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Offer price raised, closing date extended for Dutech voluntary unconditional cash offer
THE offer price in mainboard-listed Dutech Holdings' privatisation bid has been raised to S$0.435 per share, up from the original S$0.40, with the closing date also being extended by two weeks, the offeror said on Thursday night.
The voluntary unconditional cash offer is being made by Dutech' s chief executive officer, via investment holding company TSI Metals HK, for all of 356.54 million issued and paid-up ordinary shares of Dutech, with a view to delisting the firm from the Singapore Exchange.
Shareholders who have earlier accepted the offer are entitled to this revised and final offer price, with the offeror not intending to revise it further.
The final offer price of S$0.435 cents represents a premium of 74 per cent over the last transacted share price of S$0.25 on May 28, up from the 60 per cent premium represented by the original offer price.
It also represents a 73.3 per cent premium over the volume weighted average price for the one month up to and including the last trading day, which was S$0.251.
The close of the offer has been extended from 5.30pm on July 16 to 5.30pm on Aug 2, or at such later dates as may be announced.
As at 6pm on July 15, the offeror has received valid acceptances amounting to about 281.8 million shares, representing 79 per cent of the total number of shares.
This includes 208.7 million shares held by concert parties, representing about 58.5 per cent of the total.
Offer price raised, closing date extended for Dutech voluntary unconditional cash offer
The offer price in mainboard-listed Dutech Holdings' privatisation bid has been raised to S$0.435 per share, up from the original S$0.40, with the closing date also being extended by two weeks, the offeror said on Thursday night.The voluntary unconditional cash offer is being made by Dutech' s chief executive officer, via investment holding company TSI Metals HK, for all of 356.54 million issued and paid-up ordinary shares of Dutech, with a view to delisting the firm from the Singapore Exchange.
Shareholders who have earlier accepted the offer are entitled to this revised and final offer price, with the offeror not intending to revise it further.
The final offer price of S$0.435 cents represents a premium of 74 per cent over the last transacted share price of S$0.25 on May 28, up from the 60 per cent premium represented by the original offer price.
It also represents a 73.3 per cent premium over the volume weighted average price for the one month up to and including the last trading day, which was S$0.251.
The close of the offer has been extended from 5.30pm on July 16 to 5.30pm on Aug 2, or at such later dates as may be announced.
As at 6pm on July 15, the offeror has received valid acceptances amounting to about 281.8 million shares, representing 79 per cent of the total number of shares.
This includes 208.7 million shares held by concert parties, representing about 58.5 per cent of the total.
Time to close compulsory acquisition loophole that helps lowball privatisation offers succeed
Privatisation offers are often structured to enable controlling shareholders to reach the compulsory acquisition threshold more easily
DUTECH Holdings is one of those companies investors barely notice until it is too late.
Two weeks ago, the company' s chairman and CEO Johnny Liu, through his privately-held TSI Metals HK, unveiled a voluntary cash offer at S$0.40 per share.
The stock, which had closed at S$0.25 before the announcement, jumped 60 per cent when the trading halt was lifted.
Is the game over? While the offer price for Dutech was a steep premium to its market price, it actually values the company at only S$142.6 million.
This is equivalent to 9.4 times the company' s reported earnings of 73.3 million yuan (S$15.2 million) for 2020, and about 67 per cent of Dutech' s net asset value (NAV) of 1.02 billion yuan as at Dec 31.
Dutech also happens to be sitting on a lot of cash - which is ironic given that it is in the business of producing safes and cash handling systems.
As at Dec 31, the company had a net cash position of nearly 367.4 million yuan. This is equivalent to more than 53 per cent of Dutech' s current market value.
It is no wonder that Dr Liu wants to wrest the company from the hands of public shareholders.
Before his offer was unveiled, shares in Dutech were trading at less than six times its 2020 earnings and at a 58 per cent discount to NAV. More than 85 per cent of its market value was backed by cash.
Yet, unless a determined group of minority shareholders bands together to resist the offer, it seems likely that Dr Liu will succeed in taking Dutech private.
