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Hot stock: Delong up 15.8% to S$6.96 after CEO revives S$7/share cash offer
SHARES in mainboard-listed steelmaker Delong surged by some 15.8 per cent on Tuesday afternoon, on the back of news that chief executive Ding Liguo has revived his S$7 per share cash offer to take the company private through his vehicle, Best Grace Holdings.
As at 3.35pm, the counter was trading at S$6.96, up S$0.95, with some 2.2 million shares traded - making it one of the most actively traded stocks by value for the day.
Trading in Delong shares was suspended on July 24, and no trades were recorded on July 23.
In a research note on Tuesday, Maybank Kim Eng highlighted that the offer price of S$7 per share represents a 9.5 per cent premium over the volume-weighted average share price for the 12-month period up till July 22. It is also at a 16.5 per cent premium over the counter's July 22 close of S$6.01.
BT previously reported that Mr Ding revived his bid to privatise the company on Monday, even as the Securities Industry Council (SIC) ruled that an aborted buy-out attempt in late 2018 breached Singapore's takeover code.
In addition, law firm Shook Lin & Bok and financial adviser PrimePartners Corporate Finance have been censured by the SIC for their roles in a short-lived privatisation attempt by Delong.
The offeror, which is owned by Mr Ding, was also censured over the bungled buyout bid, according to an SIC statement on Monday.
Mr Ding, through his vehicle Best Grace Holdings, had made a voluntary conditional cash offer of S$7 a share on Sept 27, 2018, valuing Delong at S$771.3 million.
But a concert party of the offer vehicle had already bought a 15.04 per cent stake in Delong at a higher price, the US dollar equivalent of S$7.42 a share, in June that year. As this took place less than six months before the offer, the offeror is obliged to extend the same price to all shareholders.
The planned privatisation was eventually scuppered, just two weeks after the offer was announced.
This prompted the SIC to appoint a five-member hearing committee to look into whether the offeror had breached the Takeover Code, and whether the advisers had failed in their responsibility to ensure that the offeror complied with the Code.
Following a probe, the committee chaired by Hans Tjio established that there had been a breach, but ruled that it was not necessary to compensate any Delong shareholders, given what it deemed "the limited impact of the breach".
Meanwhile, Mr Ding and his spouse, Zhao Jing, have tabled a fresh buyout offer at the original price of S$7 a share, through Best Grace, having obtained an SIC waiver from the rule that bars an offer from being re-introduced within 12 months of a withdrawal.
Best Grace relaunched its offer at the start of this week, with Stirling Coleman Capital replacing PrimePartners Corporate Finance.