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Straits Times
5 days ago
- Business
- Straits Times
CosmoSteel CEO questions potential takeover of the firm, says offer is undervalued
The opposition from CosmoSteel CEO Ong Tong Hai comes amid more active shareholder efforts to secure better deals in such situations. ST PHOTO: KUA CHEE SIONG SINGAPORE – The chief executive of CosmoSteel Holdings has spoken out against an offer to acquire all the shares of the company, amid more active efforts by shareholders to ensure they secure a fair deal in such situations. Mr Ong Tong Hai, together with his brother Ong Tong Yang and their father Ong Chin Sum, told The Straits Times on May 30 that they are 'deeply concerned' over the 20 cents per share voluntary conditional cash offer by 3HA Capital on May 15. The three are long-term shareholders of CosmoSteel Holdings with a combined 26 per cent stake. The offer is conditional on 3HA Capital holding over 50 per cent of CosmoSteel's issued shares by the closing date of the offer, which will be announced in an offer document to be dispatched no later than June 5. An independent financial adviser (IFA) will be appointed in due course. 'We believe the offer does not represent fair value for shareholders and is made under potentially misleading premises,' the Ongs said in a statement to ST. 'We urge shareholders to carefully consider and evaluate the offer and stand with us in protecting the long-term interests of all shareholders.' The Ongs noted that 3HA Capital had highlighted the risk of CosmoSteel being suspended from trading or delisted for being on the SGX watch list since June 2018 as one of the reasons shareholders may prefer a cash exit. However, the offer price does not account for the proposed abolishing of the watch list by Singapore Exchange Regulation and its confirmation that no listed company would be forced to delist or suspend trading pending the review, they said. The bourse regulator on May 15 said it is consulting the public on scrapping the watch list for loss-making mainboard companies as part of efforts to reduce regulatory friction and encourage price discovery. The Ongs added that 'the offer price grossly undervalues CosmoSteel's recovery trajectory, assets, and growth potential'. While 3HA Capital's offer price of 20 cents is 48.1 per cent higher than CosmoSteel's share price of 13.5 cents on May 14 before the offer was announced, it is still a discount to the company's net asset value per share of 29.3 cents as at March 31. It also does not account for the company turning a profit for the first half of the 2025 financial year, compared with losses in the previous year, the Ongs said. In fact, Mr Ong Tong Hai has been purchasing shares of the steel company in the open market since May 23 at between 21 cents and 22 cents per share, which is higher than 3HA Capital's offer price. The Ongs also noted that the four-party consortium behind 3HA Capital are direct competitors of CosmoSteel. They include Hanwa Singapore, which is a subsidiary of Hanwa Co, a Japan global steel trader which currently holds a 31.6 per cent stake in CosmoSteel. 'Their acquisition of a controlling stake raises serious questions about future strategic direction, potential conflicts of interest, and the independence of the company's operations,' the Ongs said. They warned that accepting 3HA Capital's offer could mean giving up long-term value for short-term liquidity, in a deal structured under incomplete disclosures and involving parties who may not prioritise the interests of minority shareholders. They said in their statement: 'We call upon the board of CosmoSteel to fully evaluate and address these concerns in their formal response to the offer, and to act in the best interests of all shareholders. 'It is important that we do not let short-term fear or misleading representations deny us of long-term value.' The family is speaking out amid a rise in low-priced offers for SGX-listed firms in recent years, some of which cite low liquidity as a justification and put pressure on minority shareholders to accept early under the threat of trading suspension. One example is Boustead Singapore's offer for its subsidiary, Boustead Projects, for 90 cents per share in 2023. After the Securities Investors Association (Singapore), or Sias, called the offer a 'low-ball' one that undervalued the company, it was raised to 95 cents. An IFA nevertheless deemed the offer unfair but reasonable, as the price was below its $1.17 to $1.38 valuation range, but reflected the stock's illiquidity. When Boustead Projects' public float subsequently fell to just 4.5 per cent, which is below the 10 per cent requirement, trading in its shares was suspended. The SGX then directed Boustead Singapore to make a fair and reasonable exit offer for Boustead Projects. A final offer of $1.18 was accepted by over 90 per cent of independent shareholders, and the company was delisted in February 2024. In a November 2023 commentary, Sias president David Gerald had urged minority shareholders not to feel pressured into accepting unfair offers for shares they have likely held for years, adding that the risk of indefinite trading suspension should not be used to justify accepting unreasonable prices. 