In the first place, Dr Liu already owns 152.4 million shares in Dutech - or some 42.76 per cent of the company - through a privately-held company called Spectacular Bright Corp.
His brother Liu Bin, who is executive vice-chairman of Dutech, owns a further 56.3 million shares - or 15.79 per cent of the company - through a privately-held company called Willalpha International.
Both Spectacular and Willalpha have already agreed to accept the offer. This immediately gives the offeror a total of 208.7 million shares in Dutech, or 58.54 per cent of the whole company.
Exploiting a loophole
More importantly, the offer appears to be structured in a manner that will enable Dr Liu to reach the compulsory acquisition threshold more easily.
Under Section 215 of the Companies Act, an offeror can exercise the right of compulsory acquisition once it obtains 90 per cent of a target company' s shares that it and its related companies did not already own.
The wording of the law, however, enables individuals who are controlling shareholders of listed companies to have the shares they own count towards the 90 per cent acceptance threshold by setting up a special purpose vehicle to make the offer.
In the case of Dutech, the offeror - TSI Metals HK - is a Hong Kong company that was incorporated only on April 9, 2019. It has an issued share capital of HK$50,000 (S$8,540). Dr Liu is its sole shareholder and sole director.
To reach the 90 per cent threshold, the offeror needs to obtain only 112.2 million Dutech shares on top of the shares owned by the Liu brothers.
For the sake of illustration: if the Dutech shares held by the Liu brothers were not allowed to be counted in reaching the 90 per cent acceptance threshold, the offeror would have to obtain 133 million shares from minority shareholders, instead of 112.2 million shares.
In effect, the offeror would have to obtain nearly 95.9 per cent of the company' s outstanding shares, not 90 per cent, before being able to exercise its rights of compulsory acquisition.
Big shareholders gain
This compulsory acquisition loophole is more potent the higher a controlling shareholder' s stake in the target company.
For instance, in the case of Top Global, another listed company that is in the process of going private, controlling shareholder Sukmawati Widjaja held 86.77 per cent of the company before the offer. Her son Hano Maeloa held a further 0.19 per cent.
On May 24, the offeror - a company called SW Investment, which is wholly owned by Sukmawati Widjaja - said it had obtained 90.28 per cent of Top Global' s outstanding shares.
Having breached the 90 per cent threshold, the offeror also said it would exercise its rights of compulsory acquisition.
If Sukmawati Widjaja and Hano Maeloa' s shares in Top Global were excluded from the calculation, the offeror would have needed to obtain almost 98.7 per cent of its total outstanding shares before exercising its rights of compulsory acquisition.
Rule change required
Many market watchers will probably agree this compulsory acquisition loophole negates an important protection for minority shareholders.
In fact, the Companies Act Working Group (CAWG) set up by the Accounting and Corporate Regulatory Authority (ACRA) in 2018 to review several areas of the Companies Act has recommended changes to address the loophole.
Specifically, the CAWG wants to exclude from the calculation of the 90 per cent acceptance threshold shares held or acquired by corporate entities controlled by the transferee.
Other recommended exclusions include shares held by a person who would ordinarily act in accordance with the directions and wishes of the transferee a person who is party to a share acquisition agreement with the transferee and close relatives of the transferee.
Yet, there is no certainty that these recommendations will be accepted by lawmakers. And, even if they are, it could be more than a year before they are implemented.
According to a 2019 report from the CAWG, the Ministry of Finance (MOF) did not accept a recommendation back in 2011 that shares held by " associates" of an offeror be excluded from the calculation of the 90 per cent acceptance threshold.
The MOF argued then that the existing provisions had not given rise to any particular concerns. Moreover, the change would make it more difficult for an offeror to obtain full ownership of the target company, especially if the offeror already has a large stake in the company when the offer is made.
In my view, the MOF should review this position and take into account the large proportion of listed companies that are now trading below their book values.
One key reason listed companies are being prised from public investors at less than their full value is that many corporate boards have not done enough to unlock value - for instance, by distributing idle cash and offloading underperforming assets.
