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10-07-2019, 10:57 AM
Oxley asks UE to explain share sale
TUE, JUL 09, 2019 - 5:50 AM
MARISSA LEE marilee@sph.com.sg
@MarissaLeeBT
Singapore
THE decision by United Engineers (UE) to sell all of its treasury shares for S$56 million to undisclosed third parties last Friday was a board decision, managing director Roy Tan said on Monday.
Mr Tan was responding to concerns raised by UE shareholder and Oxley chief executive Ching Chiat Kwong, who questioned if UE had fetched the best price possible when it sold off the 3.14 per cent stake in the company at S$2.58 per share.
UE is one of the lowest-geared among property firms here with a net debt-to-equity ratio of 0.44 times, and a S$278 million cash pile as at end-March.
So UE should be gearing up if it needs to raise funds, instead of selling shares at an 18 per cent discount to book value, Mr Ching has argued. He told The Business Times: "We need to look at the whole process of how the shares were sold away at this price and see if, objectively, the board and the independent directors got the best value."
Mr Ching also expressed dismay that Oxley was not sounded out as a potential buyer for the block sale: "If we were offered, we would have seriously considered taking it up.
"Oxley has been acquiring shares in UE and during the annual general meeting last year, we did specify that if there's any intention to sell shares or issue rights, can you (the board of UE) let Oxley know. We know the value (of UE) and we will give a reasonable price that helps the company achieve better ground."
In reply, UE's Mr Tan told BT that it was only normal for companies to place out shares at the market price. UE shares closed at S$2.57 on Monday, down four Singapore cents or 1.53 per cent.
Shares of Singapore-listed real estate companies typically trade at an 18 per cent discount to book value or more, he added.
Mr Tan said that the board chose not to approach Oxley directly in order to avoid an interested-person transaction (IPT) that would require shareholders' approval: "We asked UOB Kay Hian to run a process to find the best price."
UE's treasury shares were placed out to a mixture of individual and institutional buyers, he said. UE is not required to name the buyers.
But Mr Ching was unconvinced: "You can go to the market, and the market can come to us. I don't think there's any IPT if you do run a process."
Mr Tan reiterated that UE needs to raise funds for investments and general working capital purposes: "We are running a company. I don't think shareholders need to worry."
UE made a joint bid with MCL Land for a private housing site along Clementi Avenue 1 last week but didn't win.
Nevertheless, UE is looking at other investment opportunities, Mr Tan said: "Opportunities will come in time and it's good to have cash ready for that purpose. It cannot be that when we need money, we raise funds - that's too slow."
Although UE officially states that it is comfortable as long as its net debt to equity ratio is below 1.1 times, "market conditions are bad so it's natural to take a conservative approach", Mr Tan added.
Oxley and the board of UE have had their differences ever since Oxley became a substantial shareholder in UE in 2017, after the Yanlord Perennial consortium bought a 33.5 per cent stake in the company (now 35.27 per cent).
Last year, Mr Ching made two appeals for a seat on the UE board. Both were rejected.
Oxley later foiled a bid by Yanlord Perennial and UE's former shareholder, OCBC, to sell their WBL shares to UE.
Drawn to UE's freehold Singapore real estate crown jewels, Oxley and its executives have been steadily accumulating more shares in the company.
They have a combined stake of 23.48 per cent now after Mr Ching bought more shares in June.
TUE, JUL 09, 2019 - 5:50 AM
MARISSA LEE marilee@sph.com.sg
@MarissaLeeBT
Singapore
THE decision by United Engineers (UE) to sell all of its treasury shares for S$56 million to undisclosed third parties last Friday was a board decision, managing director Roy Tan said on Monday.
Mr Tan was responding to concerns raised by UE shareholder and Oxley chief executive Ching Chiat Kwong, who questioned if UE had fetched the best price possible when it sold off the 3.14 per cent stake in the company at S$2.58 per share.
UE is one of the lowest-geared among property firms here with a net debt-to-equity ratio of 0.44 times, and a S$278 million cash pile as at end-March.
So UE should be gearing up if it needs to raise funds, instead of selling shares at an 18 per cent discount to book value, Mr Ching has argued. He told The Business Times: "We need to look at the whole process of how the shares were sold away at this price and see if, objectively, the board and the independent directors got the best value."
Mr Ching also expressed dismay that Oxley was not sounded out as a potential buyer for the block sale: "If we were offered, we would have seriously considered taking it up.
"Oxley has been acquiring shares in UE and during the annual general meeting last year, we did specify that if there's any intention to sell shares or issue rights, can you (the board of UE) let Oxley know. We know the value (of UE) and we will give a reasonable price that helps the company achieve better ground."
In reply, UE's Mr Tan told BT that it was only normal for companies to place out shares at the market price. UE shares closed at S$2.57 on Monday, down four Singapore cents or 1.53 per cent.
Shares of Singapore-listed real estate companies typically trade at an 18 per cent discount to book value or more, he added.
Mr Tan said that the board chose not to approach Oxley directly in order to avoid an interested-person transaction (IPT) that would require shareholders' approval: "We asked UOB Kay Hian to run a process to find the best price."
UE's treasury shares were placed out to a mixture of individual and institutional buyers, he said. UE is not required to name the buyers.
But Mr Ching was unconvinced: "You can go to the market, and the market can come to us. I don't think there's any IPT if you do run a process."
Mr Tan reiterated that UE needs to raise funds for investments and general working capital purposes: "We are running a company. I don't think shareholders need to worry."
UE made a joint bid with MCL Land for a private housing site along Clementi Avenue 1 last week but didn't win.
Nevertheless, UE is looking at other investment opportunities, Mr Tan said: "Opportunities will come in time and it's good to have cash ready for that purpose. It cannot be that when we need money, we raise funds - that's too slow."
Although UE officially states that it is comfortable as long as its net debt to equity ratio is below 1.1 times, "market conditions are bad so it's natural to take a conservative approach", Mr Tan added.
Oxley and the board of UE have had their differences ever since Oxley became a substantial shareholder in UE in 2017, after the Yanlord Perennial consortium bought a 33.5 per cent stake in the company (now 35.27 per cent).
Last year, Mr Ching made two appeals for a seat on the UE board. Both were rejected.
Oxley later foiled a bid by Yanlord Perennial and UE's former shareholder, OCBC, to sell their WBL shares to UE.
Drawn to UE's freehold Singapore real estate crown jewels, Oxley and its executives have been steadily accumulating more shares in the company.
They have a combined stake of 23.48 per cent now after Mr Ching bought more shares in June.