'The 4.5 per cent who held out have shown that individually they may not be able to make much of a difference, but collectively they can exercise considerable clout,' he said then. Meanwhile, some minority shareholders of Great Eastern (GE) have urged the Securities Industry Council (SIC) to consider amendments to Singapore's takeover and mergers code to promote fair treatment of all shareholders involved in privatisation offers. They include addressing the prolonged suspension of trading in the shares of target companies in a privatisation deal, and imposing stronger obligations on the company's directors to seek better alternatives for minority shareholders when offers are unattractive. GE is expected to announce a final proposal to meet SGX's free float requirements no later than June 8. The company's shares have been suspended from trading since July 2024, after falling below the 10 per cent threshold following a takeover bid by OCBC Bank, its majority shareholder. OCBC has managed to secure 93.52 per cent of GE's shares, short of the 95 per cent needed for a compulsory acquisition and delisting, after some minority shareholders resisted the offer, arguing that OCBC's bid of $25.60 per share undervalues the insurer. Said Mr Ong Chin Woo, who is among those who have resisted: 'Investors, especially retail investors, lack the resources and means to fight for their interests. Hence, they are particularly dependent on the protection of the code to get a fair and reasonable outcome from their investment.' Amid an ongoing consultation by the SIC to amend and strengthen the code, Ms Stefanie Yuen Thio, joint managing partner at TSMP Law, noted that it would be useful to have more avenues for minority shareholders to band together to discuss any offer and, if they think fit, to reject the offer. 'Right now, it's almost impossible for shareholders to do that – they have no means to contact other shareholders and it's for bodies like Sias to convene a meeting,' she said, adding that she has been calling for the law to be changed to facilitate shareholder activism and self-help. Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
04-06-2025
- Business
- Straits Times
Shareholders of Singapore Paincare Holdings should wait for report: Sias
Singapore Paincare will be delisted from the Singapore Exchange's Catalist board if the deal is successful. PHOTO: ST FILE SINGAPORE - Minority shareholders of Singapore Paincare Holdings, which has received a privatisation offer, should wait for a report to be released by an appointed independent financial adviser before selling their shares on the open market , said the Securities Investors Association (Singapore), or Sias, on June 4. Shareholders who do sell on the open market will not have recourse if the privatisation offer price is subsequently revised upwards, Sias added. It also reminded shareholders that 'for a delisting to take place, the IFA has to conclude that the offer is both fair and reasonable'. Singapore Paincare, a local medical services company, has received a privatisation offer from Advance Bridge Healthcare at 16 cents a share, valuing the company at about $27 million. This was announced after the firm requested a trading halt on May 27. The offer represents a 27 per cent premium over its last traded price and 77.8 per cent above its share price in March 2024, when a potential deal was first announced. Singapore Paincare will be delisted from the Singapore Exchange's Catalist board if the deal is successful. According to guidelines by Singapore Exchange Regulation, an offer is 'fair' if the value of the offer price is greater than or equal to the value of the securities subject to the offer. Securities are tradeable financial assets such as shares in a company. How 'reasonable' an offer is depends on factors such as the concentration of pre-existing voting power in the securities of the issuer, the market liquidity of those securities and the likelihood of an alternative offer being made. Sias noted that Singapore Paincare was listed at 22 cents per share in July 2020 during Covid-19 when valuations were depressed and when the Straits Times Index (STI) was trading at around 2,500. Sias added that the company now wishes to delist at 16 cents per share when the STI is trading at around 3,900. The company's initial public offering (IPO) price of 22 cents was also a 123 per cent premium on the group's unaudited net asset value per share of about 9.86 cents on Dec 31, Sias noted. It added that the price offered under the scheme of arrangement is at a slight discount to the company's audited net asset value per share of 16.6 cents as at June 30, 2024, while the unaudited net asset value stands at 16.3 cents per share as at Dec 31, 2024. 'If the same IPO premium was to be applied now, the privatisation price should be around 36 cents to 37 cents,' Sias said, noting that 'well-managed healthcare companies generally trade at premiums to their net asset value'. It added that the deal is conducted through a scheme of arrangement, which means the approval of the scheme has to be approved by more than 50 per cent of those present and voting at the scheme meeting, and by more than 75 per cent in value of the shares held by shareholders voting. 'Sias would like to remind all offerors to treat shareholders fairly... As such, they should therefore make offers that are fair and reasonable when subsequently delisting,' it said. Sue-Ann Tan is a business correspondent at The Straits Times covering capital markets and sustainable finance. Join ST's Telegram channel and get the latest breaking news delivered to you.
CNA
20-05-2025
- Business
- CNA
CNA938 Rewind - What does the end of the SGX watchlist mean?