And, when privatisation offers are made, these same do-nothing directors rarely make a serious attempt to solicit alternative deals.
With such effete guardians of their interests on the boards of listed companies, minority shareholders need greater protection under the law to ensure they are not preyed upon by controlling shareholders.
Yes, read that from BT too, I would like to exit quickly and wonder when trading halt is lifted? Thanks.
Dutech' s CEO offers to acquire all shares to privatise company at 40 cents per share
THE chief executive officer of mainboard-listed Dutech Holdings, through TSI Metals HK Limited, has proposed to acquire all 356.54 million issued and paid-up ordinary shares of Dutech for 40 cents per share in cash, with a view to delist the firm from the Singapore Exchange (SGX).
TSI Metals, an investment holding company, has an issued share capital of HK$50,000 (S$8,516) solely held by Dutech' s CEO, executive chairman and director, Johnny Liu.
This unconditional offer represents a " unique cash exit opportunity" for Dutech shareholders to realise their entire investment at a premium over the market prices of the shares up to and including May 28, 2021 amid low trading volumes, said UOB KayHian (UOBKH) in a bourse filing issued on behalf of TSI Metals on Monday.
That said, TSI Metals has the right to reduce the offer price in the event that any dividends, rights, other distributions or return of capital is declared, made or paid by Dutech to its shareholders.
On Monday, Spectacular Bright Corp - a company owned by Dr Liu which holds 152.44 million shares representing about 42.76 per cent of total shares in Dutech - and Willalpha International - a company owned by Dr Liu' s brother, Liu Bin, which holds 56.28 million shares representing some 15.79 per cent of shares in Dutech - have also executed an irrevocable undertaking where both companies will accept TSI Metals&rsquo offer.
Mr Liu Bin is also Dutech' s executive vice-chairman and director.
Spectacular has further agreed to be alloted and issued new ordinary shares in the capital of TSI Metals for a subscription price that will be set off against the cash consideration payable for Dutech shares.
The total number of shares held by Spectacular and Willalpha amount to 208.72 million shares representing about 58.54 per cent of Dutech' s total shares.
According to the filing, the offer is an option to shareholders which " may not otherwise be readily available" due to the low trading liquidity of Dutech shares, without incurring brokerage and other trading costs.
The shares have an average daily trading volume of about 23,725 shares, 45,181 shares, 37,717 shares and 56,802 shares respectively during the one month period, three-month period, six-month period and 12-month period up to and including May 28.
Dutech' s shares last traded at S$0.25 on May 28. TSI Metals' offer price of S$0.40 per share represents a 60 per cent premium.
In the filing, UOBKH said TSI Metals had made the offer with a view to privatise Dutech and to exercise any rights of compulsory acquisition that may arise. It believes that privatisation will give Dutech more flexibility to manage the business, optimise the use of its management and capital resources, and facilitate the implementation of any operational change.
In maintaining its listed status, the firm also incurs compliance and associated cost. A delisting will help save on expenses relating to the maintenance of a listed status and focus its resources on its business operations.
If TSI Metals garners offer acceptances exceeding 90 per cent of the total number of issued shares, SGX-ST will suspend trading of the shares at the close of the offer.
UOBKH said TSI Metals does not intend to take any step for the public float to be restored and/or for any trading suspension of the shares to be lifted in the event that, inter alia, less than 10 per cent of total shares are held in public hands.
According to SGX-ST rules, a company may be delisted if it fails to raise the percentage of its total shares held in public hands to at least 10 per cent within three months of trading suspension, or a longer period that SGX-ST may be agreeable to.
In its offer, TSI Metals also reserves the right to seek a voluntary delisting of Dutech. In addition, if it acquires at least 90 per cent of Dutech' s total shares, TSI Metals can also exercise the right to compulsorily acquire all the shares of the shareholders who have not accepted the offer.
TSI Metals currently has no plans to introduce any major changes to the business of Dutech, redeploy the fixed assets of the company, or discontinue the employment of any of the existing employees.
