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Lum family, Ellipsiz to make mandatory offer for Lum Chang at S$0.38 per share
ENGINEERING and service solutions firm Ellipsiz as well as members of the family that controls construction firm Lum Chang Holdings will offer to buy up remaining shares of the latter at S$0.38 apiece, while keeping it listed.
The mandatory conditional cash offer was triggered after Lum Chang managing director David Lum's firm, Beverian Holdings Pte Ltd, purchased a 0.21 per cent stake in Lum Chang at the highest price of S$0.37 per share on the open market on Tuesday.
Besides the share acquisition, the low trading liquidity in the stock was another reason for the offer, according to the offeror's announcement on Tuesday afternoon.
It added that Lum Chang shareholders will be able to realise their investments at a premium. The offer price is 8.6 per cent higher than Monday's closing price of S$0.35. It is also at a premium of about 8.6-10.1 per cent over the volume-weighted average price per share for the one, three, six and 12-month periods up to Monday.
Beverian Holdings had a 19.17 per cent stake in Lum Chang through a nominee account as at Tuesday. Mr David Lum owns 99 per cent of Beverian Holdings while his son Kelvin Lum holds 1 per cent.
The offeror RMDV Investments is the bid vehicle for consortium members Ellipsiz, Mr David Lum and Raymond Lum, who is Lum Chang's executive chairman. The two men each own a 45 per cent stake in the offeror, while Ellipsiz holds the other 10 per cent.
Mr David Lum and Raymond Lum are brothers and the controlling shareholders of Lum Chang, with a combined 42.65 per cent stake in the mainboard-listed construction and property development firm as at Tuesday.
Mr David Lum is also the sole legal and beneficial owner of another firm, Bevrian Pte Ltd, the controlling shareholder of Ellipsiz with a 60.28 per cent interest. He thus beneficially owns 60.28 per cent of Ellipsiz.
Meanwhile, Mr Kelvin Lum is Ellipsiz's chief executive officer and executive director, as well as a non-independent non-executive director of Lum Chang. He sits on the board of the offeror alongside his father and uncle.
The offeror noted that the trading volume of Lum Chang's shares "has been generally low".
The average daily trading volume of the stock amounted to just 0.02 per cent of the total number of issued shares during the one-month period up to Monday, and ranged between 0.03 per cent and 0.06 per cent for the three, six and 12 months prior.
Ellipsiz, which does not own any Lum Chang shares, said its participation in the offer "is strategic in nature to generate better returns" by investing in Lum Chang shares for long-term investment purposes.
At the moment, RMDV intends to maintain Lum Chang's listing status. If the latter's free float falls below 10 per cent and the Singapore Exchange suspends trading, the offeror will act to lift the suspension.
The offeror may conduct a review of the business of Lum Chang and its subsidiaries after the offer closes.
RMDV plans to let Lum Chang continue with its existing activities, with no intention to introduce any major changes to the group's business, redeploy its fixed assets or discontinue the employment of any existing employees other than in the ordinary course of business.
The consortium will fund the offer's purchase price with financing from external sources, including loans and/or other credit facilities from banks and other credit-providing entities. RMDV has obtained an S$87.2 million secured loan from UOB, which may be used to fund the offer.
UOB is the financial adviser to the offeror for the offer. The bank confirmed that sufficient financial resources are available to RMDV to satisfy in full all acceptances of the offer.
Earlier this month, between Nov 5 and 11, Mr David Lum's Beverian Holdings had also bought 744,600 shares of Lum Chang at S$0.35 apiece, increasing his total interest to 21.86 per cent at the time. This came after the acquisition of 73,000 shares at the same price on Oct 30.
Ellipsiz and Lum Chang both called for trading halts at about 10.50am on Tuesday. Before that, Lum Chang gained 5.7 per cent or S$0.02 to S$0.37, while Ellipsiz was flat at 32.5 Singapore cents.