Friday , October 22 2021

The offer of 56 cents per share for Challenger is "final"; Independent counsel says "fair and reasonable"



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SINGAPORE – Despite the discontent of some minority shareholders, Digileap Capital's out-of-box offer for Challenger Technologies, priced at $ 0.56 per share, is "final" and will not be reviewed, according to company records at Wednesday. 12).

The outgoing circular filed on the Singapore Stock Exchange (SGX) also included a letter from independent financial advisor Deloitte & Touche Corporate Finance, which described the financial terms of the offer as "fair and reasonable."

WHAT HAPPENED SO FAR

Challenger, a household name for IT products with 38 stores here in Singapore, said on March 20 that it plans to exit SGX after Digileap Capital made a cash out offer of S $ 0.56 each for all its shares .

Digileap Capital is a partnership between Challenger's chief executive, Loo Leong Thye, and his family, as well as Dymon Asia Private Equity.

The outbid offer price exceeds the highest closing price of Challenger shares since May 9, 2014, the company said. It also represents a premium of about 5.7% on the last traded price of S $ 0.53 per share on the last full market day.

However, the offer has been criticized by minority shareholder Pangolin Investment Management as "very low."

The Challenger "should be valued for its cash flow to shareholders," the fund manager said in a letter released days after the proposed capital closure.

"We believe that the fair value of the shares is at least S $ 1,025 based on recurring dividend returns each year, plus an additional additional return of S $ 0.125 if Challenger pays out its cash surplus through a special dividend. "

Pangolin, which holds a 2.94% stake in Challenger through its Pangolin Asia Fund, also called on other shareholders to reject the "derisory" offer at the next extraordinary general meeting (EGM).

WHY DELIST

Challenger reiterated on Wednesday that delinking will give it more flexibility to manage the business, optimize resources and implement operational changes without the attendant costs, regulatory restrictions, and compliance issues of being a listed company.

At present, it is facing a number of challenges, such as a saturated environment of electric and electronic retail business in Singapore, weak retail sentiment and disruption of the rise of e-commerce, and experienced a consistent decline in revenue over the past year. five years.

To navigate this challenging environment, Challenger said it may have to implement changes in its business that could affect the company's dividends.

The electronics retailer added in the exit circular that it does not need access to the capital markets in the foreseeable future, since it has not held any corporate exercise to raise money at SGX since 2007.

A list closeout will also help you save on expenses related to maintaining a listed status and focus those resources on your business operations.

Elaborating, Loo said he began exploring the possibility of a capital close after receiving two unsolicited offers from minority shareholder Pangolin to sell its stake.

"The first offer was received in October 2017, when Pangolin offered to sell its stake at $ 0.435 per share. The second offer was received in March 2018 and did not indicate the price at which Pangolin would be willing to sell its shares, "he said.

But instead of making a one-share deal, Mr. Loo noted that "he wanted to make an offer to all shareholders and started looking for a partner to start the process."

Challenger reiterated that in view of the low historical liquidity of its shares, the company's exit proposal "represents an opportunity for all shareholders … to make their investments in the company, making a clean exit with a prize."

According to the exit circular, Digileap Capital will review Challenger's business, organization and operations after the end of the exit offer.

This is to determine the ideal business strategy for the group, and from there, can implement Challenger business changes to navigate the challenging retail business environment.

But in addition, Digileap Capital "has no current intention to introduce any major changes in the group's business, redeploy the group's fixed assets, discontinue the employment of any of the group's existing employees, except in the normal course of Business ".

EGM TO BE HELD ON JUNE 27

Earlier this month, SGX said it had no objection to the closure of the Challenger, subject to compliance with the listing rules.

Challenger will now need to seek approval from its shareholders at the Extraordinary General Meeting (AGE) scheduled for 10 am on June 27. The last date for submitting proxy forms to the AGE will be June 25.

To exit, you will need to get a vote of approval by a majority of at least 75% as well as rejection votes of no more than 10%.

Challenger shares were last seen at 1.8%, or S $ 0.01, down from S $ 0.545 at 1.30 pm on Wednesday.

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