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DIRECTORS of retailer CK Tang told disgruntled minority shareholders yesterday that the exit offer by the Tang family does not undervalue a key property owned by the company.
Shareholders have claimed that the move by the Tang family - led by brothers Tang Wee Sung and Tang Wee Kit - to take CK Tang private was shortchanging minority investors.
It is their third attempt to privatise the company, which owns the department store Tangs.
Disgruntled shareholders claimed that the 'existing use' basis used to value the Orchard Road premises is inappropriate as it does not take into account other factors, such as its redevelopment potential.
On an existing use basis - that it continues as a department store - it is valued at $340 million. However, minority shareholders point out that nearby sites have been valued at much more. They cited Wheelock Place, which was valued at $790 million as at Dec 31 last year.
But CK Tang said yesterday that the Orchard Road premises will be used for the core retailing business.
Under the Takeovers and Mergers code, a property that is occupied for purposes of the business must be valued at open market value based on existing use.
The business, founded by the late CK Tang, the father of Wee Sung and Wee Kit, has a rich history and tradition as Singapore's premier department store, the directors said yesterday.
The brothers said they have no intention of stopping retail operations on the Orchard Road premises or to sell or redevelop the site.
Minority shareholders had also referred to Ion Orchard - opposite Tangs - with a market value of $1.38 billion.
CK Tang said yesterday that 'such comparisons are inappropriate because their built-up areas are significantly larger than our Orchard Road premises'.
The firm's comments came in a statement to the Singapore Exchange yesterday in response to recent media reports in which several minority shareholders expressed unhappiness at the offer of 83 cents a share. They believe that the shares are worth more and say the offer should at least match the net asset value of the shares. This was 93 cents as at March 31.
However, the shares have not traded at this level. They hit 90 cents in April 2007 and traded above 80 cents for a month around that time. But over the past few years, the stock has traded at an average of 64 cents, according to Bloomberg data.
The extraordinary general meeting giving shareholders a chance to vote on the privatisation deal takes place on Friday.
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