Sunrise Shares Holdings' IFA says general offer "not fair and not reasonable"

THE independent financial advisers (IFA) of Sunrise Shares Holdings said on Wednesday that the S$0.017 per share general offer for the company made by its largest shareholder, Hong Kong-based businessman Wong Siu Fai, is "not fair and not reasonable", according to a circular sent to shareholders of the firm.

The directors concurred with the advice of the IFA Novus Corporate Finance regarding the offer, and has recommended that shareholders reject the offer.

Mr Wong had acquired a majority stake in Quality Able, which holds a 4.49 per cent stake in Sunrise. That pushed Mr Wong's direct and deemed stake, which was 29.73 before his acquisition, to 34.22 per cent, making it mandatory for him to make a general offer for the rest of the company's shares.

A letter by the IFA listed how trading in the shares had been sporadic during the period commencing one year prior to the offer announcement. Due to the lack of trading liquidity of the shares, the closing prices of the shares may not necessarily be a meaningful indicator of the fundamental value.

For example, the daily closing prices of the shares were between a low of S$0.014 and a high of S$0.070 for the one-year period prior to the offer announcement.

The offer price represents a significant discount of approximately 64.4 per cent to the volume-weighted average price (VWAP) for the one-year period prior to the offer announcement, and a premium of 14.9 per cent, 36 per cent and 30.8 per cent over the VWAPs of the shares for the six-month, three-month and one-month periods prior to the offer announcement respectively.

The offer price represents a premium of approximately 21.4 per cent over the closing price of the shares of S$0.014 on the last trading day.

Other considerations included the fact that the offer price represents a significant discount of between 88.7 per cent and 83.8 per cent to the prices paid for the two previous acquisitions of shares on Sept 9, 2016 and Jan 30, 2018.

It is also a significant discount of 63.7 per cent to the placement price in a previous share placement by the company which was completed on March 24, 2017.

In the outlook of the group, the company expects that the overall business environment for the electrical trading and electrical manufacturing sectors to remain challenging in FY2018, but expects the property consultancy business of the group to maintain a stable growth rate in the second half.