SINGAPORE (THE BUSINESS TIMES) – Activist investor Quarz Capital Management has reduced its stake in Sunningdale Tech just about a week before an extraordinary general meeting (EGM) for shareholders to vote on the private equity buyout offer for the precision plastic components maker.
On Feb 9, Quarz had sold some 69,000 Sunningdale shares for a total of $112,470, which works out to be $1.63 per share. With this, Quarz now owns 7.987 per cent of the company’s total voting shares, down from 8.023 per cent previously.
To recap, Sunningdale announced last November that its chairman Koh Boon Hwee was teaming up with Novo Tellus PE Fund 2 to take the company private at $1.55 in cash per share via a scheme of arrangement.
They then raised the offer to $1.65 per scheme share, up 6.5 per cent from $1.55 previously, after Quarz in an open statement termed the takeover price to be “too low” and that this “significantly undervalues” the company.
Quarz argued that the initial takeover price was at a significant discount of more than 22 per cent to Sunningdale’s book value of close to $2 per share.
In response to queries from The Business Times, Quarz said that while the revised offer is below the company’s adjusted net asset value (NAV) of $1.98, it sees “a number of interesting and attractive opportunities with higher upside potential” in Singapore.
“We are reallocating our portfolio and refocusing on these companies who can benefit the most as the effect of Covid-19 subsides,” said Quarz. “We sincerely thank all minorities for uniting with us to achieve the improved offer.”
Said Sunningdale’s Mr Koh in response to the transaction: “We respect shareholders’ right to buy or sell shares in Sunningdale as they see fit.”
On Tuesday after trading hours, Sunningdale also released its responses to “substantial and relevant questions” that it had received from shareholders ahead of the EGM.
Shareholders wanted to know if the scheme consideration would be lowered in the event the company declares a dividend. Sunningdale said that in the event that any dividends are declared, paid or made by the company after the joint announcement date and before the effective date, the offerer reserves the right to reduce the scheme consideration by the amount of such dividends.
For illustration purposes, should Sunningdale pay a dividend of $0.05 per share before the effective date, the offerer reserves the right to reduce the scheme consideration by $0.05 per scheme share. This means the entitled scheme shareholder who elects for cash consideration will receive a dividend of $0.05 and cash consideration of $1.60 for each scheme share held.
The board said in response to a query on whether the company will pay a dividend for FY 2020 if the scheme is approved that it will take into account various factors including the level of available cash, the expected cash requirements of the business and the need for ongoing investments to sustain and grow the business.
Should the scheme fail, the board said, Sunningdale will continue to be listed on the mainboard of the Singapore Exchange.
Shareholders were also interested in how the board managed any potential conflicts of interest arising from the fact that Mr Koh and Loke Wai San, a non-executive and non-independent director of Sunningdale, are directors of both Sunningdale and the offeror.
To this, the board reiterated that there were “strict controls” in place to mitigate against any potential conflict of interest resulting from the directors’ positions and interests in the company.
These included the exclusion of the duo from all discussions among the non-conflicted directors in relation to the scheme, as well as having a separate financial adviser and separate legal adviser to guide the non-conflicted directors.
Sunningdale’s EGM will be held electronically on Feb 19 at 3pm.