Vard: CIMB responds to queries on fresh IFA letter in Fincantieri's delisting bid

CIMB Bank, which is advising on the bid by Fincantieri to delist shipbuilder Vard Holding, laid out its reasons on Wednesday morning for precedent transaction and price benchmark decisions in its latest independent financial adviser (IFA) letter.

It had already drawn flak for certain inaccuracies in the original IFA letter, which accompanied a circular on April 13, but raised more eyebrows over comments in the updated July 9 version. This prompted Singapore Exchange Regulation (SGX RegCo) to ask Vard and CIMB to respond to certain shareholder queries on Vard's proposed delisting.

In its response, CIMB said on Wednesday that it had dropped Falcon Energy's 2015 takeover of CH Offshore from the list of precedent transactions "after further consideration", because Falcon Energy does not build ships "and is therefore less comparable" to Vard.

"We wish to highlight that the exclusion of the (CH Offshore) takeover does not have any impact on our opinion . . that the exit offer is not fair but reasonable," it added, saying that the mean and median price-to-net asset value ratios of precedent transactions was still below the ratio implied in the Vard exit offer price.

On top of that, CIMB noted in response to the queries that it used share prices prior to Vard's previous offer announcement date in 2016 as a benchmark, because Fincantieri made "significant purchases of shares" between the close of that offer and the last trading day.

Those purchases - which made up about 62 per cent of all trading volume - "had provided support for the price of the shares during the said period", in the IFA's opinion.

CIMB also wanted to highlight that the market price premium implied by the exit offer price was "significantly lower" than in the precedent takeovers, which was a factor that led it to judge the exit offer to be "not fair".

Controlling shareholder Fincantieri is offering S$0.25 for every share in Vard that it does not already own, in a bid to take the company private, after a failed try in 2016. Shareholders will be voting again on the matter, after retail investor outcry at an earlier meeting on April 30 prompted a do-over.

The new extraordinary general meeting (EGM) mandated by SGX RegCo will be held at Shaw Tower in Beach Road on July 24, with the exit offer on the table for Vard shareholders until Aug 7.

Shareholders who have already accepted the offer will get their payout within seven business days of the upcoming EGM, if a delisting resolution is passed, Vard reiterated in its response to the queries.

But as the exit offer is conditional on the delisting resolution passing, shareholders will not be paid if the resolution fails and the offer lapses, the company added.

The delisting resolution must be approved at the meeting by shareholders with a combined stake of at least 75 per cent, and cannot be opposed by those representing more than 10 per cent of shares. Fincantieri has held a 79.34 per cent interest in Vard as at November 2017. Including shares acquired since then and valid acceptances, Fincantieri's resultant shareholding stood at 86.81 per cent as at June 29, 2018.