SingPost’s proposed A$1b sale of Australian business ‘on track’, says buyer Pacific Equity Partners

THE proposed divestment by Singapore Post (SingPost) of its Australian logistics business is not affected by SingPost’s recent firing of its three senior executives, the buyer Pacific Equity Partners (PEP) told The Business Times on Tuesday (Dec 24).

The question of whether the transaction could be scuppered by the sacking that included group chief executive officer Vincent Phang has been raised since the announcement on their sudden exits.

A PEP spokesperson told BT in response to queries: “PEP can confirm that the proposed acquisition of Freight Management Holdings (FMH) is on track as announced on Dec 2.”

SingPost had announced that it would be selling FMH, its logistics subsidiary Down Under, to the Australia-headquartered private equity fund at A$1 billion (S$856.4 million) in enterprise value and reaping S$312.1 million in disposal gain.

The transaction requires shareholders’ approval at a meeting that is expected to be convened in February.

With the recent sacking of the three executives, there has been concern that the deal might be waylaid.

When asked if SingPost has informed PEP about who will take over the handling of the transaction, the PEP spokesperson said: “PEP has no further comment.”

Meanwhile, SingPost shares closed S$0.015 or 3 per cent higher at S$0.515 on Tuesday, after plunging 10.7 per cent on Monday, triggered by the shock announcement that it had fired three senior management staff.

SingPost announced on Dec 22 it terminated the employment of Phang, group chief financial officer Vincent Yik, and the CEO of its international business unit (IBU) Yu Li a day earlier.

It said it had requested Phang to resign as a director and all its related companies but as of Tuesday, he was still listed as a board director on SingPost’s website. The company had already removed Phang, Yik and Yu Li from its “key executives” webpage soon after the termination.

BT understands that generally, whether a company can remove a director or not depends on its constitution, which would stipulate if its board can pass a resolution to boot a member out.

SingPost’s board of directors is helmed by chairman Simon Israel, whom SingPost said will provide increased guidance to and exercise greater oversight of the senior management leadership team in the interim.

The board’s other directors, apart from Phang, are all non-executive, independent directors: Chu Swee Yeok, Fang Ai Lian, Kong Sau Wai Elizabeth, Bob Tan Beng Hai, Gan Chee Yen and Yasmin Aladad Khan.

Non-executive, non-independent director Lim Cheng Cheng resigned on Monday after she quit her role as group chief corporate officer of Singtel – a substantial shareholder of SingPost.

The national postal services provider said it found Phang, Yik and Yu “grossly negligent” in the handling of internal investigations over a whistle-blower’s report that SingPost received earlier this year.

Given this was the first mention of a whistle-blower report, the scandal – which observers were quick to term “Parcelgate” – revealed what an expert described as SingPost’s latest lapse in corporate governance since 2005.

It also led the Securities Investors Association (Singapore), or Sias, to pose a series of questions to the SingPost board. These include whether the company had disclosed all material information and if there would be a group-wide review “to ascertain that all other business units are operating in accordance to the group’s established rules and protocols”.

In a joint statement issued late on Dec 22, Phang and Yik said they would “vigorously contest” the decision.

SingPost is on the hunt of a new group CEO, while Isaac Mah, current CFO of its Australian business, the FMH Group, will be appointed as the new group CFO.

Meanwhile, an acting CEO will be appointed to lead the IBU pending a board review of the unit. No appointment of a new IBU CEO is being proposed at this stage.

Still, Monday’s price plunge might have drawn some bargain hunters betting on a surge, driven by SingPost’s announcement earlier this month that it reached a deal to divest FMH.

Maybank Securities analyst Jarick Seet said in a report on Tuesday that “the strategic review of the monetisation of non-core assets and the Australia business was board driven and will continue”.

He added that the weakness in share price presents a “good opportunity to accumulate”, while keeping his “buy” rating on the stock with a target price of S$0.77.

Other analysts are less upbeat. OCBC equities research analyst Ada Lim said on Monday it is “unclear” if the recent developments will affect the sale. She cut her target price to S$0.54 from S$0.58 but maintained her “hold” rating.

The dust over the sacking of three C-suite executives may also take some time to settle.