Units linked to Citic, KKR make S$1.9 billion offer for United Envirotech

A JOINT venture formed by companies linked to China's state-owned conglomerate Citic Group and American private equity firm KKR has made an offer to acquire at least a majority stake in Singapore-listed United Envirotech Ltd (UEL) at S$1.65 a share.

The cash offer is still subject to several conditions being met and approvals being obtained - most notably from relevant authorities in China, on the part of Citic's unit - before being formalised.

It was announced just before 12pm on the Singapore Exchange on Wednesday by the mainboard-listed UEL, a water-treatment specialist, whose shares received a trading caution two weeks ago because of a substantial increase in its share price.

The announcement said that a special purpose vehicle - jointly and equally owned by Citic Environment (International) Company and KKR China Water Investment Holdings - has made a voluntary and conditional offer to acquire all the shares it does not already own in UEL.

It adds that the offer price represents a 12.6 per cent premium over S$1.465, being the last transacted share price of UEL shares on Nov 6 - the last full trading day before the counter was halted.

The offerors say they intend for UEL to become the flagship for the Citic group in the water and wastewater treatment business, as the Citic group develops its business in the environmental protection sector.

As of the day before the announcement (Nov 11), the offerors own 25.79 per cent of UEL shares and convertible bonds that represent about 14.58 per cent of the enlarged number of UEL shares when converted.

The announcement adds that KKR has delivered an irrevocable undertaking to convert its convertible bonds in UEL to shares, which will result in the offerors owning a total of 29.65 per cent of UEL shares. The amount the joint venture will own in convertible bonds will then represent some 10.23 per cent of the enlarged total number of UEL shares.

The announcement also stressed that the offerors are intending to take a majority stake in UEL.

The offerors have also agreed to take up a private placement of UEL shares, following the close of the offer. The deal has them agreeing to take up 30.3 million, 60.6 million or 90.9 million new UEL shares at a subscription price of S$1.65 per share. The actual number will be determined by the offerors.

UEL has a market capitalisation of some S$1.38 billion.