Keppel to push on with arbitration proceedings against SPH despite termination notice

Tan Nai Lun

Published Thu, Feb 10, 2022 · 08:50 AM

KEPPEL Corporation BN4 on Thursday (Feb 10) said it will continue with its arbitration proceedings against Singapore Press Holdings (SPH) T39 : T39 0%, after SPH decided to terminate Keppel's implementation agreement relating to its takeover offer late Wednesday.

Keppel said it had received a termination notice from SPH after it filed a notice of arbitration to start arbitration proceedings against SPH.

The termination notice, among others, stated that the Securities Industry Council (SIC) had no objections to SPH's exercise of the right to terminate the implementation agreement, and that not all the conditions of the Keppel scheme had been satisfied on or before the cut-off date.

In a bourse filing, Keppel's wholly-owned subsidiary, Keppel Pegasus, said SPH should not have consulted with SIC on the termination, "given the prevailing circumstances where the Keppel scheme should have been put to shareholders of SPH for their consideration".

In December, SIC also threw out a clause in the implementation agreement with Keppel that restricts SPH from holding a scheme meeting for a rival offer within 8 weeks from the Keppel scheme meeting. The SIC ruling meant that SPH could hold a shareholders' meeting to vote on the Keppel offer and the Cuscaden offer on the same day.

In return, Keppel said the SIC ruling "does not affect Keppel Pegasus' rights under the Keppel implementation agreement".

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Keppel said it would continue with the arbitration proceeds to enforce its rights and to seek various reliefs against SPH, including specific performance of SPH's obligations.

Late on Wednesday, SPH said it would terminate Keppel's implementation agreement while pressing ahead with preparations for shareholders to vote on Cuscaden Peak's rival offer.

Cuscaden, a consortium backed by Hotel Properties (HPL), businessman Ong Beng Seng and 2 Temasek-linked entities, CLA and Mapletree, had in November made a revised offer of S$2.40 a share for SPH, comprising S$1.602 cash and 0.782 of an SPH Reit (real estate investment trust) unit through a distribution-in-specie by SPH.

This came after Keppel tabled a final offer - which in itself is a revision of an earlier offer - of S$2.351 per share, consisting of S$0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit.

Separately, Cuscaden's spokesperson Christopher Lim, who is also group executive director of HPL, on Thursday said: "Any attempt to delay the Cuscaden scheme process goes against the interest of SPH shareholders and deprives them of the opportunity to vote in favour of the Cuscaden scheme and receiving value in their investments promptly."

For SPH, the termination of the Keppel scheme will likely pave the way for a clearer and more straightforward privatisation and voting process on Cuscaden’s offer, said RHB analysts, who noted that the scheme meetings for both Keppel and Cuscaden have been delayed due to pending regulatory approval.

The research team said the outcome of the arbitration may not matter as companies would have moved on to pursue their own goals.

As for Keppel, analysts expect the termination will likely have an immaterial impact.

DBS said Keppel’s financials and share prices will unlikely see material impact as the market has yet to factor in SPH contributions to earnings and valuation, although the RHB research team said Keppel’s share price could see a “very short-term knee-jerk reaction, as with any negative newsflow from disputes”.

RHB added that the termination will unlikely affect the medium-term outlook for Keppel’s asset monetisation and capital recycling into new growth sectors.

Shares of SPH closed flat at S$2.33 on Thursday, while shares of Keppel closed at S$6.03, down S$0.01 or 0.17 per cent.

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