[SINGAPORE] The Securities Investors Association (Singapore), or Sias, is urging minority shareholders of Singapore Paincare to hold off on selling their shares amid the proposed privatisation deal.
In a statement released on Wednesday (Jun 4), Sias noted that the company could be worth up to S$0.37 per share, which is more than double its privatisation offer of S$0.16 per share.
Sias recommends that shareholders, especially those who can afford to wait, not make any moves until the independent financial adviser (IFA) report is released.
It also noted that the deal is via a scheme of arrangement, which means that approval of the scheme has to first be approved by a majority vote at the scheme meeting – and by more than 75 per cent in value of the shares held by shareholders voting.
There have been past instances where shareholders sought slight gains by selling their shares in the open market before IFA’s opinion was released, said Sias.
“Shareholders who sold (shares in the open market) will not have recourse if there is a subsequent upward revision in the offer price,” Sias warned.
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In its released statement, Sias highlighted that in July 2020, the medical services company listed at S$0.22 per share, when the Straits Times Index (STI) was trading at around 2,500.
Now, when the STI is up by more than 50 per cent at 3,900, it wishes to delist at S$0.16 per share.
Furthermore, its initial public offering (IPO) price was S$0.22, a 123 per cent premium to the group’s unaudited net asset value (NAV) of about S$0.0986 per share on Dec 31, 2019. This was based on the post-placement share capital and after adjusting for net proceeds due to the company from the placement.
Now, the price offered under the scheme of arrangement is instead at a slight discount to the company’s NAV of S$0.166 per share as at Jun 30, 2024. Sias also noted that Singapore Paincare’s unaudited NAV as at end-December 2024 stood at S$0.163 per share.
Therefore, if the same IPO premium was to be applied now, the privatisation price should be around S$0.36 to S$0.37 per share.
Sias further noted that “well-managed healthcare companies generally trade at premiums to their NAV”.
“Sias would like to remind all offerors to treat shareholders fairly, and not to forget their promises made at the IPO. As such, they should therefore make offers that are fair and reasonable when subsequently delisting,” said David Gerald, founder, president and chief executive of Sias.
“It is also worth remembering that for a delisting to take place, the IFA has to conclude that the offer is both fair and reasonable,” he added. “All told, it would therefore be advisable to wait for the IFA’s opinion.”
