Roxy-Pacific offer 'not fair but reasonable', says independent adviser; shareholders advised to accept deal

THE buyout offer for property group Roxy-Pacific Holdings is "not fair but reasonable", the independent financial adviser (IFA) in the deal said in a letter dated Wednesday (Jan 19).

On the advice of the IFA, the independent directors recommended that shareholders accept the offer of S$0.485 in cash for each share, which values the company at S$630.5 million.

Roxy-Pacific chairman and chief executive Teo Hong Lim launched the privatisation bid in September 2021 with 10 others through bid vehicle TKL & Family, citing a "challenging macro and operating environment" and other factors.

In gauging the fairness of the offer, IFA ZICO Capital noted the price-to-revalued net asset value (P/RNAV) of 0.64 time implied by the offer price was below the average and median ratios of precedent privatisation transactions since 2019.

Precedent deals that were taken into account by the IFA included United Engineers, Breadtalk Group, Perennial Real Estate Holdings, Fragrance Group and Singhaiyi Group.

Still, the IFA considered that the implied P/RNAV was higher than the average but below the median P/RNAV of the precedent real estate privatisation transactions.

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Meanwhile, the implied P/RNAV was higher than the average and median P/NAV of selected comparable listed companies, which were considered after discussion with the management, said the IFA - such as Ho Bee Land, Oxley Holdings, Chip Eng Seng and Hiap Hoe.

In determining the reasonableness of the offer, the IFA also noted that Roxy-Pacific had not declared dividends in FY2020 and in H1 2021, among other factors.

Given that the offeror already has irrevocable undertakings for about 77 per cent of the shares - from shareholders Kian Lam Investment and Sen Lee Development, as well as from most of the members of the consortium that is making the offer - the IFA added that "it is highly unlikely that there will be any competing offer from a third party" for the company.

"Having considered carefully the information available to us as at the latest practicable date, and based on our analyses, we are of the opinion that the financial terms of the offer are, on balance, not fair but reasonable," the IFA wrote in the letter released to shareholders.

The independent directors said in the resulting circular that they agree with the IFA's assessment of the offer, as well as its advice and recommendation.

But shareholders were told that the IFA's advice to the independent directors on the offer should not be relied upon by any shareholder as the sole basis for whether to accept or reject the offer.

The voluntary conditional general offer for Roxy-Pacific is set to close on Feb 3 at 5.30 pm, or any later date that the offeror may announce.

Shares closed flat on Wednesday at S$0.48, before the latest announcement.