Hwa Hong directors plan strategic review in expectation of offer lapse

SINGAPORE (THE BUSINESS TIMES) – The shareholding directors of Hwa Hong Corporation “are increasingly of the view that maximising shareholder value would be best achieved outside the timeline and constraints imposed by the general offer” made by Sanjuro United at 40 cents per share, said the company on Monday (July 4).

This comes ahead of the offer’s closing deadline on July 6.

At the close of market on Monday, the offeror and its concert parties held some 195 million shares amounting to a 29.9 per cent stake in Hwa Hong.

Another 29.3 per cent of the company is collectively held by Hwa Hong directors Ong Eng Loke, Ong Eng Hui David, Ong Eng Keong and Ong Mui Eng, as well as their immediate family members.

In the latest update, Hwa Hong reiterated the Ong directors’ intention of not accepting the offer as they remain focused on determining whether shareholder value can be maximised through an exercise conducted through its exclusive financial adviser, Evercore Asia.

Announced earlier in May this year, the exercise would include soliciting other potential offers and evaluating any offers that may emerge.

Highlighting that a deadline for a competing general offer to be announced would normally be on July 23, Hwa Hong said the current Ong directors plan to undertake a comprehensive strategic review of the company should Sanjuro’s offer be unsuccessful.

They also intend to “engage a leading accounting firm” to conduct an in-depth review of the company’s past operational practices and governance processes, among other things.

“With the benefit of the review by the accounting firm, the current Ong directors intend to implement such recommendations as appropriate and disclose such recommendations to potential bidders in the context of the strategic review and exercise,” said the company.

It added that the Ong directors intend to commence these reviews “expeditiously and efficiently, with a view to completing the exercise to maximise shareholder value in the near term”.

Offeror Sanjuro is the bid vehicle of a consortium formed by shareholders of the company that collectively hold around 20 per cent of its shares.

It includes Ely Investments, which is wholly owned by former Hwa Hong group managing director Ong Choo Eng and his family, and Ergonomix, wholly owned by Dymon Asia Private Equity (South-east Asia) Fund II. Other members of the consortium include Roswell Assets and Crystalic Star Global.

Sanjuro’s privatisation offer for Hwa Hong was first launched in May 2022 at 37 cents per share. It was raised to 40 cents apiece in June.

Hwa Hong shares were trading unchanged at 40 cents at 10.06am on Tuesday, after its announcement.