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Thomson Medical seeks to spin off property businesses

MAIN-BOARD listed Thomson Medical Group unveiled a proposal before trading opened on Monday, to spin off its real estate business to existing shareholders via a distribution in specie by way of capital reduction.  

It added that its real estate business comprising both the design and engineering, and hospitality businesses will be restructured under its current subsidiary, RSP Holdings Pte Ltd.

The group has proposed to spin off all its shares in real estate business units - RSP Architects, Rowsley Hospitality Holdings Pte Ltd, Rowsley (SM) Pte Ltd and GG Collections – to RSP Holdings for an aggregate consideration of S$87.3 million.  

In exchange, RSP Holdings will then assume the repayment obligations for S$69.42 million owed to Thomson Medical.

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These transactions call for the issuance of new RSP Holdings shares and capitalisation of RSP Holdings’ total debt owed to Thomson Medical via issuance of the new shares.  

Thomson Medical said that it will distribute its entire holdings of RSP Holdings shares to entitled shareholders in the ratio of one RSP Holdings share for every existing Thomson Medical share held. Fractional entitlements will be disregarded for the purpose of this distribution.

This proposed distribution, once effected, will reduce Thomson Medical’s shareholders’ equity by S$155.97 million. But the number of Thomson Medical shares held by each of its shareholder will remain the same before and after the capital reduction.

In conjunction with the proposed distribution, RSP Holdings will be converted from a private limited company to a public limited company, but its shares will not be publicly floated.

Thomson Medical has promised the Singapore Exchange to present its shareholders with a cash alternative to holding RSP Holdings' (RSPH) shares. (see amendment note)

For illustrative purposes, the minimum cash amount that may be offered for each RSPH share will be between 0.35 and 0.60 Singapore cent, depending on how many warrants are exercised and based on 26.1 billion issued shares at the latest practicable date. The distribution of RSPH shares to Thomson Medical shareholders will not take place if there is no fair and reasonable cash alternative.  

An independent financial adviser will be appointed to opine on the fairness and reasonableness of the cash alternative.  

Thomson Medical Group chairman Ng Ser Miang said: “This move is in line with our current focus in developing and growing our healthcare business as well as our plans to divest the real estate business.  It will lead to us becoming a pure healthcare company, and will allow management to focus on capturing the growing demand for quality healthcare in this region.”

The group has concurrently proposed to write off accumulated losses of S$281.19 million against its paid up capital of S$2.77 billion as at Sept 30.

These corporate exercises are subject to shareholders’ approval at an extraordinary general meeting (EGM) to proceed with this corporate exercise. The group is looking to hold the EGM on Dec 4 at 2pm at the Holiday Inn Singapore Atrium.

Thomson Medical Group last traded at eight Singapore cents, up 0.1 Singapore cent as at 9.37am after announcing its proposed corporate exercises.

Amendment note: The previous article stated that Thomson Medical plans to offer cash for minority shareholders seeking alternative to holding RSP Holdings’ shares. This has been updated to reflect Thomson Medical Group's intent to present its shareholders a cash alternative to holding RSPH shares.