CNA938 Rewind Play In a nod to the increasing diversity and complexity of the stock market and investors, the Singapore Exchange Regulation (SGX RegCo) has proposed shifting its regulatory stance towards a more proactive disclosure-based regime. Andrea Heng and Hairianto Diman look at what this new regime entails with Ven Sreenivasan, veteran financial journalist
Singapore Law Watch
16-05-2025
- Business
- Singapore Law Watch
MAS proposes key changes in IPO rules and processes to boost SGX's appeal
MAS proposes key changes in IPO rules and processes to boost SGX's appeal Source: Business Times Article Date: 16 May 2025 Author: Ranamita Chakraborty Key focus areas include streamlining prospectus disclosures for primary listings, where issuers will focus on the disclosure of core information that are most relevant and material for investors. The Monetary Authority of Singapore (MAS) is currently seeking feedback on proposed changes to simplify prospectus requirements and enhance investor outreach for initial public offerings (IPOs), it announced on Thursday (May 15). The consultation is open until Jun 14. This is in tandem with a separate Singapore Exchange Regulation (SGX RegCo) consultation paper, which is seeking feedback on changes to rules on listing admission and post-listing disclosures. Collectively, these proposals from MAS and SGX RegCo aim to facilitate more listings by issuers, alongside enhanced disclosures for investors. They are part of the initial set of recommendations introduced by the MAS equities market review group in February, to boost the competitiveness of Singapore's equities market. MAS said its proposals aim to streamline the listing process for issuers and provide broader options for reaching potential investors. The key focus areas include streamlining prospectus disclosures for primary listings, where issuers will focus on the disclosure of core information that are most relevant and material for investors. This will concentrate issuers' effort on disclosures that are most pertinent for decision-making by investors. For secondary listings, MAS proposes aligning disclosure requirements with baseline international disclosure standards which are already commonly adopted by most established markets, including Singapore. Specifically, this includes the International Disclosure Standards for Cross-Border Offerings and Initial Listings by Foreign Issuers, as issued by the International Organization of Securities Commissions (Iosco). These simplified requirements allow issuers who already have primary listings elsewhere to use the same prospectuses with minimal adaptation for their secondary listing on SGX, said MAS. Additionally, it is proposing changes to existing legislation to allow issuers to gauge investor interest earlier in the IPO process. This will support bookbuilding efforts as well as give investors more time to familiarise themselves with the issuers and their intended offers. MAS said it has considered feedback and suggestions from industry stakeholders in formulating these proposals, while also taking into account the requirements and practices of major equities markets. Other proposals from the review group are expected later in the year in line with the moves to attract high-quality listings. Views, suggestions and comments can be submitted via a FormSG link. Market players told The Business Times that MAS' initiatives are welcome moves. 'As major financial markets have adopted the Iosco standards for prospectus compliance, it will facilitate more foreign listed companies to do a secondary listing on SGX,' said Robson Lee, partner at Kennedys Law. He noted that the current proposals will allow issuers to adapt their original offer document from their home exchange without needing to comply with any additional prescriptive requirements under the Singapore Securities and Futures Act. James Leong, CEO of trading firm Grasshopper Asia, pointed out that while Singapore has significant assets under management, very little of that capital is flowing into SGX-listed companies. He views the proposals as 'a welcome first step towards enhancing SGX's competitiveness and appeal' adding that Singapore has the opportunity to establish itself as a 'preeminent regional equities hub'. Source: The Business Times © SPH Media Limited. Permission required for reproduction. MAS: Consultation paper on streamlining of prospectus requirements and broadening of investor outreach channels Print
Straits Times
16-05-2025
- Business
- Straits Times
Singapore shares climb on May 16; STI gains 0.2%
Gainers trounced losers 307 to 203 across the broader market on trade of one billion securities worth $1.1 billion. ST PHOTO: BRIAN TEO SINGAPORE – Investors here latched on to optimistic news from two fronts to help send local stocks a touch higher on May 16. One boost came from announcements that the Monetary Authority of Singapore and Singapore Exchange Regulation are seeking feedback on proposed changes to the Singapore bourse that might inject more spark into the market. Wall Street helped as well, with the S&P 500 rising 0.4 per cent overnight for the fourth straight day on the back of investors increasingly hopeful that tariff tensions will ease following the US and China agreeing to a 90-day truce in their trade war. The Dow Jones Industrial Average added 0.6 per cent but the tech-heavy Nasdaq Composite dipped 0.2 per cent. It was all enough for local investors to get behind the bourse and nudge the Straits Times Index (STI) up 0.2 per cent or 5.93 points to 3,897.87. Gainers trounced losers 307 to 203 across the broader market on trade of one billion securities worth $1.1 billion. The STI's biggest winner was CapitaLand Ascendas Real Estate Investment Trust, which added 1.5 per cent to $2.63, while conglomerate Jardine Matheson led the losers, falling 1.5 per cent to US$46.74. STI constituent Singtel gained 1.3 per cent to $3.80 after the group announced it had sold a 1.2 per cent stake in India's Bharti Airtel for $2 billion. The local banks were mixed. DBS, which traded ex-dividend, fell 1.1 per cent to $44.60, UOB edged up per cent to $35.50 while OCBC gained 0.5 per cent to $16.32. Regional indexes were also mixed. Hong Kong's Hang Seng fell 0.5 per cent, South Korea's Kospi rose 0.2 per cent, Malaysian shares slid 0.1 per cent and Japan's Nikkei 225 closed flat. The ASX 200 in Australia had another strong week and signed off with a gain of 0.6 per cent, its eighth positive session in a row, ahead of an expected interest rate cut next week. THE BUSINESS TIMES Join ST's Telegram channel and get the latest breaking news delivered to you.
