SGX consultation on delisting rules

[Sumeria]

SGX RegCo’s consultation with the market on rule changes on voluntary delisting could be interesting for counters whose bigger majority owners are seriously contemplating taking their companies private.

With Dec 7 2018 the deadline given for inputs from the public, such majority owners may want to quickly work on their privatization plans to avoid the following:

1.     Paying higher exit offer prices, which would be deemed fair AND reasonable.

2.     Paying higher exit offer prices which would garner support from minority shareholders, with parties acting in concert now not being able to vote.

3.     Not being able to privatize at all, with the new set of delisting rules, as minority shareholders vote down attempt after attempt until they deem the offer fair and reasonable.

With that in mind, I suspect the majority shareholders of the following companies would want to act quickly if they have delisting dreams:

1.     Delong – already in the works, but frustrated by a technical rule. I see Ding re-launching a $7 offer soon. Delong had already dished out a big dividend, filling Ding’s pocket with cash for a GO. Waiting will only make delisting harder and costlier.

2.     Hiap Hoe – Not only has the majority shareholder been raising stake in the company but they have also pledged Hiap Hoe shares with banks. My guess is that they are pledged to raise cash in preparation for a general offer.

3.     HPL – One unsuccessful attempt before, so why not a second one, as soon as possible to avoid the new regulations?

I have vested interest in these stocks. Anyone wishing to add names to the above list?

[ghchua]

As you can see from the LTC Corp EGM yesterday, companies trying to use this voluntary delisting route before the new rules being in place will have to face minorities at the delisting EGM. And we have already seen that the EGM can be adjourned with a majority of shareholders voting for it via show of hands, without even going into the actual resolution to vote. I think companies will have to be very careful to go delisting via this route before the new rules came out, as there is now a precedent case for minorities to make reference on.

[Sumeria]

@ghchua. Thanks for the alert. I was not aware of the discussion on these rules as I am not vested in LTC and did not open up that thread to read.

[Sumeria]

From BT today:

"WITH the proposal to shift voting power on voluntary delistings to minority shareholders, will some companies try to beat the deadline?

Corporate governance advocate Mak Yuen Teen of the National University of Singapore Business School fears so - and has suggested that the Singapore Exchange RegCo suspend all such delistings until the proposal comes into force. The change is currently undergoing public consultation.
But the SGX has said "no" - for now.

Professor Mak told The Business Times: "We may see a rush. SGX may want to consider a moratorium on delistings until the new rules are in place, although it will need to move fast in changing the rules as it is also not fair for companies to be left in the limbo for too long."

SGX said Professor Mak's suggestion is not possible - for now. Its spokesman said: "We cannot declare a moratorium now because we are still consulting on the proposed changes to the rules and the outcome will depend on market feedback. The consultation is open till Dec 7 and a decision will be made as quickly as possible thereafter."

[Sumeria]

With SGX letting delistings go ahead as usual until the public consultation is concluded and a decision made, will there be a rush by those already planning a delisting to quickly wrap it up?