OUE unit proposes to privatise OUE Healthcare in S$0.05 per share scheme deal

[SINGAPORE] Mainboard-listed OUE’s wholly owned subsidiary, Treasure International Holdings, has proposed the privatisation of Catalist-listed regional healthcare group OUE Healthcare (OUEH) via a scheme of arrangement at S$0.050 per share in cash.

According to a joint announcement on Monday (Aug 24), the proposed acquisition covers all issued ordinary shares in OUEH, excluding those already held by the offeror.

OUEH is a subsidiary of the offerer and OUE. Treasure International Holdings, together with its concert parties, currently holds an aggregate 89.68 per cent stake in OUEH.

The scheme consideration of S$0.05 in cash values the offer at a 28.2 per cent premium to OUEH’s last transacted price of S$0.039 on Aug 21, the last full trading day prior to the announcement.

The price also offers a 37.5 per cent premium over the one-month volume weighted average price of S$0.0364, a 36.1 per cent premium over the three-month price of S$0.0367, a 42.1 per cent premium over the six-month price of S$0.0352 and a 51.1 per cent premium over the 12-month price of S$0.0331.

Additionally, the buyout price represents a 2.5 per cent premium over OUEH’s latest unaudited net asset value per share of S$0.0488 as at Jun 30. The scheme consideration is also higher than the closing price of the shares over the entire past five-year period.

Low trading volume

The joint announcement cited low trading volume as a key factor driving the privatisation effort.

Over the 12-month period up to Aug 21, the average daily trading volume of OUEH shares accounted for just 0.05 per cent of its total issued shares, with 16 market days registering zero trades.

“The scheme provides scheme shareholders who may otherwise face difficulty exiting their investment, due to the low trading volume, with an opportunity to realise their investment at a premium to the prevailing market prices,” the announcement read.

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Privatisation is expected to allow management greater flexibility to execute long-term strategies, without being constrained by the shorter-term expectations of the public market.

“Further, the company’s China operations are currently ramping up and may require time to stabilise,” a separate joint release issued on the same day read.

Cost of staying listed

The company added that maintaining its listed statues incurs compliance and associated costs.

“The company will be able to save on expenses relating to the maintenance of its listed status and focus its resources on its business operations.”

The offerer said it intends to ensure continuity in the operations of the group, and has no intention of making any major changes to the business of the company, redeploying its fixed assets, or discontinuing the employment of existing employees, save in the ordinary course of business.

The deal requires approval by a majority representing at least 75 per cent in value of the scheme shares voted at the scheme meeting. It will also need the necessary regulatory and court approvals.

Upon successful implementation of the scheme, OUEH will become a wholly owned subsidiary of Treasure International Holdings and will be delisted from the Catalist board.

Shares of OUE ended at S$0.98 on Friday, S$0.005 or 0.5 per cent lower.