SPH stands ready to continue on its own if shareholders do not approve privatisation offers
The company said it aims to keep expanding its business if shareholders reject the privatisation offers.
As the bidding war intensifies for Singapore Press Holdings (SPH), some investors have asked if the company can remain independent or as a "rebranded and renamed" listed entity.
Shareholders said the competing offers from Keppel Corp and Cuscaden Peak indicate that SPH is seen as being a viable business after the media arm is hived off, with valuable assets that can be reorganised or merged with others to derive more value for stakeholders.
The proposals and questions from the shareholders were outlined in a filing lodged by SPH with the Singapore Exchange on Wednesday (Nov 17).
SPH, which publishes The Straits Times, responded to several of the questions on Wednesday, ahead of its annual general meeting on Thursday afternoon.
The company said it aims to keep expanding its business if shareholders reject the privatisation offers: "We have a brand, a strategy and we have proven that we have been able to, through a fairly short period of time, grow an attractive portfolio of business."
Apart from the media unit, all businesses under continuing operations - retail and commercial, purpose-built student accommodation, aged care and digital - improved in the 2021 financial year, it noted.
Shareholders also questioned the need for share buybacks given the company is in the midst of a buyout offer.
SPH said the principal mission of its directors and management is to constantly increase shareholder value and improve the return on equity of the group, among other things.
"SPH believes that share buybacks at the appropriate price level are one of the ways through which the return on equity of the group may be enhanced," it noted.
It added that the buyback will enable directors to return part of the group's surplus funds, in excess of its financial and possible investment needs, to shareholders if the proposed privatisation does not come to fruition.
"This is an expedient, efficient and cost-effective way of returning surplus cash to shareholders.
"The group also has greater flexibility to control the share capital structure, and repurchased shares... may be transferred for the purposes of employee share schemes. This also mitigates the dilution impact on existing shareholders."
5 things to know about Keppel's and Cuscaden's offers for SPH
Keppel Corp and Cuscaden Peak have made competing offers to acquire Singapore Press Holdings (SPH). With two options on the table, shareholders of SPH, which publishes The Straits Times, will vote on the two proposed schemes separately.
On Monday (Nov 15), Cuscaden - a consortium comprising Hotel Properties (HPL), businessman Ong Beng Seng and Temasek-linked entities CLA and Mapletree - raised its offer for SPH to up to $2.40 a share.
It is offering each shareholder the option of an all-cash offer of $2.36, or $2.40 per share comprising $1.602 in cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH.
Keppel's final bid is $2.351 per SPH share, consisting of $0.868 in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit. The final consideration depends on the unit prices of Keppel Reit and SPH Reit.
On Thursday, SPH addressed several frequently asked questions about the offers in a regulatory filing.
Here are five things to know about the two offers.
1. What is the timeline for shareholders to vote on the two options?
SPH shareholders will vote on Keppel's offer at a scheme meeting to be held by Dec 8.
If it is successful, the court sanction for the scheme will be obtained by late December and the effective date and completion of the scheme will be in January.
The vote on Cuscaden's proposal can proceed only if shareholders vote against Keppel's offer, and is expected to take place around January 2022.
After a court sanction is obtained for the Cuscaden scheme, shareholders may elect between the all-cash offer of $2.36 or $2.40 per share comprising $1.602 in cash and 0.782 of an SPH Reit unit.
The effective date and completion of the Cuscaden scheme would be expected to be in February, subject to regulatory approvals and court sanction.
Should SPH shareholders vote down the Cuscaden scheme, the company will remain listed.
2. Why can't the two scheme meetings be convened at the same time?
Under the terms of the supplemental agreement entered into between SPH and Keppel, SPH must conduct the meeting for Keppel's offer ahead of any other scheme meetings for competing offers.
SPH shall not take any action to hold an alternative scheme meeting within eight weeks from the Keppel meeting. But this is waived if shareholders vote down Keppel's scheme, if Keppel shareholders vote down the acquisition at its extraordinary general meeting, or if Keppel switches its scheme to a general offer.
3. Could a general offer be on the table?
Keppel has an option to switch to a general offer for SPH prior to its scheme meeting. It has said that its increased consideration is final, which would apply even if it chooses to switch to a general offer.
If the Keppel scheme meeting fails, it will not be able to make another offer till a year later.
The Cuscaden scheme will still proceed if Keppel decides to switch to a general offer. Cuscaden has the option to switch to a general offer if it chooses to do so.
The deadline for any competing general offer to be announced is no later than seven days prior to the date of the Keppel scheme meeting. Assuming the Keppel meeting falls on Dec 8, the deadline for a competing general offer to be announced would be Dec 1.
4. Is SPH liable to pay a break fee to either Keppel or Cuscaden?
If a competing offer is successful, SPH is liable to pay a break fee of $34 million to Keppel, equivalent to around 1 per cent of the aggregate consideration of Keppel's initial offer.
There are no break fee clauses in Cuscaden's offer.
5. What happens if shareholders vote against both offers?
Should shareholders choose to vote down both offers, SPH will remain listed.
The company said its board and management will "stand ready to move forward on our own" should both offers be voted down.
Continuing the business on its own is an option on the table, it added.
"We have a brand, a strategy and we have proven that we have been able to, through a fairly short period of time, grow an attractive portfolio of business."
It noted that all businesses under continuing operations, excluding the media arm, showed improvement in the financial year ended Aug 31, 2021.
The management is also committed to continuing its growth strategies for its retail and commercial, purpose-built student accommodation, aged care and digital businesses, SPH added.
Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.