Tat Hong CEO, StanChart PE launch bid to take crane supplier private at S$0.50 a share

Singapore

THE fervent speculation about a takeover of Tat Hong Holdings has proven to have substance.

The crane supplier's chief executive and Standard Chartered's private equity arm have launched a privatisation bid for the mainboard-listed crane supplier at S$0.50 a share.

A preconditional offer announcement, released late on Thursday night, cited Tat Hong's low trading volume and the compliance cost of maintaining a listed status as reasons behind the bid to delist the company.

The offering vehicle, THSC Investments, also believes that a privatised Tat Hong will yield more flexibility in business management and optimise resource use, the document said.

But THSC Investments - which is jointly owned by SCPE and Tat Hong CEO Roland Ng's TH60 Investments Pte Ltd - said that it does not intend for now to make major changes to Tat Hong's business or its deployment of fixed assets, beyond the ordinary course of business.

It has secured undertakings from shareholders with 59.74 per cent of Tat Hong's shares.

The offer will turn unconditional if it manages to get a stake of at least 90 per cent, as that would allow for the compulsory acquisition of the remaining shares.

THSC is also waiting for a number of preconditions to be met before launching a formal offer.

These include obtaining approval from relevant authorities in Australia and China by July 11.

If the bid goes through, the family of Mr Ng, who is also Tat Hong's managing director, will control about 68.8 per cent of the vehicle making the offer.

SCPE will hold the remaining 31.2 per cent of the offeror.

The offer price represents a premium of 29.9 per cent over Tat Hong's closing share price of S$0.385 on Sept 20, 2017.

That day has been dubbed the last undisturbed trading date, before investors were thrown into a tizzy over the chatter of a potential buyout.

The offer is also at an 8.7 per cent premium over the last traded price of S$0.46 on Nov 9, 2017.

That was the last full market day before Tat Hong confirmed that it had received a non-binding letter from SCPE about the private equity unit's proposal to acquire shares of the firm at the same price of S$0.50 a share.

The company's disclosure at the time came on the heels of a Bloomberg report that SCPE might have been looking to acquire a 29 per cent stake in Tat Hong.

Tat Hong's latest set of financial results showed it staying in the red in the second quarter, although losses narrowed to S$2.79 million for the three months to Sept 30, 2017 - a 48 per cent drop from the year before.

It said at the time that it would keep up with fleet rationalisation activities on its cranes.

The counter closed up by 3.5 Singapore cents, or 7.8 per cent, to S$0.485 on Friday. Close to eight million shares changed hands.