A COMPANY owned by Cheung Woh Technologies' finance and administrative director Law Yu Chui and her family members is launching a voluntary conditional offer for the high-precision engineering product manufacturer at S$0.285 in cash per share.

 

Alternatively, shareholders can choose to receive one new share in the offeror per share at the same consideration. The new offeror shares will not be listed on any securities exchange.

 

The offeror also does not intend to revise the consideration.

 

Already, the offeror concert group comprising Ms Law' s family members, which holds about 78.7 per cent of the total issued shares, has undertaken to accept the offer in respect of all their shares, and will choose to receive the new offeror shares consideration.

 

This leaves only a slight margin before the offeror and its concert parties reach the 90-per-cent threshold required to get the deal through by the offer close.

 

Cheung Woh supplies high-precision engineering products to the hard disk drive, communications, electrical and electronics, semiconductor and automotive industries. It has manufacturing facilities in Johor and Penang in Malaysia, and Zhuhai in China.

 

The cash consideration represents a premium of about 92.9 per cent and 109.7 per cent over the volume-weighted average price per share for the three- and six-month period respectively until May 4, 2021.

 

The implied price-to-netasset-value ratio based on its unaudited consolidated net asset value per share of S$0.2367 as at end-Feb 2021 is 1.2 times.

 

The offeror noted that the trading volume of the shares has been low, with an average daily trading volume of 24,361 shares over the past 12 months.

 

" The delisting and privatisation of the company will provide the offeror and the company with greater control and management flexibility in utilising and deploying the available resources of the company," it added.

 

It will also enable the firm to save on compliance costs associated with maintaining a listed status and other regulatory requirements, and focus its resources and channel expenses on its business operations, it said.

 

As for the additional option for shareholders to accept the new offeror shares in a private unlisted company, the offeror cautioned investors to " carefully consider the risks and restrictions" before doing so.

 

Cheung Woh posted a S$3.09 million loss for the half year ended Feb 28, 2021, narrowing a S$4.6 million loss in the previous year. Revenue shrank 43.3 per cent to S$13.4 million on the back of declines in its hard disk drive components and precision metal stamping components segments.