SGX-listed Delong Holdings CEO revives take-private offer

Photo: Reuters

Singapore Exchange (SGX) Mainboard-listed steel manufacturer Delong Holdings Limited (Delong) chief executive officer Ding Linguo (DLG) has revived his previously scuppered bid to privatise the company at S$7 ($5.11) per share.

The offer was made through a vehicle owned by Ding Linguo and his wife Zhao Jing. The offer values the deal at S$771.30 million ($562.69 million) based on the 81.48 per cent interest owned by the CEO and related entities.

The previous cash offer was made in late September 2018 and was priced at the same level of S$7.00 per share. However, two weeks later, DLG pulled out of the privatisation bid as the local takeover laws required the offer price to be raised to S$7.42 ($5.41) per share. Due to insufficient funds, it did not make a revised bid.

Fast forward to the latest deal announcement, DLG and the offerors have received an exemption from the take-over regulations from the Securities Industry Council of Singapore (SIC), and the offer was thus allowed to proceed.

The offer price of S$7.00 represents an 18.6 per cent premium to the one-month volume-weighted average price (VWAP) of July 22, 2019, and allows the opportunity for shareholders to cash out their investments in Delong, which may otherwise be difficult due to the low trading liquidity of the shares.

Separately, DLG, its financial adviser, PrimePartners Corporate Finance, and its legal adviser, Shook Lin & Bok, have been publicly censured by a five-person SIC committee in relation to the 2018 privatisation offer.

Travis Lundy of Ballingal Investment Advisors Ltd and a Smartkarma Insight provider noted that the deal is pretty much done. He does not envisage a situation where there are not enough shares to not get to 90 per cent to trigger delisting.

Delong’s stock price was last quoted at S$6.96, up 95 Singapore cents, or plus 15.81 per cent at 4:15 pm SGT on July 30.