Avarga Receives Mandatory Cash Offer of S$0.25 per Share
PAPER manufacturing and building materials distributor Avarga has received an unconditional mandatory general cash offer of S$0.25 per share, it announced in a bourse filing on Monday (Nov 8).
Offer Made by Special-Purpose Vehicle TKO
The offer was made by a special-purpose vehicle TKO, controlled by Avarga’s executive chairman, Tong Kooi Ong. TKO has also acquired 183.2 million shares from major shareholder Lim Eng Hock, representing about 20.1 per cent of total issued shares, for S$45.8 million or S$0.25 per share on the same day.
Increased Control for Tong Kooi Ong
This acquisition has pushed Tong’s control to more than 50 per cent of total issued shares, from about 33.1 per cent prior to the acquisition.
Premium Offered to Shareholders
The offer represents a 22 per cent premium over the last traded price on Nov 8 of S$0.205, and a 23.8 per cent premium over the volume-weighted average price (VWAP) for the one month period till Nov 8. The premium over the VWAP for the three-month period was 24.3 per cent, for the six month period was 26.5 per cent and the 12-month period was 33.9 per cent.
Intention to Carry on Existing Business
TKO intends to carry on the existing business of the company, but reserves the right to consider options or opportunities that may present themselves. The offeror does not intend to preserve the listing status of Avarga following the completion of the offer, and will exercise its rights of compulsory acquisition.
Alternative Options if Necessary
However, if TKO is unable to acquire all the shares or seek a voluntary delisting with the total issued shares held by the public under 10 per cent, it will undertake actions to lift any trading suspensions.
Share Price Movement
Shares of Avarga closed up 14.6 per cent or S$0.03 to S$0.235 on Monday.
Conclusion
The offer of S$0.25 per share represents a significant premium for Avarga shareholders, providing an opportunity to realize their holdings in cash. The company’s executive chairman, Tong Kooi Ong, has increased his control to over 50 per cent, and intends to carry on the existing business, with the option to consider alternative opportunities.
FAQs
Q: What is the offer price for Avarga shares?
A: The offer price is S$0.25 per share.
Q: Who made the offer?
A: The offer was made by special-purpose vehicle TKO, controlled by Avarga’s executive chairman, Tong Kooi Ong.
Q: What is the intention of TKO regarding the listing status of Avarga?
A: TKO does not intend to preserve the listing status of Avarga following the completion of the offer, and will exercise its rights of compulsory acquisition.
Q: What happens if TKO is unable to acquire all the shares?
A: If TKO is unable to acquire all the shares or seek a voluntary delisting with the total issued shares held by the public under 10 per cent, it will undertake actions to lift any trading suspensions.
