an extraordinary general meeting expected in the week of Dec 30.

Based on the indicative timeline, the exit offer can be completed no earlier than the week of Jan 13, 2020.

Citic Envirotech parent Citic Group Corp is a Chinese state-owned conglomerate with interests that include energy, manufacturing, real estate, infrastructure and engineering.

The offeror, along with shareholders Lin Yucheng and Pan Shuhong, already has a deemed interest of 79.1 per cent in Citic Envirotech. Dr Lin and Ms Pan are part of the concert group under an agreement in 2014.

At the extraordinary general meeting, the delisting must also clear a majority with shareholders who own at least 75 per cent of all shares, while the concert group must abstain.

Hao Weibao, president of Citic Environment, said in a statement that the exit offer price "provides an attractive and liquid cash opportunity for shareholders who are not prepared to bear the business risks associated with the company to realise a clean exit at a premium".

CLSA Singapore is the financial adviser to the offeror.