Hwa Hong appoints IFA for privatisation offer despite SIAS advice to find an independent reviewer first

DESPITE being urged to first sort out a board compliance issue just a day ago, the board of Hwa Hong on Thursday (May 26) went ahead and appointed an independent financial adviser (IFA) to assess a privatisation offer by Sanjuro United.

This was in defiance of advice from the Securities Investors Association (Singapore) (Sias) on Wednesday for the board to “expeditiously comply” with a notice of compliance (NOC) by the Singapore Exchange Regulation (SGX RegCo) before making the IFA appointment.

The NOC was served on May 9, requiring Hwa Hong to appoint an independent reviewer to look into the company’s board nomination process, among other requirements, and the privatisation offer was announced on May 17.

In a bourse filing after the market closed on Thursday, Hwa Hong said Provenance Capital was appointed as its IFA as it is the directors’ responsibility to decide on the appointment under the Singapore Code on Takeovers and Mergers.

“There is no requirement under the Code (nor the listing rules) that the IFA appointment should be made by directors who are regarded as independent directors under the listing rules,” it added.

In building its case, Hwa Hong referenced the offer timetable stipulated by the Code. 

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It stated that the formal offer document in relation to Sanjuro’s offer is to be despatched to shareholders between 14 and 21 days from the date of the offer announcement. It also noted that a circular containing the IFA’s advice and the directors’ recommendation has to be despatched to shareholders within 14 days from when the offer document was despatched.

Hwa Hong then said: “Given that the offer timetable stipulated by the Code has commenced… it is not possible for the company to defer the appointment of the IFA until after the independent reviewer has been appointed.”

The company, meanwhile, stressed that all its directors are considered “independent” in relation to the privatisation offer as none of them have “an irreconcilable conflict of interest” with respect to the voluntary conditional cash offer.

As for the appointment of independent directors (IDs), the board called it a “separate matter” from the offer, and said it is taking “active steps” to appoint the independent reviewer expeditiously.

This is with a view to reconstituting the board, including the board committees, as soon as possible to comply with the listing rules, requirements of the Companies Act, and the 2018 Code of Corporate Governance.

As Sias had said incoming IDs should step aside until the independent review is completed, Hwa Hong highlighted that the company is permitted by the SGX-ST NOC to appoint new directors even if the review is pending. This is provided that such appointment is made in consultation with the independent reviewer, it noted.

Shares of Hwa Hong closed 1.3 per cent or S$0.005 higher at S$0.39 on Thursday.