Citic Envirotech's parent makes S$0.55-a-share offer in privatisation bid

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

Citic Group Corp's Citic Environment Investment Group is dangling S$0.55 in cash for each share through offer vehicle CKM (Cayman) Company. It noted in its announcement that this price marks a premium of about 68.5 per cent over the three-month volume-weighted average.

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".

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

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.

The offeror, in concert with shareholders Lin Yucheng and Pan Shuhong, already has a deemed interest of 79.1 per cent in Citic Envirotech, but 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".

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. CLSA Singapore is the financial adviser to the offeror.

Citic Envirotech, which called a trading halt on Monday, last closed at S$0.37.