Nan Fung makes offer for Forterra Trust
Bid at S$1.85 per unit comes as Nan Fung's stake hits 30.79% after exercise of option
Singapore
NAN Fung International Holdings - one of the largest privately-owned property developers in Hong Kong - has made a mandatory conditional cash offer for Singapore-listed Forterra Trust at S$1.85 per unit.
The offer, announced before market opening on Tuesday, sent Forterra units up 16 cents to a six-month high of S$1.86. The business trust is an owner, manager and developer of commercial real estate in China.
The offer, through Nan Fung's indirect wholly owned New Precise Holdings, was triggered by the latter's exercise of an option for 3.05 million units at around 34.8 Singapore cents each. The exercise resulted in Nan Fung and other relevant persons owning 79.1 million units, or 30.79 per cent of Forterra's enlarged number of issued units.
The S$1.85 per unit offer price was at an 8.8 per cent premium to the closing price of Forterra's units on Monday and 24.1 per cent higher than the volume weighted average price (VWAP) of the last three months.
The offer is conditional on Nan Fung and concert parties garnering a stake of more than 50 per cent in Forterra. Unit-holders will receive documents setting out the terms and conditions.
The offeror says it has no present intention of pursuing a delisting of Forterra.
Initially listed on SGX's mainboard in June 2010 under the name Treasury China Trust, Forterra shed its old label back in February this year, and today, its portfolio consists of a total of six office and retail properties in Shanghai, Qingdao and Beijing.
To provide for co-investment opportunities, last September, Nan Fung had acquired a 29.98 per cent stake in Forterra from the trust's previous sponsor, Treasury Holdings, for S$226.7 million, and it then threw in another S$29.3 million for Forterra's trustee-manager and property manager.
But lately, the trust has been suffering from a sustained lacklustre performance. Forterra's annual gross revenue for FY2013 stood at about S$77 million, representing a 22.3 per cent decrease from FY2012.
And in the most recent quarter which ended Sept 30 2014, Forterra's gross revenue dropped to S$12.9 million, a 29.5 per cent decline from the same period in 2013.
Nan Fung has no intention to introduce significant changes to Forterra. Upon takeover, the trust's business and operations are expected to stick according to current trajectory, which prioritises the completed development of integrated office and retail complex, The Place, one of Forterra's portfolio properties. Nan Fung will also evaluate options or opportunities that are available to the trust.
