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CSE Global finds new substantial shareholder in Malaysian O&G firm SDHB Group
CSE Global, which makes safety systems used in the oil-and-gas (O&G) sector, has found a new substantial shareholder in the form of a Malaysia-listed energy services group.
The market was abuzz earlier in the day on news of the block trades that had been done on Friday, with the stock closing as the most actively traded counter on the Singapore Exchange.
Serba Dinamik (SDHB Group), which provides engineering solutions to the O&G segment, has bought a 24.8 per cent stake in CSE Global for S$57.7 million, an announcement on Bursa Malaysia on Friday showed. Based on Bloomberg data, SDHB Group would likely be the single-largest shareholder.
The stake was bought from eight vendors, with the single-largest stake sold by CSE Global's founder Tan Mok Koon. Mr Tan, a former CSE executive director, sold 11.1 per cent of CSE at S$25.8 million.
The block trades, announced Friday evening on the Singapore Exchange, mean that the shares were sold at S$0.45 apiece - a premium of just over 10 per cent to the closing price on Thursday.
Shares of CSE Global surged 2.5 Singapore cents, or 6.2 per cent, to close on Friday at S$0.43 on heavy trading. Some 145 million shares changed hands.
"The proposed acquisition is part of SDHB Group's overall strategy to expand its geographical footprint in the areas where CSE Global has presence," SDHB said in a regulatory filing. SDHB said it hopes to leverage on CSE Global's client base in the O&G industry, and strengthen its IT segment by potentially integrating CSE Global's various IT solution platforms.
CSE Global provides total integrated industrial automation, telecommunications and environmental solutions projects in the Americas, Asia-Pacific, Europe, Middle East and Africa. More than 90 per cent of its revenue is from outside Singapore.
It swung into the red with a net loss of S$45.1 million for its full-year ended Dec 31, 2017, hit by a one-off settlement cost following a settlement agreement (with no admission of liability) with the US government over a potential civil liability, as well as a large one-off impairment of goodwill.
CSE Global said in announcing its final-year results in February that it expects a "much better" performance in 2018, given the current outlook of the higher flow orders in greenfield and brownfield orders.
"CSE will focus on cost control and consolidating the acquisitions made in FY2016 and FY2017, and will continue to explore acquisition opportunities to support its long-term sustainable growth objectives," it added.
The group had in February been the target of activist investor Quarz Capital Management, which called for "cash discipline" and higher dividends from CSE Global.