However, TSI Metals retains the flexibility at any time to consider any options which may be in the interest of Dutech, said UOBKH.
Durtech is Trading halt (TH) currently, any bro know when is TH going to be lifted?
overlooked this gem!!!
GO at $0.40
Dutech Holdings
On July 13, Dutech Holdings' independent, non-executive director Hedda Juliana im Brahm-Droege increased her interest in the global manufacturer of high security products from 8.73 per cent to 8.84 per cent.
Dr im Brahm-Droege acquired 380,000 shares for a consideration of S$112,100, at 29.50 cents per share.
She has gradually increased her total interest in Dutech Holdings from 8 per cent on April 23.
Dutech Holdings
On July 8, Dutech Holdings' Independent, non-executive director Dr Hedda Juliana im Brahm-Droege increased her interest in the global manufacturer of high security products from 8.58 per cent to 8.73 per cent. The acquisition of 548,300 shares totalled S$161,745 at an average price of 29.50 cents per share. Dr im Brahm-Droege has gradually increased her total interest in Dutech Holdings from 8.00 per cent on April 23.
Dutech Holdings' UL- and CEN-certified products include ATM safes, banking safes, commercial safes, and cash handling systems. The Group' s headquarters is located in Shanghai, which serves as the centre for research and development, marketing, customer service, corporate development, and financial management.
Dr im Brahm-Droege is the co-founder and the deputy chairperson of the supervisory board of Droege Group AG, an independent advisory and investment company. Dr im Brahm-Droege is also a member of the Board of Trustees of Kunstsammlung North Rhine-Westphalia and a member of the Erich Gutenberg Association.
Dutech Holdings
On June 30, Dutech Holdings' independent, non-executive director Hedda Juliana im Brahm-Droege increased her interest in the global manufacturer of high security products from 8.44 per cent to 8.58 per cent. The 484,700 shares were acquired for a consideration of S$142,471, at an average price of 29.39 cents per share.
Dr im Brahm-Droege is the co-founder and the deputy chairperson of the supervisory board of Droege Group AG, an independent advisory and Investment company. She is also a member of the board of trustees of Kunstsammlung North Rhine-Westphalia and a member of the Erich Gutenberg Association.
Dutech Holdings
Between May 29 and June 2, Dutech Holdings' independent, non-executive director Hedda Juliana im Brahm-Droege increased her interest in the global manufacturer of high security products from 8.06 per cent to 8.16 per cent.
The acquisition of the 348,200 shares totalled S$94,423 at an average price of 27.12 cents per share.
Dr im Brahm-Droege is the co-founder and the deputy chairperson of the supervisory board of Droege Group AG, an independent advisory and investment company.
She is also a member of the board of trustees of Kunstsammlung North Rhine-Westphalia and a member of the Erich Gutenberg Association.
Dutech Holdings' UL- and CEN-certified products include ATM safes, banking safes, commercial safes, and cash handling systems.
The group' s headquarters is located in Shanghai, which serves as the centre for research and development, marketing, customer service, corporate development, as well as financial management.
Dutech Holdings
On May 5, Dutech Holdings' independent, non-executive director Hedda Juliana im Brahm-Droege acquired 88,000 shares for a consideration of S$21,120.
At an average price of 24 cents per share, this increased Dr im Brahm-Droege' s total interest in the global manufacturer of high security products, from 8.04 per cent to 8.06 per cent.
Her preceding acquisitions were between April 24 and 30 with 89,700 shares acquired at an average price of 21.84 cents per share.
As anybody had the chance to join todays AGM and could share the main takeaways ?
Thanks !
Big drop..
S chip drop
S chip drop
When is the result release?
Now many people use mobile payment,paypal etc...ATM like slowly down
I am doing my research on this stock after reading CIMB' s report.
Also saw a report by this blogger (heartlandboy.com/dutech-holdings-limited-initiation-report) and by Budget Babe.
Is Heartland Boy TP of $0.88 too optimistic?
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halleluyah ( Date: 06-Oct-2016 09:09) Posted:
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chiong arhhhhhhhhhhhhh.........................