Lum family, Ellipsiz to make mandatory offer for Lum Chang at S$0.38 per share

Singapore

ENGINEERING solutions firm Ellipsiz and the family that controls construction firm Lum Chang Holdings will make an offer for the remaining 57.3 per cent of the latter's shares 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 0.2 per cent stake in Lum Chang at the highest price of S$0.37 per share on the open market on Tuesday.

The offeror RMDV Investments is the bid vehicle for Ellipsiz, Mr David Lum and his brother Raymond Lum, who is Lum Chang's executive chairman. The two men each own 45 per cent of the offeror, while Ellipsiz holds 10 per cent.

Mr David Lum and Mr Raymond Lum are controlling shareholders of Lum Chang with a combined 42.7 per cent stake as at Tuesday.

Mr David Lum also owns another firm, Bevrian Pte Ltd, which has a 60.3 per cent stake in Ellipsiz. He thus beneficially owns 60.3 per cent of Ellipsiz. Meanwhile, his son Kelvin Lum is Ellipsiz's chief executive officer and Lum Chang's non-independent non-executive director. Mr Kelvin Lum sits on the offeror's board alongside his father and uncle.

RMDV said in its announcement 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 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.

Aside from Beverian Holdings' share acquisition, another reason for the offer was the low trading liquidity in Lum Chang's stock, RMDV said.

The counter's average daily trading volume amounted to just 0.02-0.06 per cent of the total number of issued shares in the one, three, six and 12 months up to Monday.

Ellipsiz, which does not own any Lum Chang shares, said its participation in the offer "is strategic in nature to generate better returns" as it will be 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 bourse operator suspends trading, the offeror plans to undertake or support any action necessary 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 business, redeploy fixed assets or cease the employment of any existing staff other than in the ordinary course of business.

RMDV has obtained a S$87.2 million secured loan from its financial adviser UOB, and may use the loan to fund the offer.

Ellipsiz said it will take an effective interest in Lum Chang of about 5.7 per cent, assuming all public shareholders accept the offer in full. That means Ellipsiz will fork out up to about S$8.2 million - funded from the UOB loan - for this stake.

The offer will be conditional on RMDV receiving valid acceptances that will result in the offeror and concert parties holding more than half of Lum Chang's total number of shares.

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.