Esteel making mandatory general offer for BRC Asia
Singapore
A PRIVATE company, Esteel Enterprise, is making a mandatory general offer to acquire the shares it does not already own in mainboard-listed steel prefabrication firm BRC Asia at S$0.925 per share.
This follows news of Esteel's purchase of 81.6 million shares from Lingco Marine, Lingco Holdings, Seah Kiin Peng, Sin Teck Guan (Pte) Ltd and Lim Siak Meng, representing a 43.77 per cent stake, at 92.5 Singapore cents per share last Friday.
Esteel is owned by You Zhenhua's Advance Venture Investments Limited (80.1 per cent) and Liu Bin's Toptip Holding (19.9 per cent).
HG Metal Manufacturing, another mainboard-listed steel distributor which holds about 22.62 per cent of BRC Asia, has also signed a conditional agreement to accept the offer for its entire share, subject to shareholders' approval. Once this goes through, the offer will become unconditional, the deal arranger ABN Amro N.V. (Singapore Branch), said.
HG Metal said it had in August 2008 acquired BRC Asia shares as a strategic investment to expand its core business of trading of steel products. Explaining its decision to dispose its stake now, HG Metal cited challenging business prospects ahead within the construction industry. It also took into account BRC Asia's current financial performance.
BRC Asia's shares have been on a steady uptrend, rising nearly 64 per cent this year to end at S$0.86 as at last Friday.
"The company has reviewed its investment strategy in BRC Asia and considers it an opportune time to realise its investment in BRC Asia and apply the proceeds to other business and investment opportunities which are more likely to enhance shareholder value," HG Metal said.
It added that it will incur an accounting loss of about S$10.48 million from the disposal, based on a six-month financial period as at June 30, 2017.
HG Metal plans to use the net sale proceeds of S$38.8 million from the disposal for general working capital and any strategic investments or acquisitions when opportunities arise. It does not rule out returning surplus capital to shareholders.
Ahead of its announcement, HG Metal already rose 11.5 per cent to close at 58 Singapore cents last Friday, a two-year high.
BRC Asia said it will appoint an independent financial adviser to advise its independent directors.
