Date: June 21, 2024
In the recent cases of Voluntary Unconditional General Offer, SIAS observed that the offers created dilemma to Minority Shareholders where they are not given a choice to make a decision due to terms of the offer. For example, if the Company has acquired more than 90% share holdings, it will be suspended for a period of time and shareholders who have not submitted their shares, regardless or not if they are agreeable to the offer price, will not be able to trade and their monies are locked up for a period of time.
On 10 May, OCBC announced a S$1.4 billion voluntary unconditional general offer for the 11.56% shareholding in Great Eastern Holdings Limited (GE) that it does not currently own. In OCBC announcements, it was indicated that “the Offer price of S$25.60 represents a 36.9% premium over Great Eastern’s last traded price of S$18.70 and premiums of 38.6%, 40.0% and 42.4% over the one-month, three-month and 12-month periods up to and including the last trading date of 9 May 2024.”.
A number of long-term GE shareholders feedbacked to SIAS and publicly that they will not accept this offer because they feel that GE has been trading below the true value for the longest time.
On 14 June 2024, some minority shareholders of Great Eastern Holdings (GE) again, felt let down upon reading the Offeree circular, in which Ernst & Young Corporate Finance Pte Ltd, the independent financial adviser (IFA), opined that OCBC’s offer of $25.60 per GE share was “not fair but reasonable”. Shortly. OCBC also announced its decision to maintain the offer price at $25.60 per share and set the deadline of 12 July 2024 as the closing date of its voluntary unconditional general offer. OCBC’s announcement omitted any reference to the Offeree circular and the IFA’s opinion.
These disgruntled minority shareholders point out that it is noteworthy that merely two weeks prior, the Monetary Authority of Singapore (MAS) updated its guidelines for financial institutions, underscoring the responsibility of boards and senior management to ensure fair dealing outcomes for customers. While the context differs, the principle they say remains relevant. The remaining minority shareholders of GE feel that they are now faced with the decision to accept an offer deemed unfair by the IFA or potentially could find their hard-earned money locked up in an unlisted company for a long period of time.
Whilst SIAS understands that there are also OCBC minority shareholders to be taken care of, but by choosing to adhere to an offer deemed “not fair”, there is also a potential reputational risk formed by the investing community and/or consumers. While OCBC and some GE shareholders might view that this is a premium offer this as a pinnacle, some other minority shareholders have expressed feeling of not being given a choice to make a decision. As SIAS monitors the investors’ sentiment on this issue, it is hoped by GE shareholders that OCBC reconsiders its position in light of the IFA’s findings and the spirit of fair dealings by a financial institution.
SIAS had arranged for a dialogue between OCBC and GE shareholders in good faith, scheduled for 20 June 2024, prior to the release of the IFA report and OCBC’s decision not to amend its offer price. In light of these recent developments, SIAS cancelled the planned dialogue as it no longer serves its intended purpose.
With the offer closing in approximately three weeks, the fate of GE hangs in the balance. Should OCBC own less than 90% of GE’s shares at the close of the offer, GE will continue to trade on SGX with a reduced free float. Should there be a loss of free float, SGX will suspend the trading of GE at the close of the offer. OCBC has also stated its intention to seek a delisting of GE if the free float requirement is not met.
GE minority shareholders who wish to hold on to the shares should note that GE could be suspended for an extended period, and there is no assurance that any future exit offer will exceed the current one if you miss the 12 July deadline. Nevertheless, minority shareholders can take some comfort in knowing that SGX safeguards require any exit offer to be both fair and reasonable.
SIAS hopes that Company which intend to delist in future should provide an offer price which is truly “Fair and Reasonable” to all shareholders who have placed their trust in the Company, Board and Management with their hard-earned monies. For the growth of the financial capital market in Singapore, investors should put their effort in looking into good companies to invest in, rather than to lose hope and trust and spend time on putting up resolutions at EGM. SIAS will work together with the investors and companies for a win-win situation.
Please click here to see our letter to the Board of OCBC conveying the unhappiness of minority shareholders of GE.
David Gerald
Founder, President and CEO
SIAS
