Minority Shareholders Condemn Wah Shing Proposed Privatisation

Date: June 6, 2003

Many minority shareholders of Wah Shing International Holdings Limited have contacted SIAS to express their strong condemnation and serious concerns over the Scheme of Arrangement proposed by the major shareholder, South China Industries (BVI) Limited to privatise the company at a Scheme price of 6.5 cents a share. By comparison, the Net Tangible Asset (NTA) per share value is 28 cents per share. The offer is therefore priced at a substantial discount of 77% to the per share NTA..

SIAS notes that the company was listed in 1996 at an issue price of US 37 cents per share. Last year, after a 20:1 consolidation of shares, the company raised fresh funds from shareholders with a 3:1 rights issue at 12 cents per share. Barely a year after this rights issue, the controlling shareholder is now offering only 6.5 cents per share to cancel the shares of minority shareholders. Many shareholders feel that this amount is preposterous.

It appears that only the major shareholders stand to gain from the Scheme. As can be seen on page 9 of the Scheme document, the NTA of the company rises from HK$1.28 per share to HK$2.42 per share after the Scheme.

Therefore, SIAS understands the reasons for the unhappiness of minority shareholders and sympathises with them over their predicament. Minority shareholders should therefore exercise their vote against the resolution in proxy or in person if they do not agree with the Scheme.

SIAS is alarmed by the recent trend of controlling shareholders taking unfair advantage of minority shareholders by offering to buy them out on the cheap especially at a time of depressed share prices. We appeal to companies who have plans to privatise, to offer their shareholders a fair deal. If there should be a discount to the NTA of the company, the discount should be fully justified.

Mr David Gerald J.
President & CEO
Securities Investors Association (Singapore)