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SHAREHOLDERS of Evergro Properties, a thinly traded stock, will be given the chance to exit their investment under a delisting plan by its parent.
Keppel Land (KepLand), which has an 85.4 per cent stake in the China-focused property group, is offering Evergro shareholders either cash or its own shares in exchange for their shares.
They will get 1,000 new KepLand shares for every 7,000 Evergro shares owned. Alternatively, they may choose to receive $290 for every 1,000 Evergro shares.
The share offer represents a premium of about 21.1 per cent to Evergro's closing price of 25 cents last Friday.
The cash offer, on the other hand, works out to be 16 per cent higher than the closing share price.
The purpose of this exercise is to combine Evergro and KepLand into a single entity. Following this, Evergro shares will be delisted from the Singapore Exchange.
The delisting will remove the compliance costs of maintaining a separate listing for Evergro.
'By combining the operational expertise, industry knowledge and extensive networks of both companies, Keppel Land will be in an even stronger position to capture opportunities and growth in China,' explained KepLand chief executive officer Kevin Wong.
The exit offer is also an opportunity for Evergro shareholders to unlock the value of their investment at a premium to market, Mr Wong added.
Those who wish to participate in the future growth of KepLand may opt for the share swop instead of accepting cash.
The delisting will cost KepLand up to $54 million, if all Evergro shareholders choose the cash option.
Evergro, which was formerly known as Dragon Land, has not been an exciting play for its shareholders. Its shares are not widely followed by investors, with daily trading volume averaging just 130,000 shares.
On the other hand, KepLand is a big player, with total assets of $6.3 billion as of March 31. The group, which focuses on two core businesses of property development and property fund management, has significant presence in Asia, particularly in Singapore, China, Vietnam, India and Indonesia.
For the year ended Dec 31, Evergro chalked up net profits of just $545,000 on turnover of $43.6 million.
On a brighter note, the group is sitting on a healthy cash pile of $134.7 million as of March 31, thanks to a rights issue last August priced at 18 cents apiece.
Even then, the issue was not an unqualified success as some minority shareholders gave it a miss, which allowed KepLand to mop up unwanted shares and boost its stake in Evergro.
Merrill Lynch (Singapore) has been appointed as financial adviser to KepLand while the Evergro board will soon appoint an independent financial adviser to advise independent directors on the merit of the delisting proposal and exit offer.
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