Independent financial adviser deems offer for Amara ‘fair and reasonable’

XANDAR Capital, the independent financial adviser (IFA) in the exit offer for Amara Holdings, has deemed the voluntary cash offer at S$0.60 per share from a consortium linked to Albert Teo, the hotel group’s chief executive, to be “fair and reasonable”.

The IFA estimates the value of each share to be between S$0.53 and S$0.54. 

Among the valuation metrics used, the IFA looked at the price-to-net asset values (P/NAV) of several locally listed property companies and concluded that the final offer price’s ratio is above the mean and median ratios of the comparable companies.

The opinion is despite the final offer price’s discount of 51.89 per cent to its S$1.247 revalued net asset value (RNAV) per share, or price to RNAV of 0.48 times. 

The RNAV is significantly larger than the previously assessed net asset value. Its unaudited net asset value attributable to shareholders as at Jun 30, 2023 was S$383.4 million, while the IFA now reports its RNAV as S$717.1 million. Some S$349.6 million was added due to a revaluation surplus relating to the group’s leasehold land and buildings.

The companies used for the comparison include OUE, Hotel Properties Limited, and Far East Orchard.

The IFA went on to note that the gearing ratios of these companies are lower than Amara’s. 

The companies’ gearing ratios – calculated based on total borrowings and lease liabilities over total equity – range between 0.04 and 0.89 time, while Amara’s is at 0.9.

Xandar Capital, in its report, stated that it had discussed the suitability and reasonableness of the companies Amara is compared with the management.

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It nevertheless qualified that the companies are not an exhaustive list, while noting that there “may not be any listed company that is directly comparable” to Amara in terms of location, business activities, customer base, size of operations, asset base and other relevant criteria.

“Any comparison made here is necessarily limited and it may be difficult to place reliance on the comparison of valuation for the comparable companies. Therefore, any comparison made serves only as an illustrative guide,” it added.

It also pointed out that the RNAV of the companies are not available to calculate the P/RNAV ratios for comparison purposes, thus only P/RNAV ratios relating to the privatisation statistics of several other property-related companies were used.

The companies being compared here include Lian Beng Group, Chip Eng Seng Corporation and Hwa Hong Corporation.

Xandar Capital said this comparison showed that the P/RNAV ratio as implied by the final offer price in Amara’s case is “within the range but lower than the mean and median P/RNAV ratios” of the privatisation transactions.

The P/RNAV ratios of these transactions are relevant as they relate to successful privatisation offers for companies in the broad property industry listed on the Singapore Exchange Securities Trading, it said.

The offeror – a consortium linked to Albert Teo, the hotel group’s chief executive, other members of his family and private equity investor Dymon Asia – had said that the S$0.60 final offer price is final, and that the offer will be funded by a combination of interest-free loans and a bank loan.

Shareholders holding some 51.2 per cent of Amara’s shares have accepted the offer at 6 pm on Tuesday (Dec 19).