SINGAPORE (THE BUSINESS TIMES) – Property developer Tuan Sing Holdings has proposed to acquire and privatise commodities trading group SP Corporation via a scheme of arrangement.

Tuan Sing currently holds about 80.2 per cent of SP Corp’s total issued share capital, or about 28.1 million shares.

In a joint announcement issued on the Singapore bourse on Saturday (Aug 20), both companies said they entered into an implementation agreement setting out the terms and conditions of the scheme.

The scheme consideration for each scheme share is $1.59 in cash. Each SP Corp share was last transacted at 59 cents on Aug 18, before the announcement.

The scheme consideration is equivalent to SP’s book value per share as at June 30, 2022.

SP Corp is engaged in commodities trading activities in coal, rubber, metals as well as other commodities and products used in the energy, metal and automotive industries in Asia.

Tuan Sing will be funding the acquisition using internal cash resources.

Given that SP Corp has not carried out any fundraising exercise on the Singapore Exchange (SGX) in recent years and is unlikely to require access to the Singapore capital markets for funds, there is no need to maintain its listing status on the SGX, the parties said.

The acquisition will also allow Tuan Sing to reduce the duplication of compliance and associated costs in maintaining the listing status of both companies. Delisting SP Corp will help Tuan Sing save on costs associated with complying with listing and other regulatory requirements, as well as human resources needed for such compliance, they said.

Tuan Sing also believes that the proposed privatisation will allow its company and SP Corp’s management to consolidate the optimise the use of their capital and management resources.

The companies said the scheme is an opportunity for shareholders to exit their entire investments without incurring brokerage and other trading costs, which may otherwise be difficult due to low trading liquidity.

For a scheme proposal to be approved, the Companies Act provides that a majority of shareholders representing at least three-fourths in value of the shares held by shareholders present and voting at a scheme meeting, either in person or by proxy, must vote in favour of it.

UOB is financial adviser to Tuan Sing, while Ernst & Young Corporate Finance has been appointed independent financial adviser to SP Corp directors considered to be independent for the purpose of the scheme, so that they can make a recommendation to scheme shareholders.

SP Corp shares closed flat at 59 cents on Friday while Tuan Sing shares also ended unchanged at 36.5 cents.