KUALA LUMPUR (Feb 13): Chin Hin Group Property Bhd (CHGP) shareholders have been advised to reject the mandatory general offer (MGO) offer launched by non-independent and non-executive chairman Datuk Seri Chiau Beng Teik and his family.

In a circular to investors, Inter-Pacific Securities Sdn Bhd (Interpac), the independent adviser for the MGO, said the offer was not fair and not reasonable.

Interpac said the offer was not fair as the 30 sen offer price was 24 sen to 25 sen (44.44% to 45.45%) discount to CHGP’s restated net asset value (RNAV) of 54 sen to 55 sen per share.

In addition, the 10 sen offer for CHGP’s warrants represents a discount of six sen (37.5%) over the theoretical value of the warrants, which stand at 16 sen apiece, computed based on the trinomial option pricing model.

According to Investopedia, the trinomial option pricing model is an option pricing model that incorporates three possible values that an asset can have in a given period of time. These three possible values during a specific period of time may be greater than, equal to or worth less than the asset’s current value.

Interpac said the offer was not reasonable given that the Chiau family seeks to maintain the listing status of CHGP.

“Therefore, the offer securities will remain traded on Bursa Securities and hence, the holders will still have the opportunity to realise their investments in the offer securities in the open market after the closing date.

“However, there is no assurance that the market price of the offer securities will continue to trade at current price levels after the closing date,” the broking firm noted.

Interpac also noted that the Chiau family does not intend to invoke Section 222(1) of the Capital Market and Services Act 2007 to compulsorily acquire any remaining shares and warrants that it has not received valid acceptances for.

Non-interest directors of CHGP echoed the independent adviser’s view that the offer was not fair and not reasonable while recommending shareholders to reject the offer.

On Jan 13, CHGP announced that Divine Inventions Sdn Bhd — a subsidiary of PP Chin Hin Realty Sdn Bhd and a vehicle owned by Chiau, his spouse Datin Seri Wong Mee Leng and their son and executive director Chiau Haw Choon — had acquired five million CHGP shares, equivalent to a 1.69% stake.

In addition, the senior Chiau also bought another 4.51% stake or 13.36 million shares of CHGP.

As a result of the acquisitions, the Chiau family controlled 37.59% of CHGP’s shares, thus triggering the MGO.

However, non-independent and non-executive director Datuk Goh Boon Koon and his vehicle, Teoh Hai Hin, Teoh Huan Shim and Mohd Salleh Hashim — who collectively control 24.49% of CHGPs shares and 24.87% of the CHGP’s warrants — have irrevocably decided not to undertake the offer.

The first closing date of the MGO is Feb 24, with the option to extend further if the Chiau family sees fit.

CHGP shares closed 1.64% or half a sen lower at 30 sen, valuing the group at RM89.13 million.