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Vard Holdings maintains that valuation error by CIMB 'immaterial', no confusion on its delisting vote

VARD Holdings said on Friday that an error in its independent financial adviser's (IFA) report would not have changed the adviser's opinion, and that there should have been no confusion at its recent shareholders' meeting about whether a delisting vote was taking place.

Vard issued its announcement in response to a Business Times article that reported on the shareholders' meeting, in which some shareholders had voiced concerns about whether the meeting and the vote were properly carried out. On Thursday, the Singapore Exchange (SGX) ordered Vard to hold a new extraordinary general meeting (EGM) to re-vote on the delisting proposal, citing the inaccuracy in the IFA's report.

The shipbuilding and repairing company said on Friday that the calculation error by CIMB Bank in the valuation multiples of the comparable companies table (such as Sembcorp Marine's historical price to net asset value multiple) "does not have a material impact" on CIMB's overall assessment, and that CIMB had maintained its opinion that the exit offer price was not fair but reasonable.

This is because even with a correction, the price-to-net asset value (P/NAV) multiple implied in the exit offer price continued to be well within the range of P/NAV multiples of the comparable companies. Given CIMB's confirmation that there was no change in the overall IFA opinion, the independent directors thus confirmed during the EGM that there was no change to the independent directors' recommendation to the shareholders.

In a regulatory announcement, SGX however mentioned that the exit offer was at a P/NAV multiple of 0.9 times, while the correct P/NAV of comparable companies should have been 1.2 times instead of the erroneous 1.1 times. The error resulted in the exit offer appearing closer to the mean multiple than it actually is, the regulator said.

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Vard also explained the IFA's conclusion that an offer is "not fair but reasonable", which bewildered some shareholders, saying that the two are "two different concepts".

"An offer is 'fair' if the price offered is equal to or greater than the value of the offeree securities, while in determining whether an offer is 'reasonable', the IFA should consider other matters as well as the value of the offeree securities. Such matters include, but are not limited to, the existing voting rights held by the offeror in the offeree and the market liquidity of the offeree securities."

It added that: "Where an IFA concludes that an offer is 'not fair but reasonable', it is on the basis that the IFA is of the view that despite the offer being 'not fair', the offer is 'reasonable' after taking into consideration other matters as well as the value of the offeree securities."

Regarding the confusion over whether a test resolution, a vote for adjournment or a vote for the delisting resolution had been carried out, the company maintained that it "does not believe there is any confusion that the delisting resolution was put to a vote".

"The board believes that it had meaningfully responded to relevant queries and prior to the poll, there was no indication that there was any new relevant question," the company said.

The Business Times, whose reporter was at the shareholders' meeeting, had in a May 1 report described anger and confusion among some shareholders as Vard proceeded with voting for the delisting resolution while there was still substantial discussion about whether and how to vote for an adjournment of the meeting.

In its announcement on Friday, Vard said that meeting chairman Roy Reite had waited for most people to be back in the hall before announcing that there would not be a vote on adjournment. The company acknowledged that as the chairman of the meeting was explaining about the voting process for the delisting resolution, there were questions about an adjournment vote, but described those questions as "interruptions" by shareholders who were attempting to "disrupt and shout down the polling".

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