Offerors for Singapore Reinsurance, Procurri declare final prices

Singapore

THE offers on the table for Singapore Reinsurance and Procurri Corporation will not be increased, the two mainboard-listed companies said separately in statements on Tuesday and Wednesday, respectively.

In a bourse filing late on Tuesday night, Singapore Reinsurance said Fairfax Asia does not intend to increase its 35.35 Singapore cents offer price "under any circumstances whatsoever".

The offer was declared unconditional as at 6pm on Wednesday, as Fairfax Asia had received valid acceptances totalling about 132.6 million shares, resulting in it owning, controlling or agreeing to acquire 51.23 per cent of Singapore Reinsurance's voting rights.

Fairfax Asia, which plans to take Singapore Reinsurance private, is making a voluntary cash offer for the 71.82 per cent of the reinsurer that it and its concert parties do not already own.

The offer price is a premium of 20.6 per cent over Singapore Reinsurance's volume-weighted average price per share for both the one-month and three-month periods up to and including March 18, being the last full trading day before the offer announcement. The counter closed at 29.5 Singapore cents on that date.

But it also represents a discount of 21.4 per cent to Singapore Reinsurance's group book value of 44.99 Singapore cents per share as at Dec 31, 2020.

Meanwhile, over at Procurri, private equity firm Novo Tellus said its offer price of 36.5 Singapore cents apiece is final except in the case of a competitive situation.

Procurri's independent financial adviser has deemed the partial offer "fair and reasonable". The company's independent directors have also recommended that shareholders vote in favour of and accept the partial offer.

Novo Tellus's affirmation of its offer price comes a week after Procurri's substantial shareholder DeClout said it intends to vote against the partial offer. As at Tuesday, April 13, DeClout held 21.2 per cent of Procurri's shares. Although that is not yet sufficient to block the Novo Tellus offer, it will certainly be a hindrance.

In response to a query from The Business Times, DeClout said it believed the offer price is "too low and substantially undervalues Procurri".

Novo Tellus held 19.5 per cent of Procurri as at the offer announcement date of March 15.

A concert party, a company called ACT Holdings, held another 9.2 per cent of Procurri.

This leaves 71.3 per cent of Procurri in the hands of independent shareholders with some say in the outcome of the offer.

For the offer to take place, Novo Tellus would need more than half of those shareholders - or at least 35.7 per cent of the existing shareholding base - to vote in favour of the offer.

Management of Procurri holding a collective 11.8 per cent of the company has agreed to vote in favour of the offering. These votes and acceptances must be received by May 3, 5.30pm.

The company will remain publicly listed to provide an opportunity for shareholders to participate in the company's future financial performance, Novo Tellus said.

The partial offer represents a 32.7 per cent premium to the closing price of Procurri shares on the last trading date on March 10 - the last full trading day before a trading halt was called on March 11.

The offer's price-to-earnings ratio of 39.8 times is "significantly above" the average valuation for comparable companies. The offer price is also 2.05 times Procurri's net asset value, higher than the average valuation for comparable companies and similar partial offers.

In its press statement on Wednesday, Procurri said it requires "significant strategic investment to grow long-term share value". Novo Tellus believes that Procurri "faces a very challenging transition", with limited revenue visibility and large investments needed to generate future growth. As a result, earnings prospects may be depressed and Procurri will not likely be in a position to pay dividends in the next few years.

Procurri shares closed 1.39 per cent or 0.5 Singapore cent lower at S$0.355 on Wednesday. Meanwhile, shares of Singapore Reinsurance last traded at 35 Singapore cents on April 14.