Delisted Aztech Group shareholders may share in proceeds from listing of Aztech Global

Singapore

THE board of Aztech Group will deliberate the use of proceeds from the sale of vendor shares in the recent listing of its subsidiary Aztech Global, and will take into consideration the interests of Aztech Group's minority shareholders.

Michael Mun, executive chairman and chief executive of Aztech Global, said the sale of the vendor shares during Aztech Global's IPO (initial public offering) was "primarily to reward shareholders of Aztech Group, including minority shareholders from the previous listing exercise".

Shareholders of Aztech Group will be updated in due course on what will be done for them, Mr Mun said.

This was in response to queries from The Business Times on why shareholders of the formerly listed Aztech Group - which was taken private in 2017 - were not given the option to exchange their shares for that of the newly-listed company.

Last month, Aztech Global, the technology arm of Singapore-based conglomerate Aztech Group, made its debut on the Singapore Exchange. Aztech Global had raised a total of S$297 million in gross proceeds, selling 155 million new shares and 77 million vendor shares.

The sale of the vendor shares raised net proceeds of S$95.1 million for Aztech Group.

Mr Mun had previously offered to delist Aztech Group at 42 Singapore cents a share in cash.

This was a discount of 56 per cent to the company's revalued net asset value (RNAV) per share of S$0.952 as at June 30, 2016.

At the time, Stirling Coleman Capital, the independent financial adviser (IFA) to the independent directors, called the offer "fair and reasonable" due to reasons such as the group's declining financial performance, the downward trend of its share price, and its low trading volume.

The IFA did, however, note that the exit price valuation was below the range of comparable companies in the electronics segment, and below the range of precedent voluntary general offers and voluntary delistings.

Toh Zhen Zhou, an analyst at Aequitas Research who also publishes on SmartKarma, called the offer a "steal".

"This is the case of the majority shareholder taking the company private at an opportunistic time and at a very cheap valuation," he said in a note published in February.

At an investor meeting held by Aztech Group in January 2017, shareholders had grilled the independent directors for an hour about the fairness of the offer.

Mr Mun and his son, Jeremy Mun, who was an executive director of the company, were absent at the meeting. They nevertheless got the mandate they needed to delist the company; 93.8 per cent of the total number of shares cast in the vote by shareholders at the meeting, voted in favour of the delisting.

When it delisted in February that year, almost 5,000 investors were reportedly still holding shares in the company.

S Nallakaruppan, an investment specialist at Lim & Tan Securities, said a distribution in specie of new Aztech shares to Aztech Group shareholders "would have made more sense to the original shareholders, especially the minority ones".

"Some minorities might be ageing and they could have an urgent need for funds. Perhaps the management could think of giving some options to these minorities," he said.

Mr Mun is the sole shareholder of AVS Investments, which holds 84.09 per cent of Aztech Group.